Boeing Co.'s largest union urged members to reject the planemaker's contract offer next week and walk off the job in a strike that would shut down production and may further delay the 787 Dreamliner.
The International Association of Machinists and Aerospace Workers also filed unfair-labor practice charges against Boeing for “direct dealing with our members,” spokeswoman Connie Kelliher said Friday near Seattle, its manufacturing hub. Managers met one-on-one with workers “to enhance their own bargaining position, undermine the union and intimidate our members.”
Boeing, saying it wanted more open communication with the 27,000 machinists, posted full proposal terms online during talks instead of letting union leaders present details to members themselves as usual. The company cut off bargaining Thursday, six days before the current contract expires Sept. 3, to give workers time to study the new terms before they vote. The final offer included an 11 percent jump in base pay over three years.
“We're extremely disappointed that the union is recommending that our employees reject what adds up to the best contract in the aerospace industry,” company spokesman Tim Healy said. “We hope our employees recognize the value of this offer. It is our best and final.”
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Boeing, which counts Charlotte-based aerospace firm Goodrich Corp. as a supplier of parts and systems, is the world's No. 2 commercial-plane maker and defense contractor. A walkout this year, which would come Sept. 4 amid a record order backlog and efforts to get Dreamliner production back on track, may cost Chicago-based Boeing $120 million a day in lost revenue, Jefferies & Co. analyst Howard Rubel estimates. A strike also might keep Boeing from reclaiming the position of world's largest planemaker from Airbus SAS, the Toulouse, France-based rival that's built more planes annually since 2003.
The union's members in Washington state, Oregon and Kansas have followed leaders' voting recommendation in three of the last four negotiations, stopping work twice to gain contract improvements. If more than two-thirds reject Boeing's proposal, the workers will walk out Sept. 4.
Boeing shares fell 78 cents to $65.56 at 4 p.m. in New York Stock Exchange trading. The stock price has declined 35 percent since October, when the first of three Dreamliner delays was announced because of parts shortages and problems with suppliers.
The groups exchanged initial plans in May and holed up in a Seattle-area hotel for final talks starting Aug. 21. Union leaders rejected Boeing's first two proposals.
Terms of offer
The final offer presented Thursday provides raises of 5 percent the first year and 3 percent the following two years. The combined 11 percent raise would be the biggest since the one of the same amount in 1999. The union sought an increase at the top end of the 9 percent to 13 percent three-year range it has won recently for other aerospace companies.
Workers also would get a $2,500 payment if they approve the accord by Sept. 3, plus other bonuses. The plan would preserve the way Boeing uses contractors, rejecting changes the IAM sought and had warned it would be willing to strike over.
The total average annual value of the contract would be $110,400, 23 percent greater than the typical machinist's average compensation now, including overtime, bonuses and benefits, according to Healy. The average machinist's wage is about $26 an hour now, or about $54,000 a year.
Boeing dropped most plans the union had termed “strike issues,” including proposals to negotiate a separate contract for the 700 machinists in Wichita, Kansas; to give new workers a 401(k)-style retirement plan instead of the traditional defined-benefit pension; and to cut medical coverage for early retirees.
“Boeing is gambling that their concessions are appealing to enough of the work force to keep a strike from happening, but job security is a sticking point for a lot of them,” Richard Aboulafia, an analyst with Teal Group in Fairfax, Va., said. “There is no question that union management feels as though the company is working around them.”
At a news conference Thursday, lead company negotiator Doug Kight said Boeing had “not gone around the union.”
“As leaders it is not only our right but our obligation to talk to the employees, owners of the company, about our business,” Kight said.
Boeing, which still needs to make about 160 planes by year-end to meet its aircraft-deliveries goal, has a record order backlog of $275 billion that would take machinists eight years to build. Still, the company has said it needs to make sure any contract improvements are sustainable. Some airlines have canceled or deferred deliveries because of record oil prices.
The union says workers deserve more of Boeing's record profits since the last contract was signed in 2005, along with more job security. Machinists have gone on strike over three of the last six contract negotiations. The most recent walkout shaved $300 million from second-half earnings in 2005.