Boeing sweetens contract offer for Machinists

EVERETT — The Boeing Co. still could have a Machinists strike on its hands, despite making concessions in its latest contract offer to the union on Tuesday.

With just a week to go before the Machinists vote on a 3-year labor deal with Boeing, the aerospace company withdrew its proposal to eliminate a traditional pension for new employees. Boeing also upped its general wage increase to 9 percent over three years. But the Machinists and Boeing remain at odds over two issues: outsourcing and early retiree medical benefits.

“There are still deal breakers on the table,” wrote the Machinists in an update to members.

The aerospace company hopes to avoid a strike as it tries to deliver on a record backlog of commercial jet orders, including nearly 900 requests for its delayed 787 Dreamliner. The union will vote on Boeing’s final offer, due out before Labor Day, on Sept. 3. If two-thirds of union members reject the offer, the 24,000 Machinists in the Puget Sound area could strike at 12:01 a.m., Sept. 4.

Boeing’s leaders said they had made significant progress in the negotiations. Company spokesman Tim Healy said that Boeing has been committed to sharing its success with its employees.

To do so, Boeing improved its wage increase to 9 percent over three years from the 6 percent that the company offered in its first proposal. The aerospace company also aims to include Machinists in an incentive plan in the third year of the contract and give union members a lump sum payment of 5 percent of their gross pay in the first year. The average payment would be $3,300, Boeing officials said. The first offer was $2,500.

The company said on Tuesday that it had eliminated three out of four of the issues the Machinists said they would strike over. Boeing said it had met the union’s demands on pension for new employees, on retaining Wichita, Kan., in the bargaining unit and on outsourcing. More importantly, Boeing decided not to press forward with its plan to swap out traditional pension plans with 401(k)-type plans for new employees.

“We have listened to what the union said on pensions,” Healy said.

Machinists’ spokeswoman Connie Kelliher countered that Boeing should never have pitched those ideas in the first place. And the union, she said, still sees room for improvements on outsourcing, leaving two strike issues on the bargaining table.

“We should have started with the existing contract and moved forward,” she said. “Instead, they have come at us with takeaways.”

Kelliher said the union surveyed thousands of its members recently on outsourcing. Ninety percent said they would strike if Boeing doesn’t give the union more assurances. Boeing and the union have signed several letters of agreement on job security for facilities maintenance employees and materials handling. But the two don’t see eye-to-eye on how well those letters of agreement have worked out.

Boeing works with an outside materials handling company for its 787 Dreamliner. Machinists do similar materials work on the company’s other jet programs. The union doesn’t want to see outside vendors make further inroads at Boeing.

A major point of contention between Boeing and Machinists is early retiree medical benefits for new Machinists. Boeing proposed eliminating the benefit for Machinists hired after Jan. 1, 2010. About 80 percent of the Machinists said they’ll strike to retain that benefit. The union staged a 28-day strike in 2005.

Boeing’s other major union in the Puget Sound region, the Society of Professional Engineering Employees in Aerospace, opted out of the early retiree medical benefits program for new employees during its last negotiations in 2005. However the engineers still are seeking an agreement with the company on an alternative plan for health insurance benefits for new engineers and technical workers. SPEEA heads into contract talks with Boeing later this year.

Roughly 6,100 Boeing retirees are using the benefit. But that figure likely will grow in the next few years with nearly 43 percent of Boeing Machinists over the age of 50. Most Machinists retire between age 55 and 62. Boeing’s Healy noted that only four of its 49 bargaining units still have early retiree medical.

“It’s really a fairness issue,” Healy said.

The Machinists plan to have a counteroffer to Boeing today. Boeing has said it is committed to delivering its final offer before the Labor Day weekend.

Read Michelle Dunlop’s aerospace blog at to take part in a reader poll on the possibility of a Machinists’ strike.

The latest offer

Boeing’s latest contract offer to the Machinists:

General wage increases: 4 percent in the first year, 2.5 percent in years two and three.

Cost of living adjustments: 1.5 percent in first year, 0.8 percent in year two, 0.5 percent in year three.

Lump sum payment: 5 percent in the first year.

Incentive program: First payout in third year would be 10 days pay for meeting targets.

Pension: Boeing no longer seeks to eliminate the traditional pension plan for new Machinists. The monthly payment for each year of service will increase to $78, up from the existing rate of $70 and $75 in the first offer.

Early retiree health insurance: Boeing would eliminate this benefit to new Machinists hired after Jan. 1, 2010.

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