Union Workers OK Pact With Boeing

Boeing machinists voted overwhelmingly Thursday to accept a contract that boosts pensions and preserve medical benefits, ending a costly monthlong strike for the Chicago-based aerospace firm.

Eighty percent of the voting members of the International Assn. of Machinists and Aerospace Workers approved the contract, which also shunned Boeing’s plan to introduce a different compensation scale for new hires and employees in Wichita, Kan.

The union, which represents 18,400 Boeing workers in Washington, Oregon and Kansas, started back to work late Thursday after the votes were tallied.

“I’m so proud of our members,” Mark Blondin, president of Machinists Union District 751, said in a statement late Thursday. “The overwhelming unity and solidarity of the machinist union membership won this strike.”

Boeing initially had said that the union’s demands would be too costly. But Alan Mulally, president and chief executive of the commercial airplane division, said the company was very pleased with the contract ratification and eager to get back to business.

“We have tremendous momentum in the market and a very bright future,” Mulally said in a statement.

In spite of the severe challenges facing the airline industry, Boeing has had a strong year and is closing the gap with its European competitor Airbus, which in recent years has taken the lead in commercial airplane sales. Airlines battered by high fuel costs have been enthusiastic customers of Boeing’s new fuel-efficient 787 Dreamliner aircraft.

Harley Shaiken, a labor expert at UC Berkeley, predicted that the Boeing contract would embolden union leaders demoralized by declining membership and setbacks in other industries, in which companies have secured significant reductions in wages and benefits.

“In a sea of defeats, this is a labor victory,” he said. “It shows that a strong union can still deliver.”

The contract approved Thursday contained no wage increases, although workers would receive an 8% signing bonus averaging $5,200 plus $3,000 payments in the second and third years of the contract.

Like many large U.S. companies, Boeing was hoping to hold the line on soaring healthcare costs, which it said rose 30% between 2001 and 2004. But union members resisted paying higher premiums, and the final contract did not include any changes to the company’s current plan.

The two sides reached a compromise on retirement benefits, with the company agreeing to increase pension payouts for union members by nearly 17% to $70 a month for every year served, up from $60. And the company pledged to continue paying medical benefits for current and future retirees.

The machinists also succeeded in preventing some union jobs from being lost to outsourcing. Boeing said that vendors would not be allowed to install parts or components on airplanes and that suppliers couldn’t move parts within the factory, a move that threatened the jobs of union forklift drivers.

Mark Beaudry, a 52-year-old shop steward, said Thursday that he was voting for the contract because it addressed his key concerns, including the maintenance of benefits for new hires.

“People fought for us to keep our benefits, and we need to keep fighting to keep future people’s benefits,” he said. “The way industry is going, it’s a giant take-away. Every day in the paper, you pick it up and see people getting their benefits taken away.”

Boeing spokesman Chaz Bickers said Thursday that the company could not comment on the effect of the strike on its delivery schedule or its finances. Earlier, James Bell, Boeing’s chief financial officer, told analysts that the strike could delay delivery of more than two dozen airplanes in September.

Aerospace analyst Scott Hamilton of Leeham Co. in Sammamish, Wash., said Boeing would suffer financially because of the lost production, contract penalties and other costs. But he said the company should be able to get back on schedule quickly by adding shifts and overtime.

Hamilton said Boeing returned to the table with a sweetened deal because 86% of the union’s members voted to strike last month.

Because Boeing was unable to achieve some cost reductions, Hamilton said, the company was likely to increase its outsourcing, which would lead to fewer new manufacturing jobs in the United States.

“Even if this isn’t as costly as Boeing would have us believe, it’s still more expensive and they’re going to look for ways to cut production costs,” he said.