Boeing Union Urges Machinists to Strike Tuesday August 30, 11:30 pm ET By Allison Linn, AP Business Writer Boeing Presents Machinists With Final Contract Offer; Union Leaders Urge Workers to Strike SEATTLE (AP) -- Boeing Co. on Tuesday presented what it called its final contract offer to more than 18,000 Machinists, whose leaders promptly urged the workers to reject the proposal and strike. A top Boeing executive warned that a strike would be devastating. In a statement posted late Tuesday on its Web site, the union said the aerospace giant was insisting on concessions and takeaways in a "corporate strategy to break the workers who have built this company." Union members will vote on the three-year offer Thursday, with the current contract set to expire Friday. "I just cannot emphasize enough what a strike would mean to us because we would absolutely be walking away from our commitments to our customers," Alan Mulally, head of Boeing's commercial airplanes division, told a news conference earlier Tuesday after the company released its last offer. "There's just no way we would recover." If the union members vote to strike, Mulally said the company would have no choice but to slowly shut down operations. And he added that customers have been clear that such a disruption could cause them to choose a rival airplane maker -- notably European archrival Airbus SAS. The final offer aimed to answer a key union concern with a 10 percent increase in pension payouts. But it otherwise changed little from Boeing's last offer. The Seattle-based Machinists Lodge 751, which represents workers who assemble commercial airplanes, said on its top issue, Boeing's final offer of a pension of $66 per month for every year worked, up from $60 currently, was "insulting." For about 17,500 affected Machinists in the Puget Sound area and Gresham, Ore., the final offer increased lump-sum payouts to $6,000 over two years. That total could increase to a maximum of $9,000 if employees choose to roll the money into a retirement plan. The company also added a 2.5 percent wage increase in the third year of the contract. For about 900 Machinists workers in Wichita, Kan., the company offered no general wage increase, but a one-time payout of $2,800, which would increase to $4,200 if any employee chose to deposit that money in the Boeing 401(k)-type retirement account. "They are trying to buy you with cash, while dividing and hurting you in other ways," the union statement said. "We will not let this company divide us. Why would we allow them to separate Wichita out of the economic package?" Machinists Lodge 751 is negotiating for employees in all three areas, but certain terms of the contract differ based on location. Workers represented in the talks now receive an average of $59,000 a year. The company said they would earn about $62,500 a year by the end of the new contract, excluding overtime and other extra payouts. "From the start, the union has been very clear about our top issues" including pensions, health care and job security, the union statement said. "We presented a fair and reasonable offer but Boeing refused to address your issues." The union criticized Boeing's health care and job security proposals and a company proposal to eliminate new hires from future retiree medical benefits. Boeing said late Tuesday it hoped employees would look seriously at the offer. "We'll let our employees decide," Boeing spokesman Charles Bickers said. The fierce round of final negotiations occurs as Boeing is enjoying a strong rebound in its commercial airplanes division, giving the union a burst of confidence in talks. Chicago-based Boeing is striving to beat Airbus SAS on new commercial jet orders for the first time since 2000. Boeing had racked up 529 orders through the end of July, compared with 299 orders for Airbus. Airbus is ahead on deliveries so far, with 216 planes as of the end of July, compared with 179 for Boeing. Boeing expects to deliver 320 airplanes this year, and Airbus expects to deliver 360. Boeing is also offering an incentive pay program that would provide five days of pay to Oregon and Washington workers if the company meets financial targets and up to 15 days' worth if the targets are exceeded. But it has dropped a $1,000 payout that was meant to jump-start that program, in exchange for increasing the lump-sum payouts. Cost-of-living provisions would boost base wages by about 1 percent in each year of the contract. The company also said it would offer two health plans with the option of no premium, though premiums would increase for most health care plans. Bickers said Boeing continues to shoulder most worker health care costs, and defended its retirement package as one of the industry's best. Analyst Richard Aboulafia with the Teal Group said union workers could expect to get other concessions but should expect a tough fight over pensions. That's because pensions represent a huge fixed cost that the company can't scale back in a downturn. "I think they've found the one area that management cannot afford to give in to, just for the long-term health of the company," he said. Still, Aboulafia said the union is in a strong position since Boeing cannot afford a long-term strike that would disrupt airplane production just as business is picking up. http://www.iam751.org http://www.boeing.com/negotiations AP Business Writer Elizabeth M. Gillespie contributed to this report.