From the Boeing News clips from this morning:
Boeing, union differ by $1 billion, Mulally says
Seattle Post-Intelligencer 09/09/05
author: James Wallace
(Copyright 2005)
The Boeing Co.'s striking Machinists union made demands that would have cost the company more than $1 billion above its final offer, Boeing Commercial Airplanes boss Alan Mulally said Thursday.
In a message to Boeing managers in the Puget Sound area, Portland and Wichita, Kan., Mulally said he is hopeful that the weeklong strike in those three areas will be a short one. But he also acknowledged that the two sides left the bargaining table far apart.
No talks are scheduled, Mulally said.
The last strike against Boeing by the International Association of Machinists and Aerospace Workers, District 751, lasted 10 weeks. That was in 1995.
"Our hope is for a short work stoppage with minimal impact on our communities and our relationship with them (the strikers)," Mulally said.
But he hinted there may be no quick settlement.
"When union negotiators say the two sides were 'miles apart,' they are correct," Mulally said in the message. "Having barely moved off their original position, union negotiators were demanding more than $1 billion more than what was in our best and final offer. Their position did not reflect the current market for pay and benefits and far exceeded any recent contract settlements in the industry."
In an update posted Thursday on its Web site, the union did not specifically address Mulally's message, but did say:
"Regardless of what Boeing says to their managers, 86 percent of our members said the company did not come close to meeting our expectations on pension, health care, job security and a number of other issues. The fact is their final offer is a smaller economic and benefit package than the 2002 contract."
Mulally, in his message, said that "while the divide between our offer and the union's extreme positions is large, it is in everyone's best interest to resolve this situation as quickly as possible."
He said the company is "always willing to discuss reasonable proposals around that offer which support our mutual goals and our long-term business plans and obligations."
The strike by the union's 18,400 members, of which more than 16,000 are in the Puget Sound area, has shut down Boeing's 737 production at its Renton plant and 747, 777 and 767 production at the Everett plant.
Some industry analysts have said the strike is likely to delay the delivery of as many as 30 or more jets if it lasts until the end of September. Mulally said Boeing will do all it can to help customers get the airplanes they need, short of actually building the planes.
"The strike is particularly damaging for them (customers) because they are just beginning to recover from a prolonged downturn in a fragile market," Mulally said. "We are looking at a variety of ways to support our customers' needs for airplanes during the strike, and we are examining all our options for recovering delivery schedules in a post-strike environment. Our support for in-service Boeing airplanes remains a top priority."
Mulally said Boeing has managed an "orderly" shutdown of its jetliner production since the strike began, and its suppliers have done what they need to do to manage their businesses.
"While we do not know how long the strike will last, we're confident that we are taking the right steps to enable a smooth restart of production sometime in the future," Mulally said.
The strike began a week ago today, three days after Boeing made its final offer.
The company made a number of concessions during the contract talks, Mulally said.
"We moved substantially from our initial positions on retirement, medical and wages," Mulally said. "And we structured various features of our offer to provide maximum flexibility to reduce the impact of our medical plan changes and allow employees to save for retirement. We also offered an incentive pay program requested by the union that shares the company's success with up to three weeks extra pay annually."
Boeing's final offer would have raised the pension multiplier for Machinists from $60 a month for each year of service to $66, which matched what was agreed to by Lockheed Martin in its most recent contract with its Machinists.
Mulally called that $66 figure the "industry's highest benchmark."
He disclosed that the union was seeking more than a 33 percent increase in pension benefits. The union had not previously said what it was asking, only that Boeing could easily afford another $20 above the $60 multiplier. Heading into the contract talks, better pension benefits was the union's top priority.
Mulally said the union also wanted a multimillion dollar contribution to the union's own pension plan and a 50 percent increase in Boeing's VIP savings plan match.
"While the union requested no general wage increases, its position on lump sum wage payments was even more extreme that its retirement demands," Mulally said.
In its final offer, Boeing offered union members in the Puget Sound area and Portland two lump sum cash bonuses of $3,000 each, which Boeing said could be rolled into its 401(k) retirement plan for a 50 percent company match, or another $3,000.
The union leadership has called Boeing's final offer "insulting," saying it was even worse than the last contract, in 2002, when the industry was in the downturn and Boeing was cutting thousands of jobs.
In a vote on the three-year contract offer Sept. 1, 86 percent approved the strike, according to the union.
Boeing's commercial jetliner business is having a banner sales year and is poised to beat rival Airbus in jetliner orders for the first time since 2000. Nearly 600 orders have been won so far in 2005. Mulally said "improved competitiveness" is the main reason for Boeing's recent success.
"Given all that we have accomplished over the past several years to make Boeing more competitive, we would be doing a disservice to every current and future employee, customer, shareholder, and our communities if we agreed to an offer that eroded our ability to compete," Mulally said.
"Accommodating the union positions would have done just that. In the end, it was a bridge too far for our bargaining team and our business plan."