The Boeing Co. dangled wage increases and a bonus as its initial offer to its Machinists union Friday in hopes of signing a new contract and avoiding a labor strike.
In its second day of round-the-clock negotiations with the Machinists, the aerospace company has offered general wage increases, a $2,500 lump sum bonus and an incentive plan.
The existing contract with the Machinists union expires on Labor Day, Sept. 4. The union has threatened to launch a strike that day over the issues of pension, early retiree medical insurance and outsourcing.
The International Association of Machinists and Aerospace Workers represents 24,000 Puget Sound-area workers who assemble Boeing commercial jets. The contract also covers Machinists in Portland, Ore., and Wichita, Kan. The union last staged a 28-day strike against the jetmaker in 2005.
Boeing withdrew its request to divide out the Wichita unit from the Puget Sound area bargaining unit. The Machinists previously identified Boeing’s desire to carve Wichita out of this bargaining unit as an issue it would strike over.
Although Boeing eliminated one strike issue, it left three more in play.
In its offer Friday, Boeing sought to eliminate a defined pension plan for new Machinists hired after Jan. 1, 2009. The company would offer a 401(k) type retirement plan for those new employees.
Boeing proposed to increase payouts on its existing pension plan to $75 monthly, up from $70 monthly, for each year of an employee’s service.
The company also did not back down on its decision to halt early retiree medical coverage for new employees. Boeing wants to eliminate that benefit for new Machinists who begin work at the company after Jan. 1, 2010.
Union leaders responded in a note to its members, saying the Machinists are “not interested” in promoting a system of “haves” and “have-nots.” The Machinists said they “will not tolerate a two-tier class system” for central issues such as retirement and health insurance.
In terms of general wage increases, Boeing offered a 2.5 percent increase in the first year and 2 percent each of the last two years of the contract. The company also will give cost of living adjustments above and beyond the general wage increases. Boeing proposed a $1.28-an-hour wage hike on minimum rates for incoming Machinists.
But union leaders say the company’s wage offer is unsatisfactory.
“After not receiving a wage increase since 2004, Boeing’s wage proposals are far below members’ expectations, as well as industry trends,” the Machinists wrote in their update to members.
The average rate of pay for a Boeing Machinist is $27 per hour, roughly $56,000 annually before overtime, the company reports.
Machinists could collect 10 days worth of pay for meeting targets for the second and third years of the contract in a new incentive plan that Boeing recently introduced. Union members could get up to 20 days of pay each of those years for exceeding the performance targets.
The union downplayed Boeing’s incentive plan proposal. It wants to be included in the standard plan already in place for the company’s other labor group, its engineers union. The Machinists said the company could cancel the plan at any time and has offered no guarantee.
Outsourcing remains a top concern for the Machinists. Boeing sourced major sections of its latest jet, the 787 Dreamliner, with global partners. Workers in Everett piece the major sections together. Boeing has suffered setbacks with the 787 due to supplier troubles and production issues.
The Machinists said Boeing wants to review facilities maintenance work “for the purpose of potential outsourcing.” In previous contracts, Boeing and its Machinists have negotiated terms regarding how the company will hand out work.
The union said it will counter Boeing’s offer in the upcoming days. But Boeing “has a lot of ground to make up in a very short time,” the Machinists said.