Boeing Co.  /  AP file
Boeing employees in Seattle work on a 737 Airborne Early Warning and Control airplane in an undated photo provided by the company. Boeing opens formal contract negotiations with its largest union Friday.
updated 6/9/2005 5:18:18 PM ET 2005-06-09T21:18:18

The last time The Boeing Co. sat down to bargain with its largest union, it was fighting through a steep downturn in business in the aftermath of the Sept. 11, 2001, terrorist attacks.

Three years later, the aerospace behemoth is riding a surge in commercial jet orders and has hired back thousands of laid-off and new employees — which means the Machinists will be asking for payback.

“Our members stuck in there during the hard times. ... Now it’s on the upswing and we intend to share in the profits that the company is going to get,” said Mark Blondin, Machinists District 751 president.

Boeing maintains that it offers stellar pay and benefits, but is facing intense cost-cutting pressure from financially crippled airlines — and chief rival Airbus SAS.

“We have a competitor out there that offers great products and offers them at prices that are kind of unprecedented,” Jerry Calhoun, vice president of human resources for Boeing’s commercial airplanes division, said of Airbus.

“Whatever we can get back in terms of pricing and volume and margins, it’s really clawing back our competitive position,” he said.

Boeing and the Machinists open contract negotiations Friday by trading proposals for a new three-year deal. Preliminary talks will stretch through the summer. Round-the-clock bargaining is set to begin Aug. 15, and a vote is scheduled for Sept. 1, when the current contract expires.

The union represents about 18,000 employees in the Seattle area, Wichita, Kan., and Portland, Ore.

It has been 10 years since the union went on strike. In 2002, federal mediators stepped in after the Machinists began voting to authorize a walkout.

The company’s final offer had included an 8 percent ratification bonus; a 2 percent pay raise the first year and 2.5 percent the second and third years; and a 20 percent increase in monthly pension payments to retirees.

It also boosted health care costs, created a crew leader program the union didn’t like and let outside vendors deliver work directly to the factory, bypassing workers who had traditionally received, inspected and delivered parts.

Top issuse: Pensions, health care
Machinists voted down that offer, but fell short of the two-thirds majority needed to go on strike. Under union bylaws, the contract automatically went into effect.

“Negotiations are give and take — everybody realizes that — but we definitely got took last time,” Blondin said.

Without delving into any specifics on the union’s wish list, Blondin said top priorities will be sweetening pension benefits, holding down any increase in health care costs and protecting jobs.

Boeing has traditionally resisted the union's call for the pension plan to include cost-of-living raises. The union says that has made retirees lose buying power by the day.

Health care premiums and deductibles increased as much as a few thousand dollars a year for workers who don’t opt for a managed-care plan. Those costs are likely to rise again. Boeing’s health care payout has increased 30 percent to about $1.7 billion since 2001.

In 2002, Boeing shot down a job-security proposal tying employment levels to aircraft deliveries. And while it’s hiring more people to build planes, Calhoun said it simply doesn’t make sense to guarantee jobs in such a cyclical industry.

“The only thing that generates job security is really the marketplace and our ability to continue to sell products at prices that our customers are willing to pay,” Calhoun said.

Machinists have fought to keep jobs from being outsourced, but Boeing insists that’s part of staying competitive in a global economy.

“To be geocentric about our business would be a very quick way for us to go out of business,” Calhoun said. “Keeping every job and every nut and bolt of every airplane in the Seattle area isn’t going to work.”

The average Boeing Machinist has 20 years of experience and makes $27 an hour or about $56,000 a year. The pay scale ranges from $9.72 an hour to $33.71 an hour.

“Our members want to build airplanes. The company wants to build airplanes. I think if the company comes in fair-minded to do the right thing that we can come to a mutually acceptable agreement,” Blondin said. “It’s going to be an interesting summer.”

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