Boeing Co. said the machinists union in Washington has rejected a "best and final" contract proposal that would ensure the aerospace giant would build its next-generation 777X airliner in the state.
The announcement came after the third day of meetings between Boeing and the International Assn. of Machinists and Aerospace Workers District 751. The talks were the first between the two sides since the union overwhelmingly voted to reject a eight-year contract extension last month.
Since then, Boeing has opened a nationwide sweepstakes asking other states to submit incentive-laden proposals. The company said it received proposals from 22 states, many of which submitted multiple sites for consideration.
Washington is still in the running to build the twin-aisle jet, but it's unclear whether Boeing will move forward without a deal with the machinists union. It represents more than 31,000 Boeing workers.
"We entered these discussions to address the concerns we were hearing from our employees," Ray Conner, chief executive of Boeing commercial airplanes, said in a statement. "We've listened to the union leadership and had an open dialogue in hopes of moving toward each other. Unfortunately the offer, which would have ensured this great airplane for the Puget Sound region, was immediately rejected by the union leadership."
The machinists union did not immediately comment.
Moving the assembly line out of the region would be staggering to the Seattle area, where Boeing was founded in 1916.
Theis one of Boeing's best-selling models. Versions of the plane have been built in Washington since the early 1990s, and the 777X is seen as vital to the company's fortunes in the long-haul market for decades to come.
Just last month, at the 2013 Dubai Airshow, Boeing said it had signed 777X contracts amounting to a record-setting $95 billion for 259 airplanes.
The proposed deal would have cut some pension and healthcare benefits, but guaranteed that the 777X program would stay in the Pacific Northwest.
Under the proposed contract, traditional pension plans for newly hired machinists would be converted to a 401(k) type of retirement program in which Boeing would contribute 10% the first year, 10% the second, 6% the third and 4% for each year up to the end of the contract.
Boeing said it sweetened the deal with additional lump-sum bonus of $5,000 on top of the $10,000 it had previously offered. Employees also would have received additional dental benefits, the company said.
The labor dispute in Seattle drew the attention of Southern California lawmakers, who are still reeling from Boeing's announcement in September that it would close the C-17 Globemaster III cargo jet plant in Long Beach in 2015.
On Tuesday, Gov. Jerry Brown's office of Business and Economic Development announced that it would submit a proposal to the company.
Boeing said a total of 54 sites are now being evaluated for the next stage of the process.