Kevin Burns has worked at Lockheed Martin's aircraft assembly plant in west Fort Worth for a little more than three years. His father, Jerry, has been there for 35. Both will collect a pension from Lockheed when they retire.
And both father and son, staunch members of the International Association of Machinists, say they're willing to remain on strike against Lockheed as long as necessary to make sure that future workers get pensions too.The younger Burns, 40, is the third generation of the family to work at the plant. His grandfather, R.C. Burns, was hired in 1945 and was an active union member and officer for 40 years.People like "my grandfather, they fought for the pensions back then," Kevin Burns said. "If they had not fought back in the '80s or when [Lockheed predecessor General Dynamics] got started, I wouldn't have a pension today. My 13-year-old boy is fascinated with this stuff, and there's a chance he might end up out here someday. I don't want him not having a pension if it's at all possible."The question of pensions for future workers is one of the key issues behind the week-old strike by Machinists District Lodge 776.In its final contract offer, which union members voted down April 22, Lockheed stuck to its goal of eliminating its traditional defined benefit pension plan for newly hired workers.Hoping to entice an affirmative vote, the company offered union members 3 percent annual wage hikes, a $3,000 bonus, higher pension payments for current workers when they retire, and fixed quarterly payments to retirement savings plans for new hires.The company also matches a portion of employee contributions to a separate 401(k) retirement savings plan, up to $1,840 a year.The contract proposal was rejected by a resounding 93 percent of the union members who voted, about 75 percent of the 3,600-plus Machinists-represented work group."We continue to think it was an excellent, industry-leading offer," Lockheed spokesman Joe Stout said.The average base wage at the plant is $29.23 per hour. That works out to about $61,000 a year, plus overtime, a not-shabby wage in a tough economy. So why strike?For Jerry Burns, the union ties are too strong.Now the mayor of White Settlement, Burns first ran for City Council after his father was tear-gassed by White Settlement police while picketing outside the plant in a 1984 strike.Though not far from retirement, Burns, 61, said the promise of higher wages, a bonus and a 14 percent increase in his future pension benefits was not enough for him to eliminate the pension for the next generation. He fears that if Lockheed gets its way now, younger workers will be less likely to support retirement benefits in the future."I accept benefits that this union fights for, and I wouldn't feel right not doing my part," Jerry Burns said. "If I'm a part of the group and they're taking action, I'm taking action."Lockheed: Concerned about reducing costsLockheed Martin recognizes its legacy and its importance as a major Fort Worth employer but also must take steps to reduce its current and future costs, Stout said. The company's main customer, the Defense Department, is pressing hard on contractors to rein in weapons costs."It's a source of pride to Lockheed Martin that generations of employees have made rewarding careers at the Fort Worth plant," Stout said. "Our goal is a labor agreement that's fair to employees and that allows the company to remain competitive, able to provide jobs for future employees."Lockheed, Stout said, is following "many other companies that have moved away from pensions." It has already shifted from a pension to the savings plan for salaried employees hired since 2006."We think it's important for current employees to look at the total value of their pension plan, retirement savings, company contributions and other provisions to get a clear picture of what the company offered them," Stout said.In 1980, 84 percent of Americans working for large or midsize private companies were eligible for a traditional pension, known as a defined benefit plan because it promises to pay a specific benefit, typically based on earnings and years of service. By 2010, that was down to 30 percent, according to the Employee Benefit Research Institute in Washington, D.C.Pension experts say companies are rushing away from traditional pensions because of the long-term financial obligations they impose. Lockheed officials say they have injected about $2.3 billion into its pension funds in each of the last two years to maintain their long-term solvency, but those funds still lack the assets necessary to fully pay all future obligations.Machinists' leaders say pension solvency wouldn't be an issue if companies like Lockheed would simply make the necessary contributions annually and not rely on investment gains. They compare it to the difference between regularly investing in savings bonds and hoping for high stock market returns, which union leaders liken to investing in lottery tickets.The union is opposed to the shift away from pensions in principle, and its leaders say the Lockheed proposal falls far short of providing future workers with a benefit comparable to the existing pension. Pension benefits, union officials argue, amount to about $4,200 a year in deferred compensation. Lockheed's proposal would provide new employees $1,400 a year in savings contributions.Union leaders say they offered to include new employees in the Machinists' own, independently managed pension fund that would provide similar benefit levels at a much lower annual cost to the company. "They weren't interested. They didn't want to talk about it," said Paul Black, president of Machinists District Lodge 776.Healthcare benefitsare also at issueHealthcare benefits are also in dispute. The union members now have a choice of five healthcare plans, including three HMOs, with varying levels of out-of-pocket expenses.Lockheed's proposal offers two plans, an Aetna HMO and an Aetna-administered LM HealthWorks, touted as a consumer-driven plan.Union officials say 60 percent of their members are in plans that would be eliminated and should not be forced to change, which could mean finding new doctors for their families.Stout said that Lockheed wants to shift its employee healthcare toward wellness and prevention efforts and that the HealthWorks plan provides financial incentives for steps in that direction."Our goal is to move from treating illness to enhancing the health of our employees," he said.Union members are also wary of the LM HealthWorks plan, which has lower premiums and a wider choice of doctors but also higher co-payments and deductibles.The Lockheed plan "is fine for younger, healthy people, but we have an older workforce out here," Black said. "It's fine as long you don't have to use it."Kevin Burns says many of his younger colleagues, 20- and 30-somethings, are also concerned about the healthcare plan changes."They've got kids. You start telling them they're going to have to pay $3,000-$4,000 before the company pays 85 percent, and that gets their eyes open," he said. "We actually had salary people out there on the floor prior to the strike telling us, 'You don't want this insurance.'"Bob Cox, 817-390-7723Twitter: @bobcoxict
Key points of dispute
Lockheed Martin proposals
Pensions
Lockheed proposes eliminating the defined-benefit pension plan for new hires. It would instead pay $1,400 a year into a retirement savings plan.
Workers would also continue to have a 401(k) tax-deferred savings plan, with Lockheed matching 60 percent of employee contributions, up to $59 a week -- $1,840 a year.
Lockheed would increase pension payments for existing workers from $79 a month per year of service to $90 a month. A 30-year employee's pension would increase from $2,370 a month to $2,700.
Healthcare benefits
Lockheed would reduce available healthcare benefit plans from five to two. Remaining choices would be:
LM HealthWorks, a "consumer-driven" plan managed by Aetna with deductibles of $650 per person or $2,000 per family and maximum out-of-pocket expenses of $1,500 per individual or $3,000 per family. The plan would typically pay 85 percent of costs after deductible. Includes some free care and financial incentives for wellness.
Aetna HMO. Low employee out-of-pocket costs. Employees' cost share of both plans would be 13 percent, with no cap on annual cost increases. The HMO has higher premium costs for both the company and employees.
Union positions
Pensions
All employees should receive company-provided pensions upon retirement. The pension benefit is worth about $4,200 a year to employees as "deferred compensation."
The union has offered to switch new hires to its aerospace workers plan, relieving Lockheed of administration responsibilities while providing benefits at lower cost and future risk to company.
Healthcare
Machinists say about 60 percent of members are enrolled in medical benefit plans that the company wants to eliminate and should not be forced to switch.
The union fears that Lockheed will try to force all employees into LM HealthWorks in the next contract. They say the plan exposes workers and their families to risk of much higher out-of-pocket costs in the case of serious illness or injury. But prescription drug costs are lower.
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