Boeing to send final proposal to union
Boeing Co. plans to present its machinists with a final 3-year contract offer on Thursday, a day after receiving a counterproposal from the union, a company spokesman said.
The airplane maker’s latest offer will come as part of a week of round-the-clock negotiations at a Seattle airport hotel ahead of the current contract’s expiration on Sept. 3. Three years ago, the machinists went on strike.
The union’s latest counterproposal asked for more money and stronger job security language, according to Connie Kelliher, a spokeswoman for the International Association of Machinists and Aerospace Workers District Lodge 751.
Boeing (BA, Fortune 500) had bumped a proposed wage increase to 9% over three years and raised the basic pension benefit in offer to the union earlier this week. It also included a yearly 3% cost of living adjustment.
Boeing spokesman Tim Healy said the "final offer" would enhance Boeing’s previous offer but he refused to discuss specifics.
Kelliher said the union’s counteroffer showed movement from the machinists’ side but still "respected the issues our members identified as important."
Chicago-based Boeing’s most recent proposal still contained provisions that the union said would take away existing benefits. For instance, it would eliminate early retiree medical benefits for future hires and for rehires who have been gone longer than six years, Kelliher said.
About 18,400 machinists in the Seattle area, Wichita, Kan., and the Portland, Ore., area struck for four weeks in 2005, forcing the company to halt production of commercial airplanes. The machinists assemble Boeing’s commercial planes and some key components. The union represents 25,000 Boeing employees in the Seattle area, around 1,800 in Wichita and 800 in Portland.
The average Boeing machinist earns $27 an hour or about $56,000 a year, before overtime and incentives.
Boeing’s commercial airplane manufacturing operation, based in the Seattle area, has led a resurgence by the company over the past two years amid heavy orders for the much-awaited and increasingly delayed 787.
Last month, the company said 787 production was adhering to a revised schedule announced in April, and that the program was in the final stages of assembling the first airplane in preparation for a test flight.
Boeing, however, has lost credibility, and faces billions of dollars in anticipated additional costs and penalties, with three delays in the 787’s delivery schedule that leave it more than a year behind the original schedule.
In July, Boeing posted a 19% decline in second-quarter earnings, partly because of late delivery of military aircraft and rising costs from the 787.
But the company reaffirmed its forecasts for 2008 and 2009, saying its backlog of airplane orders had risen 6% to a record $346 billion.
Among its recent orders was one from American Airlines, which said this month it will buy six more 737s than planned, bringing the total number of the aircraft to be delivered in 2009-2010 to 76.
On Thursday, Boeing said EgyptAir had ordered two 777s worth $529 million at list prices.
However, airlines have been struggling with rising fuel costs freecreditreport. Several carriers have posted big losses in recent months and some have been forced to postpone aircraft deliveries.
Healy has previously said that the union’s proposed contract language would severely restrict Boeing’s ability to react to market changes, and that the best way to ensure the company’s success is to maintain its existing business approach.
The union also wants language limiting Boeing’s use of subcontractors and vendors in place of union members.
"We believe that when we give the IAM our final offer tomorrow, our employees will see it as an outstanding offer, the best in the industry, and will vote to approve it," Healy said Wednesday night.
Representatives from Boeing and the union began round-the-clock negotiations on Aug. 21, at a Seatac, Wash., hotel.
Filed under: money by Specialist