Machinists union faults latest Boeing offer

Pact for 18,300 expires at midnight Thursday

August 30, 2005|By BLOOMBERG NEWS

CHICAGO - Boeing Co., the world's biggest aircraft maker, increased bonuses in its latest contract proposal to the Machinists union and left an earlier pension offer unchanged, falling short of union demands.

The current agreement, covering 18,300 workers, expires at midnight Thursday.

The union, Boeing's largest, wants increases in pensions and retiree benefits for its members, whose average age is almost 50.

The Machinists are threatening to walk out when demand for commercial airplanes is the strongest in almost five years. Union leaders failed to muster enough votes for a strike in 2002, as airliner orders slumped.

"We are continuing to negotiate, but remain far apart on your top issues," the union said in a statement to members on its Web site, adding that the latest proposal, Boeing's third, "still falls well short on all issues."

Most of the workers are in the Seattle area with others in Portland, Ore., and Wichita, Kan. Boeing's new proposal, submitted to the union Sunday night, is a prelude to its so-called best and final offer, which is expected to be given to the union membership for a vote Thursday.

Boeing's prior offer, described as "an insult" by the union Friday, would have boosted monthly pension payments to $64 from $60 for each year of service made in the prior offer.

The biggest apparent change in the latest offer Sunday was in bonuses: $4,500 on ratification, plus a new $1,000 payment in March "recognizing employees' contributions to Boeing's performance this year." That's $1,500 more than Boeing's previous offer of a $2,000 ratification bonus and $2,000 in cash the first year of the contract.

The latest proposal would let workers put half of the one-time payment of $4,500 into 401(k) plans with a 50 percent match.

Boeing also added a low-premium health care option for employees participating in programs designed to promote good health, though workers still would pay more than they do now for health care.

The Machinists, who make and assemble parts for military and commercial aircraft, had 94.5 percent of their monthly health care premiums paid for by the company under the expiring contract, Boeing said.

Boeing spent $1.7 billion on employee health care last year, about $8,500 per worker on average, or $2,000 more than in 2001, the company says on its Web site. The company covered $1,675 of the increase, while about $325 was paid by employees in premiums.

In 2000, about 19,000 Boeing engineers - in a separate union - staged one of the largest white-collar walkouts in U.S. history because of disagreements over pay, health care and research spending. It was the union's first extended work stoppage and led to a nearly one-third decline in Boeing's share price. The engineers' contract expires Dec. 1.

The Machinists struck in 1989 and 1995, slowing production, and threatened a strike up to the last minute of negotiations in 1999.

Shares of Boeing, which had 159,000 employees as of Dec. 31, rose $1.27 to close $67.58.

Boeing makes military aircraft including Apache attack helicopters and F-18 fighters. It's second to European-owned Airbus SAS in commercial planes.

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