Aviation

Q&A about the possible Cessna strike

Machinists union members at Cessna Aircraft will vote Saturday on whether to ratify the company's seven-year contract offer or follow their leadership's advice and strike.

Lack of job security and an increase in health care costs are two major issues the union has with the offer.

Preserving jobs in the U.S. is a big issue for the union, said Machinists District 70 directing business representative Steve Rooney.

"We've seen loss of jobs in this community by jobs being outsourced," Rooney said. When the work leaves, he said, the jobs don't come back when the economy improves.

Guaranteed work for Wichita wasn't adequately addressed in the contract, Rooney said.

Cessna spokesman Bob Stangarone said that the offer is a fair one that preserves current wage rates and pensions and offers a competitive health care plan.

"It's critically important to understand that we're competing globally in a very challenging economy," he said.

Here are some other questions on the eve of the vote:

When was the last time the Machinists struck Cessna?

In 1976 Machinists struck Cessna for two weeks.

How long would a strike last if there is one?

It's difficult to say.

Machinists struck Boeing in late 2008, the city's most recent strike, for 57 days. A strike at Hawker Beechcraft that year lasted four weeks. In 1995, a strike at Boeing lasted 69 days.

If there is a strike, how many employees would be affected?

The Machinists represents 2,400 Cessna workers. About 57 percent of them are union members. All Machinists, members or not, could walk off the job. Because Kansas is a right-to-work state, they also could decline to honor the strike and cross the picket line. The 3,600 employees not represented by the Machinists union would be required to work.

What are the advantages to a strike?

It's unknown how long a strike would last or what kind of gains might be made in a strike. But the union feels the company can improve its offer.

"I think the feeling is it's an ugly agreement," Gary Chaison, Clark University professor of industrial relations.

A strike may not hurt Cessna until a few weeks or a month pass, experts say, because the aviation industry is in a downturn and orders are slow.

"That's why most strikes take place in good times when customers want their products," said Teal Group aerospace analyst Richard Aboulafia. "That's not the case right now."

In the down economy, Cessna may think if there's ever a time to keep costs low, this is the time to do it, and "if it takes a strike, it takes a strike," said Wichita State University professor of economics Martin Perline.

"First of all, they don't know there will be a strike."

What are the disadvantages of going on strike?

For striking workers, paychecks stop. Striking workers can collect $150 a week from a strike fund starting in the third week of a strike.

It takes time to offset lost pay with additional gains. And there's no guarantee there will be gains, Perline said.

"Even if you get more, it does take time to make it up," Perline said. "You're losing your whole paycheck."

Strikes also are disruptive to companies and one could lead the company to outsource more work.

"The strike might be interminable," Chaison said.

A company never wants a strike.

"At the end of the day, you want good labor-management relations," Aboulafia said. "You want a partnership. It's not good that it's come to this."

Even if members accept the contract, morale could be low long-term, Perline said.

Some will vote in favor of the contract because the alternatives aren't good. They have obligations such as mortgages, car payments, children in college or spouses who've been laid off or are not working, he said.

"Right now, the alternatives aren't real good," Perline said.

This is "hard-ball bargaining," Chaison said. "This is where you don't want to get to.... It's crunch time."

What impact would a strike have on the Wichita area?

Every week Cessna workers are on strike would mean $2.1 million in lost wages, said Jeremy Hill, director of WSU's Center for Economic Development and Business Research. That would trickle into the community.

A four-week strike would mean $8.4 million in lost wages and a 4 percent decline in retail taxable sales.

"At some point, it will affect every retail establishment," Hill said.

What are positive areas of the offer?

The union has had a good contract with Cessna for a long time, union officials say.

"A lot of that remained unchanged," Rooney said.

The offer retains pensions and includes a $2,500 signing bonus, paid out in January, and $1,000 bonus paid in 2012.

It also retains wages, but offers no raises for four years, and a 1 percent wage increase in each of the last three years for some workers.

It includes cost-of-living adjustments and performance bonuses. The union wonders whether bonuses will ever be paid because the criteria aren't yet determined and they are not linked to executive bonuses.

It's a good contract from Cessna's perspective, Perline said.

"They got a good contract that you could only get in a time like this," he said. "You've got a lousy economy, high unemployment and an aircraft industry that's not doing well."

What are negative things about the offer?

Machinists will have to wait seven years before fighting for a better deal. Negotiations on wages can reopen after four years, but workers can't strike over the results.

"That's a long time to live under an agreement they don't like," Chaison said. "I think (workers) are saying we're willing to accept concessions if we get something in return."

Another drawback for the union is job security. The company agrees to keep only final assembly of the Citation products in Wichita for the life of the contract. That's the point at which the wings, engines, avionics and interior are installed and the airplane painted before going to delivery.

Health care costs would increase with a switch to the same plan as salaried employees.

"Health care benefits is a very emotional issue" for workers, Chaison said.

How much would health insurance change?

It would increase costs for many employees, but the costs still would be less than what the average Wichitan pays, according to a local insurance broker.

Cessna employees now pay $60 a month for single coverage, $100 for the employee plus one, and $150 for family coverage. That includes dental coverage.

Under the contract, the cost for single coverage in 2011 would range from nothing to $142 a month, depending on base pay and the plan chosen. Family coverage would range from $43 to $365. Dental and vision coverage would add $60 to $150 a month to that.

The total annual maximum out-of-pocket cost for an employee is $2,400 to $4,550.

Gary Hardman, president of Hardman Benefit Plans, said the overall health costs are lower than average for the Wichita market.

The costs would be about the same as they are for Learjet employees, he said.

Hawker Beechcraft employees pay less out of pocket, he said, but their premiums are more.

Cessna also would make a contribution to a health reimbursement account or health savings account. It would contribute $1,000 to $2,000 per year during the first two years of the contract, and $500 to $1,000 in the third year.

Unspent money in health savings accounts can be carried over, Hardman said, and employees also can contribute.

What would the switch to United Healthcare mean?

United Healthcare would become the health insurance carrier, replacing Blue Cross & Blue Shield of Kansas and Preferred Health Systems plans.

That could mean employees and their families would have to find a new primary care physician, and United's network is "significantly smaller" than other insurers, according to Ronald Brown, a Wichita physician.

His practice group has had difficulties in the past finding specialists who accept United Healthcare insurance, but he said that problem has eased with the addition of Wichita Clinic to the United network.

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