Machinists union leaders call for Boeing strike

Leaders of Boeing Co.'s Machinists union called Friday for a strike after rejecting the aerospace giant's "best and final" contract offer. They urged union members to reject the offer in a vote set for Wednesday.

The Chicago-based company hoped the proposal, which provides added pay and incentives to workers over three years, would help it avert a labor standoff. The talks come as Boeing tries to keep up with a backlog of plane orders and avoid more penalties caused by production delays of its next-generation passenger jet.

Tom Wroblewski, district president of International Association of Machinists and Aerospace Workers District Lodge 751, said the company's offer fell short in terms of job security, wages and medical coverage, among other areas.

"We did not take lightly the fact we recommended a strike," he told a news conference. "This is not just talking about 27,000 members. This is talking about 27,000 members and their families."

Boeing spokesmen said the company was "extremely disappointed" by the union's response, but is standing by its offer. The current contract expires Wednesday.

Wroblewski said the union was willing to continue bargaining and would welcome the involvement of a federal mediator: "It's all in the company's court at this point."

"We are more than willing to talk to the union and discuss the contract with them in more detail — that said, this is truly our final offer," Boeing spokesman Jim Proulx said late Friday in response to Wroblewski's comment.

The union held a preliminary vote to authorize a strike in July. On Wednesday, members are scheduled to cast two ballots: one to accept or reject Boeing's latest offer and another on whether to begin a strike. A simple majority is required to reject the contract, and a two-thirds majority is needed to call a strike, which would trigger a work stoppage at 12:01 a.m. Thursday.

The sides have been negotiating since May 9; round-the-clock talks began Aug. 21 at a hotel near a Seattle airport.

In 2005, about 18,400 machinists in the Pacific Northwest and Wichita, struck for four weeks, forcing the company to halt commercial airplane production. The machinists assemble Boeing's commercial planes and some key components.

The proposal, Boeing's third offer, was delivered to the union Thursday. It would have increased pay by 11% on average for more than 27,000 union workers in Washington state, Kansas and Oregon, the company said.

The tentative deal also included a $2,500 bonus for workers if the agreement was ratified by Wednesday.

Boeing said it had withdrawn certain contentious proposals, such as plans to cut early retiree medical coverage and create a new defined-contribution retirement program for future employees.

The union's main concerns include details on subcontracting, which union leaders say jeopardizes job security.

Machinists don't want to see jobs that union workers can do go to outside contractors, Wroblewski said.

Union leaders also said workers are paying too much in the medical plan.

Tim Healy, a Boeing spokesman, said: "We're extremely disappointed that the union is recommending that our employees reject what adds up to the best contract in the aerospace industry."

"We hope our employees recognize the value of this offer," he said. "We encourage them to study it, calculate what it means to them and their families and vote in their best interests on Sept. 3. This is our best and final offer, and that's what it means."

Analysts say a strike could cost Boeing about $100 million per day in deferred revenue. In 2005, Boeing was unable to deliver more than two dozen airplanes as scheduled because of the strike that year.

Boeing's union machinists have walked off the job six times since the labor group was formed in 1935.

"We're supposed to be a world class company, but they don't want to give us a world class contract," Robert Eagleson, a union steward at Boeing's Renton plant, said Friday.

Boeing's latest offer followed a counterproposal from the union asking for more money and stronger language about job security.

Besides the proposed wage hikes, the offer included pension increases and a 3% cost-of-living adjustment. The added pay and benefits would total an average $34,000 over the life of the three-year contract, according to the company.

The average Boeing machinist earns $27 an hour, or about $56,000 a year, before overtime and incentives.

Scott Hamilton, an analyst with Leeham Cos., said earlier that such bargaining usually continued until seconds before the deadline, but that Boeing had thrown a "Hail Mary pass" five days ahead of time in hopes of appealing directly to union members.

"Boeing is rolling the dice on this, there's no question about that," he said.

From a financial standpoint, Hamilton said, the offer appeared to be "pretty good" for a labor force that hasn't had a wage increase in its past two contracts.

But he believes the union was looking for more — perhaps 13% rather than 11% in wage increases, he said.

The effect of a possible strike would depend on its duration, particularly for Boeing's 737 and 777 production lines, which are running at capacity, with 31 737s and seven 777s produced monthly, Hamilton said.

The union currently represents 25,000 Boeing employees in the Seattle area, around 1,500 in Portland and 750 in Wichita.

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.

But Boeing 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.

Airlines, meanwhile, have been struggling with rising fuel costs. Several carriers have posted big losses in recent months and some have been forced to postpone aircraft deliveries.

Shares of Boeing fell 78 cents, or 1.2%, to close Friday at $65.56.