The Machinists union says talks with The Boeing Co. have failed and a strike will begin at midnight. Below is the announcement:

The strike will commence at one minute after midnight tonight. This Company disrespected the process, bargained illegally and most of all, disrespected the finest aerospace workers anywhere on the planet by failing to meet your expectations.

Despite meeting late into the night and throughout the day, continued contract talks with the Boeing Company did not address our issues. Armed with your strong strike vote, the IAM Negotiating Committee continues to try and convince the Company to meet our members' demands.

Your Negotiating Committee appreciates the support of all of our members during this interim time period and will appreciate your continued support as we picket the gates of Boeing beginning at 12:01 a.m. Saturday, September 6.

I want to thank the mediation service, who diligently tried to help secure a contract short of a strike to avoid hardships on our members. Unfortunately, those services did not secure an offer.

We are ON STRIKE at 12:01 a.m. tonight.

If this Company wants to talk, they have my number, they can reach me on the picket line.

In Solidarity
Tom Wroblewski

UPDATE:
Scott Carson, CEO of Boeing's jetliner business, who participated in the last-ditch talks in Orlando, Fla., to try and avert a strike, just released this statement:

"Over the past two days, Boeing, the union and the federal mediator worked hard in pursuing good-faith explorations of options that could lead to an agreement. Unfortunately the differences were too great to close," said Scott Carson, president and CEO of Boeing Commercial Airplanes.

The IAM has called for a strike to begin at 12:01 a.m. Saturday, Sept. 6. Boeing operations in Washington, Oregon and Kansas will remain open. Employees who are not represented by the IAM are expected to report for work as normal.

During the work stoppage, Boeing will support its customers and their airplanes in service. The company will continue delivering airplanes that were completed prior to the strike, and will continue providing customers with spare parts. Boeing does not intend to assemble airplanes during the strike.

UPDATE: My story follows:

BY James Wallace
P-I aerospace reporter

Although its order books are full of planes to build for eager customers around the world, The Boeing Co. was shutting down its jetliner production in the Puget Sound area as its biggest union headed for the picket lines Friday night.

It is the fourth strike in two decades against Boeing by the International Association of Machinists and Aerospace Workers, arguably the most powerful manufacturing union left in the U.S.

Some 25,000 Machinists in the Puget Sound area were to strike at 12:01 a.m. Saturday after Boeing and the union could not make a breakthrough on contract talks that had been extended for 48 hours in hopes of averting a strike.

The walkout will halt Boeing's jetliner production for the duration of the strike and further delay the 787 Dreamliner, possibly pushing first flight into next year. And it will likely cost Boeing about $2.8 billion in lost revenue per month, according to an analyst with Merrill Lynch & Co.

Machinists, who on average make about $54,000 a year without overtime, will receive $150 a week in strike pay, but that won't kick in until the third week of the strike.

In 2005, the union walked out for four weeks. Now, it's on strike again. The development came after union leaders on Wednesday night had agreed to extend a strike deadline until midnight Friday. Even though Machinists had voted overwhelmingly to strike, a federal mediator had appealed to both sides to keep talking. Those talks, at a hotel in Orlando, Fla., failed to produce an agreement.

About 3:30 p.m. Friday, Tom Wroblewski, president of the union's local district, announced from Florida that the last-ditch talks had failed.

"This company disrespected the process, bargained illegally and most of all, disrespected the finest aerospace workers anywhere on the planet by failing to meet your expectations," he said in a statement.

He went on to say that "despite meeting late into the night and throughout the day, continued contract talks with the Boeing Company did not address our issues. Armed with your strong strike vote, the IAM Negotiating Committee continues to try and convince the company to meet our members' demands."

He thanked the federal mediator, but said no agreement could be reached.

"If this company wants to talk, they have my number, they can reach me on the picket line," the union president said.

Wroblewski and Mark Blondin, the union's aerospace coordinator and its lead negotiator, were en route back to Seattle Friday night.

One of the key issues that proved a stumbling block in the talks was job security, according to sources. Boeing would not agree what the union wanted, they said.

In an interview Wednesday, before he left for Florida, Wroblewski said Boeing would pay a steep price if a better agreement was not reached.

"When we go out on strike, the price goes up," he said then.

Boeing spokesman Tim Healy said the company is open to more discussions but no new talks are scheduled.

The strike will shut down Boeing's jetliner production at a time when the company has a record backlog of fuel-efficient jets that need to be built for eager customers. After selling more than 1,000 jets each of the last three years, Boeing has a record commercial backlog of $275 billion.

Boeing needs to settle the dispute as quickly as possible, said Scott Hamilton of Leeham Co., a consulting firm in Issaquah outside of Seattle.

"The longer this goes on the more the ripple effect will be and the longer it will take Boeing to recover," he said.

Scott Carson, president and chief executive of Boeing Commercial Airplanes, and Doug Kight, the company's lead negotiator, also were returning to Seattle from Florida after the talks failed.

"Over the past two days, Boeing, the union and the federal mediator worked hard in pursuing good-faith explorations of options that could lead to an agreement. Unfortunately the differences were too great to close," Carson said in a statement.

The company said its operations in Washington, Oregon and Kansas will remain open. Employees who are not represented by the IAM are expected to report for work as normal.
The IAM represents about 2,000 Boeing machinists in Wichita and near Portland.

"During the work stoppage, Boeing will support its customers and their airplanes in service. The company will continue delivering airplanes that were completed prior to the strike, and will continue providing customers with spare parts," Boeing said in a statement. "Boeing does not intend to assemble airplanes during the strike."

Gov. Chris Gregoire said in a statement that she would monitor the situation closely.

"It is unfortunate that Boeing and the IAM could not reach a contract settlement acceptable to both parties. I had hoped that the 48-hour extension would give both parties the opportunity to reach a speedy resolution," she said.

"Boeing and its workforce are a critical part of the health of the state economy. I urge both parties to continue working on a resolution and settle the strike as quickly as possible."

On Wednesday, Wroblewski was cursed and shouted off the stage at the union headquarters when he and Blondin announced the extension.
Hundreds of Machinists had gathered at the union headquarters to hear the vote totals announced and strike speeches delivered, believing they would be on the picket lines at midnight.

The anger and bitterness over that extension has left deep divisions among union members.

"Stupidity is rampant out here," a veteran machinist at the Everett plant said as he left work Friday afternoon and prepared to walk the picket line. He did not want to be quoted by name. Despite the overwhelmingly vote last Wednesday to strike, he said "hot heads" within the union did not give the leadership the kind of support and time needed to possibly reach an agreement with Boeing during the talks in Florida. This machinists had voted to strike, but he supported the move to extend the deadline – even past midnight Friday if it might lead to a better offer.

He said the militant group had circulated a petition by email calling for the removal of Wroblewski.

Other emails from the same group showed the heads of Blondin and Wroblewski superimposed on Disney's Mickey Mouse, this machinist said. The emails began making the rounds shortly after the P-I newspaper first reported late Thursday morning that the secret talks were being held at a Disney hotel in Orlando.

Both sides agreed to the location because the IAM is holding its national convention at the hotel and its international president, Tom Buffenbarger, was already there for the convention. Boeing and the federal mediator wanted Buffenbarger to be part of the talks.

"This is what you get with radicalism," the Everett machinist said of the strike.

Union leaders last week had unanimously recommended that the company's best and final offer be rejected and that a strike be approved.

The Machinists rejected the company's final offer by a wide margin – 80 percent voted against the contract.
And 87 percent voted to strike, well above the two-thirds requirement.

Boeing was hoping to prevent a strike by winning over at least a third of those voting with what the company had called the best labor contract offered any American workers this year.

Boeing had said its final offer would add about $34,000 in compensation for the average Machinist over three years.

In addition to an 11 percent wage increase over three years, Machinists would have received a $2,500 bonus if a majority had approved the contact. They also would have received a lump sum of either $2,500 or 6 percent of their annual wage, with overtime. On average, that would have amounted to $3,900, according to Boeing.

The union was seeking a wage raise of about 13 percent.

The average annual salary of a Machinist is about $54,000 a year, without overtime, but about 4,000 make less than $30,000 a year, according to the union.

Of the 25,000 IAM members in the Puget Sound area, about 13,000 work at the Everett plant, where Boeing builds its widebody jets – the 767, 777, 747 and the new 787. The rest work mostly in Renton, where the popular single-aisle 737 is assembled; in Auburn; and at Boeing's manufacturing plant in Frederickson near Tacoma, where the tail fin of the 787 is made.

A big issue for the union was the use of outside vendors to deliver airplane parts directly to the factory floor – work previously handled by the union until Boeing took that work back in the 2005 contract. The union wanted language in the new contract that would have given it more authority over outsourcing work and more job security for Machinists. Boeing would not agree.

Over the last several years, Boeing has outsourced much of the airplane manufacturing work that it once did. It is now focused more on design and final assembly. The wings and fuselage of the 787 Dreamliner, for example, are manufactured in Italy and Japan and by non-Boeing companies in Wichita and South Carolina. But the program is at least 14 months late, in large part because Boeing's global partners fell way behind schedule with this new production process.

The union demanded much more this time, after what it considered subpar contracts in 2002 and again in 2005. The union's motto during the contract talks was, "It's our time this time."

But Boeing said it could not give the union so much that it would hurt its ability to stay competitive in the industry.

Also, the company faces tough contract talks starting next month with the union that represents its white-collar work force of engineers and technical workers.

That union, SPEEA, will be watching closely what the Machinists eventually get.

"This is a failure of Boeing management," Ray Goforth, SPEEA executive director, said in a statement late Friday. "By forcing this strike, Boeing management has again failed its customers, employees and its shareholders."

While SPEEA contracts require represented employees to report to work as scheduled, President Cynthia Cole urged workers to display signs of support when passing the lines.

"We're standing behind the IAM and supporting their efforts to get a fair and reasonable contract from Boeing," Cole said. "We are seeing the same takeaway attempts from the company. They are coming after us, too."

SPEEA is scheduled to start main table negotiations Oct. 28 for new three-year contracts covering 21,515 employees in the Puget Sound unit.

UPDATE: 6 p.m.

Here is the latest:

By James Wallace
P-I aerospace reporter

With a Friday night strike deadline looming, The Boeing Co. and its largest union were to meet with a federal mediator at a Disney resort in Orlando, Fla., late Thursday in talks that may have been planned secretly over the last several days.

Meanwhile, at plants in Renton and Everett, angry machinists continued to build airplanes.

Scott Carson, head of Boeing's jetliner business, flew to Florida to take part in the talks to prevent a work stoppage by the 28,000-member union that would shut down Boeing's jet-making plants and delay first-flight of the 787 Dreamliner.

In Washington state, Kansas and Oregon, members of the union, who voted overwhelmingly to strike, anxiously awaited word on whether they will be carrying picket signs by Saturday or voting on a new offer.

"Everyone is upset," said a long-time machinist at the Everett plant who asked not to be quoted by name. "They are mad at the company, mad at the offer, even mad at the union leadership. They are as angry as I have ever seen."

There was no word from either the company or the union about the progress of the closed-door talks in Orlando.

Nor was it clear how soon the union could vote on a new offer should one be crafted. Union leaders have vowed the strike will be on at midnight Saturday morning if a deal is not struck.

Connie Kelliher, spokeswoman for the union, said. "It all depends on the results of the talks. We simply don't have any answers at this point."

Neither Boeing nor the union initially would disclose the location of the talks.

But the P-I first reported Thursday afternoon that the parties had left for Orlando, Fla., earlier in the day. They will be meeting at Disney's Coronado Springs Resort, location of the grand lodge convention later this week of the International Association of Machinists and Aerospace Workers. Tom Buffenbarger, international president of the Machinists union, was already there and will be part of the talks.

There was an unconfirmed report Thursday that some angry machinists who build 737 wings at the Renton plant either left work after their shifts started Thursday, or they were asked to go home by the company. But a spokeswoman for the union said she had not heard this report. Boeing did not return a phone call for comment.

But the incident was discussed at a meeting of managers at the Everett plant, sources said. In a memo about "unexcused absences" sent to all its managers, Boeing told them that before "taking any action related to refusal to work, managers should consult with their site employee relations specialist."

Machinists were already angry at Boeing's final offer, but their anger boiled over Wednesday night at the union's district headquarters near Boeing Field. The union's president and its chief negotiator were cursed and shouted down after they announced the current contract would be extended for 48 hours to allow for further negotiations even though the union's membership had just voted overwhelmingly to strike.

That strike would have started at midnight Thursday.

The union voted to reject the company's final offer by 80 percent, and even more – 87 percent – voted to strike, well above the 67 percent required.

Kelliher said Wednesday night that it was the overwhelming rejection of the company's final offer that brought Boeing back to the negotiating table. Boeing said it was asked by a federal mediator to go back to the bargaining table, as was the union.

But sources said the union leadership and the company, through a third party, had already discussed federal mediation long before the vote results were known. Whether there would be additional talks depended on the contract being voted down and a strike called. Gov. Christine Gregoire was also involved, though her role is not clear. The governor's office said she had "reached out" to both sides a few days ago in an effort to avert a strike.

In an e-mail Thursday to Boeing employees, Jim McNerney, the company's chairman and chief executive, said he was disappointed the union rejected Boeing's offer and voted to strike.

"Our negotiations team worked very hard to reach a contract agreement that handsomely rewarded a vital group of employees, ensured continued strong support of our customer commitments, and maintained our long-term competitiveness against a strengthening and growing list of commercial and military competitors," McNerney said.

If a deal is not reached by the end of Friday, the union's leaders have said the strike will be on, starting at midnight Saturday morning.

Also representing the union in the negotiations are Mark Blondin, aerospace coordinator and the lead negotiator in the talks with Boeing on the offer that was rejected, and Tom Wroblewski, president of the local district. Boeing's lead negotiator is Doug Kight.

A strike by 25,000 union members in the Puget Sound area would not only shut down Boeing's jetliner production at a time when the company has a record backlog of fuel-efficient jets to be built for eager customers, but would further delay the first flight of the 787 Dreamliner set for later this year. The union also has some 1,800 members in Wichita, Kan., and another 800 in Portland, Ore.

Union leaders last week unanimously recommended that the company's best and final offer be rejected and that a strike be approved.

Boeing was hoping to prevent a strike by winning over at least a third of those voting with what the company had called the best labor contract offered any American workers this year.

In addition to wages, medical costs and pensions, a key issues for the union is job security. The union wanted language in the new contract that would have given it more authority over outsourcing work and more job security for Machinists. Boeing refused.
But that was before the vote results.

"The rank and file union membership is more aligned with IAM leadership than previously thought, which all but makes certain a strike in the next 48 hours – unless Boeing caves big time,'' Peter Arment, an analyst with American Technology Research in Greenwich, Conn., wrote in a note to clients Thursday.

He added that a strike "will be short lived given Boeing's desperate need not to see the 787 slip even further.''

The union last struck for 28 days in 2005, before the current contract was agreed to. The union would have struck Boeing in 2002 but the strike vote fell just short of the two-thirds needed even though Boeing's final offer that year was rejected.

I have learned from sources that Boeing and the union are meeting secretly at a hotel near Walt Disney World in Orlando, Fla. Below is the story.

BY James Wallace
P-I aerospace reporter

With a 48-hour deadline approaching, representatives of The Boeing Co. and its largest union will soon hunker down in a hotel at Walt Disney World in Orlando, Fla., trying to reach an agreement that would prevent a strike.

Sources said that both sides flew to Orlando early Thursday to continue talks with a federal mediator.

Neither the union nor the company would disclose the location of the talks, but the Seattle P-I confirmed they are taking place at Disney's Coronado Springs Resort. The hotel was selected because it is the location of the grand lodge convention later this week of the International Association of Machinists and Aerospace Workers. Union and company representatives involved in the contract talks are all registered at the hotel.

The two sides agreed to meet after a dramatic showdown Wednesday night at the union's district headquarters near Boeing Field that saw the union's leaders cursed and shouted down when they announced an agreement to keep talking with the company for 48 more hours, even though the union's membership had voted overwhelmingly to strike.

Those taking part in the 11th-hour talks include Tom Buffenbarger, international president of the Machinists union.

Also there for the union are Mark Blondin, aerospace coordinator and the lead negotiator in the talks with Boeing on the offer that was rejected, and Tom Wroblewski, president of the local district.

Boeing's lead negotiator in Orlando is Doug Kight.

In an e-mail Thursday to Boeing employees, Jim McNerney, the company's chairman and chief executive, said he was disappointed the union rejected Boeing's offer and voted to strike.

"Our negotiations team worked very hard to reach a contract agreement that handsomely rewarded a vital group of employees, ensured continued strong support of our customer commitments, and maintained our long-term competitiveness against a strengthening and growing list of commercial and military competitors,'' McNerney said.

He added:

"Clearly, we are committed to doing our best to prevent a work stoppage and the disruption it would cause inside and outside our company. But we will do so ever mindful of our responsibilities to protect our long-term competitiveness, maintain our ability to best serve our customers, and to ensure fairness and equity for all employee groups.''

If a deal is not reached by the end of Friday, the union's leaders have said the strike will be on, starting at midnight Saturday.

It was not clear Thursday what would happen if the two sides are able to agree on an offer that the union's leaders would be willing to recommend. A vote on any new offer could come as soon as Saturday, according to people close to the matter.

The union voted to reject the company's final offer by 80 percent, and even more – 87 percent – voted to strike. That was well above the two-thirds requirement.

A strike by 25,000 union members in the Puget Sound area would not only have shut down Boeing's jetliner production at a time when the company has a record backlog of fuel-efficient jets that need to be built for eager customers, but would have further delayed the first flight of the 787 Dreamliner set for later this year.

Union leaders last week had unanimously recommended that the company's best and final offer be rejected and that a strike be approved.

Boeing was hoping to prevent a strike by winning over at least a third of those voting with what the company had called the best labor contract offered any American workers this year.

One of the big issues for the union is job security. The union wants language in the new contract that would have given it more authority over outsourcing work and more job security for Machinists.

Jim McNerney, Boeing's chairman and chief executive, has sent the following to all Boeing employees regarding the contract talk developments with the Machinists union. There is no further word Thursday morning about how those talks are going.

The union says the company has until midnight Saturday to work out an acceptable contract or the strike is on. (Read my story.)

From Jim McNerney:

Late last night, members of the International Association of Machinists and Aerospace Workers District 751 in Seattle, Portland and Wichita voted to reject a contract offer that we believe ranked not only as the best contract in the aerospace industry, but provided a package of pay and benefits that would be extremely competitive in any leading company in any industry. While union members also voted to go out on strike, Boeing and IAM leaders have agreed to seek the help of a federal mediator to explore whether an agreement can be reached to prevent a strike.

The rejection of the exceptional offer we put on the table is obviously disappointing. Our negotiations team worked very hard to reach a contract agreement that handsomely rewarded a vital group of employees, ensured continued strong support of our customer commitments, and maintained our long-term competitiveness against a strengthening and growing list of commercial and military competitors.

During the mediated talks, Scott Carson, president of Commercial Airplanes, and Doug Kight, Commercial Airplanes vice president of Human Resources, will continue to lead our negotiations team. Clearly, we are committed to doing our best to prevent a work stoppage and the disruption it would cause inside and outside our company. But we will do so ever mindful of our responsibilities to protect our long-term competitiveness, maintain our ability to best serve our customers, and to ensure fairness and equity for all employee groups. Scott, Doug and the team have the full support of senior leadership across the company.

My request to all employees at this time is to continue to respect each other, treat each other professionally, and to keep doing your jobs with the same level of excellence that has earned us our strong global reputation. Please continue working together closely to further improve our efficiency while finding innovative ways to help our customers do their jobs better, too.

Meanwhile, our negotiations team will be working with the federal mediator and IAM leadership in good faith to find a path forward to an agreement that balances the best interests of our employees, our customers, our company and our communities.

Thank you,

Jim

The Machinists union voted 87 percent to strike, but the leadership agreed to extend the contract for 48 hours.

It turned into a nasty scene at union headquarters when the extension was announced. Read our story.

Starting at 5 a.m. Wednesday, some 25,000 Boeing machinists in the Puget Sound area began voting on the company's offer for a new three-year contract. We should know between 8 p.m. and 9 p.m. if they will be on strike, which would halt Boeing's jetliner production and likely further delay the 787.

Here is the story I just filed.

By James Wallace
P-I aerospace reporter

RENTON – With a couple dozen or more horn-honking, engine-revving motorcycles leading the way, followed by a pickup truck with a giant American Flag, hundreds of Machinists who help build The Boeing Co.'s 737 jetliner and perform other jobs for the company marched from the jetliner plant to their union hall here Wednesday morning.

Their mission – to vote on whether to accept or reject a new three-year contract offer from the company.

The union leadership strongly urged the Machinists to reject Boeing's offer and strike.

Many of the machinists wore blue t-shirts with the words "It's our time this time,'' the union's slogan during the talks on a new contract.

They made noise. They carried signs. They raised arms and fists as they marched about a mile to vote before returning to work.

Depending on the vote by the marchers and some 25,000 of their fellow Machinists in the
Puget Sound area, as well as a couple thousand more in Kansas and Oregon, they could be on strike starting at midnight. A strike would essentially shut down Boeing's jetliner production and likely cause further delays on the 787 program.

The voting will end at 6 p.m. in the Puget Sound area and the results should be known by about 8:30 p.m.

"When we go out on strike, the price goes up,'' Tom Wroblewski, president of local District lodge 751 of the International Association of Machinists and Aerospace Workers, said as he stood on a side walk down the street from the plant gate and slapped hands with many of the Machinists as they marched by toward the union hall and the all-important vote.

"They miscalculated,'' Wroblewski said of Boeing.

As the Machinists marched, they chanted, "Union power! Union power!''

Union rules require that a majority of those voting not only reject Boeing's final offer, but that at least two-thirds also vote to strike. Boeing is hoping to prevent a strike by winning over at least a third of those voting with what the company had called the best labor contract offered any American workers this year.

But it was impossible to find anyone in the crowd of marchers who said they would vote to accept the contract and also vote not to strike.

"It's a done deal,'' said Earl Muriekes, 52, who has worked as a machinist for Boeing since 1989. He drove the pickup with the large American flag near the front of the marchers. A union shop steward, Muriekes helps build 737 wings at the Renton plant.

He said one of the Boeing managers in the plant tried to bet with him Tuesday night that at least a third of the machinists would vote not to strike. If that happens, the contract would go into effect by default even if a majority of the Machinists vote it down. That happened in 2002, when Boeing's offer was soundly rejected but 34 percent of the machinists voted not to strike.

Muriekes did not make the bet and told the manager, "You will lose.''

"It's not going to fly,'' he said as he waited at the union hall to vote on the contract.

He's been through several strikes at Boeing. The union struck in 1989, his first year at Boeing, for 48 days.

Boeing and the Machinists union have a long history of bad blood and occasional strikes. The union has struck Boeing six times since 1948. In 1995, a 69-day strike lasted well into December.

The last strike, in 2005, lasted a month before an agreement was reached on the current contract. The four-week strike cost Boeing about $1.5 billion in revenue when it had to push back the delivery of 30 jets. During that strike, Boeing returned to the negotiating table and made several concessions to end the dispute. It raised the monthly pension payment by nearly 17 percent and backed away from several issues that the union had called unacceptable, including one that would have raised the monthly premiums union members pay for their medical coverage.

In 2005, the strike was settled after Boeing improved its final offer.

The stakes are high for both sides this time.

Industry analysts estimate that Boeing could lose as much as $120 million each day the strike lasts as a result of revenue that will be deferred until customers receive planes delayed by the strike. Customers pay most of the money of a new jet upon delivery. The 2005 Machinists strike delayed the delivery of 30 jets. Production rates are much higher now because of the record backlog.

"It would surprise me if we came back before the first of November,'' said one longtime Boeing machinists who did not want to be quoted by name. "The company is dug in and so are we.''

But first, the votes must be counted later tonight.

Guest post by Margaret Santjer, business editor

Leaders of Boeing's Machinists union are urging members to reject the company's best and final offer and vote to strike next week.

P-I reporter Dan Richman has the story here.

UPDATE: 6 p.m.

The union said it could be Friday before it responds to Boeing's final offer. Here's my story.

BY James Wallace
P-I aerospace reporter

Hoping to prevent a second strike of its biggest union in three years, The Boeing Co. on Thursday offered the machinists who assemble its commercial jetliners what the company's lead negotiator called "the best contract offer in America" this year.

The International Association of Machinists and Aerospace Workers was studying the 300-page offer Thursday evening and had not yet said if it would recommend the offer be accepted or rejected by the union's 27,000 members, who will vote Wednesday. A strike would begin just after midnight Thursday and would essentially shut down Boeing's jetliner factories in Renton and Everett.

Connie Kelliher, a spokeswoman for the union, said it could be Friday before the union leadership responds to the offer. "They're still going through it, every detail, line by line," she said.

After more than four months of talks on a new three-year contract, Boeing's offer would raise pension benefit rates by more than 14 percent, the company said, and provide bonuses that could total at least $5,000 for each member, along with a general wage increase of 11 percent over the three years of the contract.

Doug Kight, Boeing's lead labor negotiator, said the "best and final" offer is just that – as good as it will get.

If the contract is approved, he said, Boeing machinists would have the "best contract" in the aerospace industry.

"It's an outstanding economic offer by any measure," he told reporters at an afternoon news conference at the Doubletree Hotel across from Sea-Tac Airport, where his labor team and the union's leaders have been meeting around the clock for a week to try to reach a new labor accord. He said it was good for employees and would also allow Boeing to remain competitive.

"This is, as we told the union leadership this morning, our best shot," Kight said. "It is our best and final offer and one that we are very proud of."

On the shop floor in Everett, one longtime machinist said the general reaction to the offer was negative.

"If you are flipping burgers at McDonald's, you would call this a great offer," said the worker, who did not want to be quoted by name. "But for a company that has made $13 billion in profits the last few years, this is not a generous offer."

On average, a Machinist makes a base wage of about $27 an hour, or about $56,000 a year without overtime, according to Boeing.

Kight said the offer had the backing of Boeing's board, Chairman and Chief Executive Jim McNerney and his leadership team in Chicago, as well as Scott Carson, head of Boeing Commercial Airplanes, and his leadership team in Seattle.

"We have thought long and hard about its content," Kight said when asked if the offer might be improved later in the event of a strike.

In 2005, when the union last struck Boeing before agreeing to the current contract, the company eventually made a better offer to settle the dispute.

"We have listened very, very carefully to the union leadership. 5 We have listened to our employees," Kight said. "This has been carefully, carefully thought through. 5 We are all together. We are all aligned. This is our best and final offer. We are giving it our best shot."

District Lodge 751 of the IAM Workers represents about 25,000 Boeing employees in the Seattle area, some 1,800 in Wichita, Kan., and 800 in Portland.

The union had made it clear that it wanted much more this time, after what it considered subpar contracts in 2002 and again in 2005. The union's motto during the contract talks was, "It's our time this time."

Tom Wroblewski, president of the local district of the Machinists union, was not immediately available for comment on Boeing's final offer.

"We have the leverage now that the company had in 2002 and in 2005, and we are going to use it," Mark Blondin, lead negotiator for the union, had told the Seattle P-I in a recent interview. Blondin, now aerospace coordinator for the national IAM, had Wroblewski's job during the 2002 and 2005 contract talks.

Blondin said it was "payback time" for the union this time around.

"They are going to have to pay up to get an agreement from this membership. A lot of our members have it in their gut that it's payback time."

Even if a majority of the union members reject Boeing's final offer, it does not mean there will be a strike. The only way a strike can be called is if a majority of union members vote to reject Boeing's final offer Wednesday, and then, on a separate ballot, at least 66 2/3 percent vote to go on strike.

In 2002, Boeing's final offer was rejected by about 62 percent, but the union could not muster the two-thirds vote required for a strike and the contract took effect by default.

If more than a third of the union members who vote on Boeing's final offer this time don't approve a strike, the contract will also take effect by default.

Union leaders have accused the company of just such a strategy. In a recent statement on its Web site, the union had this to say:

"Remember, thanks to you, they (Boeing) have made 13 billion dollars recently and have plenty of cash on hand. They may attempt to throw just enough of this money at the contract to appeal to just one third of the membership."

Kight said it would be deeply disappointing if the union rejected the final offer.

He urged employees to study the proposal over the long Labor Day weekend, and to talk about it with their family, friends and co-workers and then to vote "in their own best interests."

"We believe this is the best contract offer in America this year," he told reporters at the Doubletree news conference. "We believe it will probably be the best contract offer in America next year and maybe the year after."

Boeing and the Machinists union kicked off negotiations May 9 on the new labor accord, with the union saying it wanted its members to have a bigger share of the company's profits, which have soared along with Boeing's jetliner backlog.

The company's final offer came after a week of around-the-clock talks on the always tough economic issues began at the Doubletree Hotel. The company had said when the hotel talks started that it wanted to have its final offer ready before the start of the long Labor Day weekend so that union members would have enough time to study the proposal carefully.

On average, according to Boeing, the offer would provide employees with $34,000 in additional pay over the three years of the contract. That's up from $24,000 in the company's initial offer made last week.

Other highlights:
--Workers would receive a general wage increase of 11 percent over three years, up from 6.5 percent in the company's initial offer and 9 percent in a revised offer.
--The pension rate would be increased to $80 a month for each year of service. That's up from $70 a month in the current contract and up from $78 in the revised offer.
--Workers could receive a bonus of at least $5,000 if the contract is approved by Sept. 3. This would come in the form of two payouts: A lump sum payment of 6 percent of the worker's annual wage, including overtime, or $2,500 – whichever is greater; a "ratification bonus" of $2,500 would be paid if the contract is approved by Sept. 3. But Kight said the ratification bonus will only be paid if at least 50 percent of the union's members vote to approve the contract Wednesday. If the contract is turned down, but the vote to strike falls short, the bonus would not be paid, he said.
--Boeing said it had withdrawn a remaining proposal that the union had described as a "deal breaker." This would have discontinued early retiree medical benefits for persons hired after Jan. 1, 2010.
-- Union members would, for the first time, receive an incentive pay plan. They could earn up to 20 extra days of pay a year. Boeing said it would continue to develop specific details of the pay plan in talks with the IAM. The first potential payout of the plan would be in the 3rd year of the contract.
--The minimum pay rate for Machinists would be raised $2.28 an hour, effective Sept. 5.
Even before the final offer, Boeing had withdrawn three other proposals that the union had said would result in a strike. Boeing had sought to switch retirement plans for new hires to one based on benefits from a 401(k) plan. It also wanted to negotiate a separate agreement with the IAM's members in Wichita. Boeing had also proposed a change in the current contract that would have allowed it to outsource work from its facilities maintenance.

Boeing and its Machinists have a long history of bad blood and occasional strikes. The union has struck Boeing six times since 1948. A strike in 1989 lasted 48 days. In 1995, a 69-day strike lasted well into December. The last strike in 2005 lasted a month before an agreement was reached on the current contract. The four-week strike cost Boeing about $1.5 billion in revenue when it had to push back the delivery of 30 jets. During that strike, Boeing returned to the negotiating table and made several concessions to end the dispute. It raised the monthly pension payment by nearly 17 percent and backed away from several issues that the union had called unacceptable, including one that would have raised the monthly premiums union members pay for their medical coverage.

In a note to clients Thursday, industry analyst Peter Jacobs of Seattle-based Ragen MacKenzie said a strike would likely not have a long-term impact on Boeing's stock price.

"From a long-term perspective, work stoppages have not had a material impact on the stock price or Boeing's earnings power, although clearly a strike would interrupt aircraft deliveries and the near-term earnings outlook. In the past, investors have typically overlooked the near-term financial implications."

But he went on to say that a strike "would further delay the production and first flight of the 787 (scheduled for later this year), which would clearly be a negative. Perhaps partially offsetting that would be some additional breathing room for suppliers to catch up on behind-schedule work. The company would not incur additional financial penalties for delays caused by a strike."

Although Boeing typically would have to make a penalty payment to a customer for delivering a plane late, that's not the case if the delivery delay is caused by a strike.

Howard Rubel, an analyst with Jefferies & Co. in New York, estimated a strike would cost Boeing about $120 million a day in deferred revenue.

Peter Arment, an analyst with American Technology Research Inc., put the figure at about $100 million per day in deferred revenue because of delays in delivering jetliners. Customers pay most of the costs of a new jet when the plane is delivered.

When the same union struck Boeing for a month in 2005, before the current contract was settled, Boeing pushed back the delivery of 30 jets – a $1.5 billion hit.

But this time, there is more on the line for Boeing than just a slip in delivery schedules.
Its production would be stopped when it has a record backlog of planes that need to be built. A strike would likely delay the first flight of the company's new 787 Dreamliner. That flight is supposed to happen in the fourth quarter, probably in November.

Any strike of more than a week or two would likely mean that maiden flight would not take place until next year.

The 787 program is already 14 months behind schedule and any delay in the test flight program could have a ripple effect and possibly result in further 787 delivery delays, which already stretch more than two years for many customers.

ON THE WEB
For more on Boeing's offer, see boeing.com/2008negotiations.
For the union's response, see iam751.org/contract08.htm.

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Below is my initial post from earlier today.

The Machinists union just announced, shortly before 11 a.m. Thursday, that Boeing has made its best and final offer on a new three-year contract.

The union "is currently reviewing it line by line to see ALL
changes and how they impact our members. We will be making a statement later today,'' the union said in a statement.

Boeing upped the general wage hike from 9 percent in a revised offer to 11 percent over three years in the final offer. It will also give a cost-of-living adjustment that it says would amount to about 3 percent more.

Union members would receive a lump sum payment of 6 percent of their annual pay or $2,500 -- whichever is greater. In addition, workers would receive a "ratification bonus" of $2,500 if the contract is approved on or before Sept. 3.

The monthly pension rate would be increased to $80 a month for each year of service.

On average, according to Boeing, the offer would provide employees with $34,000 in additional pay over three years.

Boeing said it had backed off issues the union had said it would strike over, incuding a plan to eliminate early retiree medical for persons hired after Jan. 1, 2010.

The union will vote on the contract Sept. 3. Depending on that vote, a strike could begin just after midnight next Thursday. It would require that two-thirds of those voting on the contract also vote to go on strike.

I'll have details throughout the day as they break.

HIGHLIGHTS of the company's final offer.

Continue reading to see Boeing's news release below.

continue reading

Alaska Airlines plans a special media event at Sea-Tac airport Thursday to officially retire the last of its MD-80 jets. They made the final passenger flights this past weekend.

To mark the occasion, and its commitment to Boeing, one of Alaska's 737-800s will be unveiled Thursday in the Boeing livery that was first designed for the 787. The jet has Alaska's trademark logo of a native Alaskan on the tail fin.

The below picture of the 737-800 with its special paint job was taken by Andrew Sieber, who has an aviation photo Web site. His photo was taken of the plane last week at Boeing Field.

For my aerospace notebook, I wrote about the end of Alaska's MD-80 and of the father and daughter pilot team who flew them.

To see the story, continue reading below. (The PI photo will be posted with my story online.)

continue reading

Boeing made a revised offer Tuesday morning to the Machinists union, which called the company's first offer "insulting.''

Read the offer here.>

In a major concession to the union, Boeing withdrew its proposal to change the traditional retirement plan for new hires to one based on a 401(k) plan. The union had said this was a strike issue. But the latest offer still would stop offering early retirement medical coverage for persons hired after Jan. 1, 2010. The union has said this is also a strike issue.

The latest offer would give Machinists a general wage hike of 9 percent over the three years of the contract -- that 's up from 6.5 percent in the company's initial offer.

The basic benefit pension would be raised to $78 per month for each year of credited service.

Rather than a $2,500 lump sum bonus when the contract is signed, the new offer would pay a bonus of 5 percent based on gross pay earned between Aug. 31, 2007, and Sept. 4, 2008. The average wage of a Machinist in the Puget Sound area is about $56,000 a year, so the average bonus would be around $2,800.

In a statement, the company said:

Since presenting our first offer, we've spent a great deal of time meeting with the IAM to focus on their contract priorities. We have made substantial movement in pay, pension and health care. We've withdrawn key proposals that were important to the company but of concern to the union. We have been negotiating for more than four months, we've had a thorough discussion of all of the issues, and we are near the point of presenting a best and final offer that rewards Boeing employees for their great work while allowing the company to sustain our success in the future.

The union was told that Boeing's latest offer would be "close" to the best and final offer that the company has said it plans to put on the table before the start of the upcoming Labor Day weekend, which means it could come either Thursday or Friday. The union will vote on that final offer Sept. 3, and depending on the outcome, a strike could begin just after midnight Sept. 4.

A response to the company's latest offer will be coming later today, and will be available for reading at the IAM Web site.

UPDATE: Since the 5 percent bonus is based on the annual wage plus OT, Boeing says the average signing bonus will total about $3,300.

UPDATE2:
3 p.m.

The union just issued the below statement, saying there are still "deal breakers" in the latest company offer.

"The company needs to get serious about these issues or they are going to have a work stoppage on their hands,'' the union said in its statement.

On the Company's Latest Proposal

The fact is Boeing should not have brought ANY takeaway offers to the table during this round of bargaining given their record profits and backlogs. While we acknowledge the Company pulled the proposal to carve the Wichita unit out of the agreement and to eliminate guaranteed pensions for future hires, these should never have been on the table to begin with.

There are still deal breakers on the table – eliminating retiree medical for future hires and rehires who have been gone longer than 6 years and zero improvements on job security.

Boeing is touting a big move for pulling back two takeaways. The end result of pulling those two proposals was a zero increase or benefit for workers. The starting point for this round of contract bargaining is the current 2005 agreement; it should not have begun with regressive bargaining in the first place.

The remainder of Boeing's proposal is still far below the expectations of our members.

Job Security
Despite strong messages at every bargaining session that job security is a top issue, Boeing continues to ignore job security proposals. We surveyed thousands of our members over the past 24 hours and a resounding 90% said they would strike for improvements in the Articles and Letters of Understanding covering our members' job security.

The survey pointed out this issue has many facets:

LOU 2 Facilities Maintenance Subcontracting – These are the members who take care of the Company's buildings and machinery (such as electricians, carpenters, millwrights, plumbers, factory service etc.) As these members retire they are not being replaced. Ironically, the Company then claims they do not have enough people to do the work and must subcontract the work.

LOU 37 Material Delivery Process – The Company currently outsources some material delivery to vendors who deliver parts to the airplane inside Boeing factories. This affects many members in jobs such as stores, QA, forklift drivers and the rest of our MPRF's.

Article 21.7 Subcontracting – covers ALL other work done inside the company. Although we have site reps for each location to offer up alternatives, the company watered down this language in the 2002 and 2005 contract.

Tooling subcontracting – The company is claiming tooling is part of 21.7 but per this Article, if work is considered "emergent", it is not eligible for an alternative proposal and can be subcontracted immediately.

The Company needs to get serious about these issues or they are going to have a work stoppage on their hands.

WAGES: Aerospace industry trends have consistently offered between 9 to 13% for wage increases over a three-year agreement. Considering Boeing's profits and the fact that we haven't had a wage increase since 2004, our members expect to be at the top of this trend.

HEALTH CARE: On health care, they are still looking to shift additional costs to members in the form of monthly premiums. While they talk about minor improvements, they fail to mention the many additional out-of-pocket expenses our members will pay in addition to the increased monthly premiums. These expenses include increased deductibles on TMP, higher office visit co-pays, a new $250 hospital inpatient confinement copay for those choosing Selections or Group Health. In addition, they introduced a mandatory generic prescription drug program. Even if the treating physician prescribes the name brand formulary drug for health purposes, you will still pay the difference from the generic co-pay to the brand name drug cost.

PENSIONS: The pension increase of $8 is less than the increases received in the past. Keep in mind not one penny was put into our pension plan in the last year reported (2006), yet $522 million was put in the Executive Plan. Our members also expect improvements in the alternate formula

INCENTIVE PLAN:
Rather than including us in the existing Employee Incentive Plan that regularly pays out, Boeing's new proposal eliminates one year of potential payout AND you must ACHIEVE the as yet undetermined goals to get ANY payout. Boeing's previous proposal would have paid out at varying levels - for below, at and above target metrics. The Union remains adamant this must have guaranteed, negotiated metrics before you vote. At this point, it is still a zero dollar value to our members and could remain that way.

There are no meaningful changes or improvements for any additional paid leave such as vacation, sick leave, holidays, bereavements.

The Union will be working through the night and will present a full counter proposal to the Company Wednesday.

Keep up the great work, but it's time to turn up the volume on the messages your sending on the shop floor. The Company is still not listening, but with your help we can make them listen. It's Our Time This Time!

In Solidarity,
Your Union Negotiating Team

UPDATE3:

Below is my story

BY James Wallace
P-I aerospace reporter

The Boeing Co. sweetened its offer to the Machinists union Tuesday, but it was quickly rejected with a warning that time is running out to avoid a costly strike that would shut down Boeing's jetliner factories in the Puget Sound area, possibly delay the critical first flight of the 787 Dreamliner and put about 27,000 employees on picket lines.

"The company needs to get serious about these issues or they are going to have a work stoppage on their hands," the union said in a statement a few hours after Boeing made its revised offer that included a bigger wage hike, better pension benefits and also removed two key issues that the union had said would result in a certain strike.

But the Machinists union said there are "still deal breakers on the table." It planned to present Boeing with a counter proposal Wednesday morning.
Boeing has said it will make its best and final offer before the start of the long Labor Day weekend, which will give union members time to carefully consider the contract before they vote Sept. 3. A strike would begin shortly after midnight the next day.

People familiar with the company's thinking said that final offer is likely to be made Thursday.

They also said the revised company offer Tuesday was "close" to what the final offer will be.

Boeing offered the union a three-year contract that it said will earn machinists an additional $28,000 over the life of the agreement, from higher wages and a first-ever incentive pay plan for the union. That compares with an estimated $24,000 in the first offer the company made late last week.

The general wage increase was upped from 6.5 percent in the first offer to 9 percent over three years in the latest offer.

The basic pension rate was increased to $78 a month for each year of service, up from $75 in the initial offer and $70 now.

Union members would receive a 5 percent bonus, based on their annual salary plus overtime, when the contract is signed. Boeing said a machinist making the average yearly wage of about $56,000 would receive a bonus of about $3,300.

In the revised offer, Boeing dropped one of its key issues – switching retirement plans for new hires to one based on benefits from a 401(k) plan. But the revised offer would still eliminate early retiree medical benefits for new hires – an issue the union has said it will strike over.

Boeing also dropped a proposal in its first offer that would have allowed the company to outsource work from its facilities maintenance. The union had called this a "deal breaker."

The company said it listened to the union and its latest offer was a very good one. It said the pension rate hike to $78 a month for each year of credited service would be the best in the aerospace industry.

"Since presenting our first offer, we've spent a great deal of time meeting with the IAM to focus on their contract priorities," Boeing said in a statement. "We have made substantial movement in pay, pension and health care. We've withdrawn key proposals that were important to the company but of concern to the union. We have been negotiating for more than four months, we've had a thorough discussion of all of the issues, and we are near the point of presenting a best and final offer that rewards Boeing employees for their great work while allowing the company to sustain our success in the future."

But the latest offer fell way short of what union leaders said they need to see to prevent a strike.

The union said the 9 percent wage hike is too little for a company that made $13 billion in profits over the last several years and which has not rewarded its machinists with a general wage increase since 2004.

It also said eliminating medical benefits for new hires who retire early remains a "deal breaker."

The lack of job security in the revised offer is also a deal breaker, the union said.

And Boeing is still shifting too much of the cost of health care to its members, the union said.

"The company is still not listening," the union said in its statement.

A strike would shut down Boeing's jetliner factories in Renton and in Everett at a time when Boeing is increasing production after three years of booking record orders. A strike would also further delay its 787 Dreamliner. The first flight of the 787, which was to have taken place by September 2007, has been delayed until the fourth quarter, probably in November.

A further slip in the 787 test flight program could mean additional delivery delays, which already stretch more than two years for many unhappy customers.

District Lodge 751 of the International Association of Machinists and Aerospace Workers represents about 25,000 Boeing employees in the Seattle area, some 1,800 in Wichita, Kan., and 800 in Portland.

The Machinists union has struck Boeing six times since 1948.

In 2002, union members rejected Boeing's final offer but could not muster the 66 percent approval needed for a strike. In 2005, the union walked. The four-week strike cost Boeing about $1.5 billion in revenue when it had to push back the delivery of 30 jets.

For more on the company's offer, see Boeing's Web site: boeing.com/2008negotiations .
For the union's response, see the IAM's Web site: http://www.iam751.org/contract08.htm

The Boeing Co. made its first full offer on key economic issues to the Machinists union Friday, providing for an increase in pensions and a general wage increase for each year of a new three-year contract.

"This offer reflects our commitment to rewarding employees for contributing to the company's success while addressing head on the challenges we face in managing long-term costs so that we can continue providing great pay and benefits," Boeing said in a statement. "When the company succeeds we all succeed.''

But the union has already said it will not accept several elements contained in the initial offer, including a change in benefits for new hires that would replace the traditional pension plan with a 401(k) plan. The union says this is a strike issue.

The company said its proposal would provide about $24,000 in additional wages and incentive payments over the three-year agreement.

These are the main points of Boeing's offer:

The Boeing Co. says it needs at least six months to submit a new tanker bid. And it may pull out of the tanker competition if the Pentagon insists on awarding the tanker contract by the end of the year.

Boeing's threat was sounded by Jim Albaugh, chief executive of Boeing's military business, in an interview with the Wall Street Journal.

Albaugh told the paper Thursday that Boeing has carefully studied the latest requirements and decided that its 767-200 tanker does not carry enough gas to meet the new requirements.

The Pentagon has said it expects to issue a final RFP (request for proposals) for a new Air Force tanker next week, perhaps as early as Monday.

"I think the option we would have if we were not given the six months, there is a really high likelihood that we would no-bid the program," Albaugh told the paper.

According to people familiar with the situation, the government is leaning toward adding another 15 days for Boeing and rival Northrop Grumman Corp. to respond to the latest request for proposals, giving the competitors a total of 60 days to submit a new bid. Because Boeing would have to figure out how to convert a larger airplane into a flying gas station, the Chicago aerospace company said it needs an additional four months to prepare a competitive proposal.

"This is an airplane that's going to be in the inventory 40 years," said Mr. Albaugh. "What we're asking for is an additional 4 months to have a meaningful competition."

continue reading

Boeing and its Machinists union began around-the-clock talks Thursday that will determine if the union walks out on Sept. 4, further delaying the 787 program and stopping production of the company's other jets.

Below is my story that will be posted soon.

BY James Wallace
P-I aerospace reporter

Tom Wroblewski, president of the local district of the Machinists union, did not mince words when he was asked to describe The Boeing Co.'s latest incentive pay plan for the union's 27,000 members, most of them in the Puget Sound area.

Boeing publicly released details of the incentive plan earlier this week.

"It's a crock,'' Wroblewski said.

Tough talk. But his words cut to the heart of just how far apart Boeing and its powerful union are as the two sides begin a final push to try and reach a new three-year contract – and avert a costly strike that will shut down Boeing's jetliner factories in Renton and in Everett at a time when Boeing is increasing production after three years of record orders.

And a strike would further delay its 787 Dreamliner.

The first flight of the 787, which was to have taken place by September of last year, has been delayed until the fourth quarter, probably in November. A further slip in the 787 test flight program could mean additional delivery delays, which already stretch more than two years for many unhappy customers.

"Any strike lasting more than a week and you can kiss first flight this year good bye,'' said Scott Hamilton of Leeham Co., a consulting group.

Harry Nourse, an analyst with Bank of America Securities, puts the odds of a strike at around 70 percent.

Not a bad prediction, given that the union has been talking tough about getting some "pay back" for the last two contracts in 2002 and 2005 that did not go down very well with the rank and file.

Mark Blondin had Wroblewski's job in 2002 and in 2005, when the last two contracts were negotiated. In 2002, union members rejected Boeing's final offer but could not muster the 66 percent approval needed for a strike. In 2005, the union walked. The four-week strike cost Boeing about $1.5 billion in revenue when it had to push back the delivery of 30 jets – 21 from September 2005 during the strike and nine more from the fourth quarter.

This time around, Blondin is aerospace coordinator for the International Association of Machinists and Aerospace Workers, or IAM. He is the union's top negotiator in the current contract talks with Boeing.

"We have the leverage now that the company had in 2002 and in 2005, and we are going to use it,'' Blondin said in a recent interview with the P-I newspaper. "They are going to have to pay up to get an agreement from this membership. A lot of our members have it in their gut that it's payback time.''

The Machinists union has struck Boeing six times since 1948.

District Lodge 751 represents about 25,000 Boeing employees in the Seattle area, around 1,800 in Wichita and 800 in Portland. The average Boeing machinist earns $27 an hour or about $56,000 a year. That's without overtime.

Although the company maintains that "good progress" has been made in contract talks that began in early May, it has come down to this: The two sides checked in to the Sea-Tac Doubletree Inn Thursday, where they will remain until Boeing drops its best and final offer, probably by the end of next week. The union is already predicting a strike if the company does not "get serious'' and share in the more than $10 billion in profits Boeing has made since 2004.

The Machinists union will vote on Boeing's final offer Sept. 3. Depending on that vote, a strike would begin just after midnight Sept. 4, when the current contract ends.

"This company is acting like a company that is in bankruptcy,'' Wroblewski said in an interview before checking in to the hotel for the around-the-clock bargaining sessions. "The company needs to get serious and come forward with serious proposals and not just talk.''

Boeing is likely to make early proposals on key economic issues, including more money for pensions and a general wage hike for each year of the contract.

"We have about a week. That's not much time to dance around the issues,'' said Doug Kight, Boeing's chief labor negotiator.

Agreement has already been reached on about half the contract, he said. But what remains are the tough economic issues such as compensation, pensions and medical.

"We will get down to the numbers pretty quick,'' Kight said in an interview.

The union's members have not had a general wage hike, other than a cost-of-living increase, since 2004. "We appreciate that,'' Kight said. "We will have good conversations with the union about that this next week.''

One of the big battles to be fought in the coming days will be over Boeing's proposal to have an "enhanced" 401(k) plan that would replace a defined benefit plan for new hires.

The union rejected such a pension change during the 2005 contract talks and will do so again, Wroblewski said. Kight said that other unions have agreed to similar contract changes and that Boeing's plan would be of greater value to the new workers.

"This is a key issue for us,'' Kight said. "Those reasons are not going to change.''

For Boeing, it must weigh the consequences of a strike against holding the line on mounting pension and health insurance costs.

Boeing and the IAM exchanged their preliminary proposals about 45 days earlier than in the past. This was to give the negotiating process more time.
Given the early start, Wroblewski said he was "disappointed" that more progress has not been made heading into the final round of talks at the Doubletree Inn.

"The company has had record profits and a huge backlog,'' he said. "It's our time to make improvements.''

He's sounding the union's negotiating theme for 2008: "It's our time this time.''

Asked about Wroblewski's remarks that he thought there would be more progress by this point, Kight had this to say: "It takes two to tango.''

That tango officially began Thursday at the Doubletree Inn, where the union has called for a huge rally of its members starting at 12:30 p.m. Sunday. It's billed as a "final countdown" to what will either be the union's second strike in three years… or a new labor accord that both sides agree will be tough to reach in the time that remains.

Emirates 777-300ER. Boeing photo.

It's a long way from Dubai, but if you see an Emirates 777-300ER flying low and slow over the TPC Snoqualmie Ridge golf course just east of Seattle Friday around noon, it's not because Emirates has added Seattle to its destinations. The jet is there to officially start play of the Boeing-sponsored Champions Tour event. The 777-300ER will be delivered to the airline after Friday's flight.

Emirates has ordered 40 of the 777-300ERs. Nine have been delivered, not including the one that heads to Dubai after its golf course fly-over.

I wrote this feature on the retiring Boeing test pilot, Jim Metcalfe, who will be flying the 777-300ER Friday.

Jim Metcalfe in cockpit of 777-300ER. Boeing photo.

Although the Pentagon was expected to issue its final tanker request for proposals this week, a spokesman now says it is more likely to be next week.

"We are still talking to the companies about the draft," Pentagon spokesman Bryan Whitman told reporters Wednesday. He said the "current projection" is for the final bid request to be issued next week, according to a report from Bloomberg News.

The Boeing Co. is vying with a team of Northrop Grumman Corp. and EADS to build 179 aerial refueling tankers for the Air Force. Northrop initially won the contract, but Boeing protested, and the GAO found errors in the competition.

Boeing and Northrop met separately Wednesday with Pentagon officials to talk about the drfat RFP. It was the third such meeting.

Boeing said it will wait to see the final RFP before deciding on a course of action. Options include another protest, which the GAO would consider. This would delay the tanker competition into a new administration. Or Boeing could drop out and not bid. If it stays and competes, Boeing must decide whether to stick with its smaller 767-200 tanker or offer the bigger 767-400 or even the huge 777.

It is getting close to crunch time for Boeing and its powerful Machinists union. The two sides will retire to an airport hotel next Thursday to try to work out a new contract and avert a posisble strike that would halt Boeing's jetliner production and further delay the 787.

This is a story I wrote that will be posted online shortly.

BY James Wallace
P-I aerospace reporter

A week before The Boeing Co. and leaders of its Machinists union hunker down in a SeaTac hotel to try to hammer out the tough economic details of a new three-year labor contract, both sides held contrasting events in the Everett jetliner plant Wednesday.

A strike, which union leaders have said is likely if the company's position on certain economic issues does not change, would shut down jetliner production at the Everett plant, as well as in Renton, where Boeing's 737 is assembled.

In the morning, an estimated 2,000 or more machinists paraded through the Everett factory starting at the 787 production line. They made their way past the 777 and 747 assembly lines before exiting the factory near the 767 line. They held signs and made noise as they marched – and made sure the company gets the union's message that "It's our time this time.''

A few hours later, in a speech from the same plant to some 6,500 Boeing managers who gathered at a dozen company locations in Washington and in Oregon, Scott Carson, chief executive of Boeing's jetliner business, said the company will put a good and fair offer on the table, according to a Boeing spokesman. Media were not allowed to listen to Carson's brief speech.

Carson, along with Doug Kight, Boeing's top labor negotiator, also told managers the company will present its best and final offer to the union by the Friday before the long Labor Day weekend to give employees extra time to study the proposal over the holiday weekend, said Tim Healy, Boeing's labor spokesman.

Carson spoke for about five minutes and then he and Kight took questions for about 20 minutes, Healy said.

Managers were told to talk to their employees about the key issues, and to advise their employees that when it is time to vote on the company's final offer, to make sure they vote in their own best interest, Healy said.

In response to one question, Carson and Kight made it clear that Boeing will not improve on its best and final offer if there is a strike, according to Healy

The Machinists union will vote on the final offer on Sept. 3. Depending on that vote, a strike would begin just after midnight Sept. 4.

Union leaders have said over the last several weeks that talks with Boeing have not gone well and have warned of a possible strike.

One Boeing machinist who took part in the march through the Everett factory said the union's burn barrels will be taken out of storage in the next day or two. Those barrels are used on picket lines to keep workers warm if there is a strike.

A strike would not only cripple Boeing's jetliner production in the Puget Sound area, but would further delay the 787 Dreamliner, which is already some 14 months or more behind schedule. The plane's first flight is expected in the fourth quarter. A strike would also stop work on other 787s in production at the Everett plant that will be needed as part of the 787 test flight program.

Boeing has said it hopes to hammer out an agreement on all of the noneconomic issues by Aug. 21, when both sides will pack their bags and take rooms at the SeaTac Doubletree Inn for the final round of talks on the remaining economic issues. They will not leave the hotel until Boeing makes its best and final offer.

Boeing and the Machinists union kicked off negotiations May 9 on the new labor accord, with the union saying it wants its 27,000 members to have a bigger share of the company's profits, which have soared along with Boeing's jetliner backlog.

The Machinists union has struck Boeing six times since 1948, the most recent a monthlong walkout before the current contract was reached in 2005.

In 2002, union members rejected Boeing's final offer but could not muster the 66 percent approval needed for a strike.

Last month, thousands of Boeing machinists who assemble the company's jetliners met at KeyArena in Seattle and voted by about 99 percent to authorize their union to strike if a new labor contract can't be reached. Union leaders are demanding a much bigger share of the company's success of the past three years.

As is always the case, wages, medical benefits and pensions are key issues. The union is seeking a general wage increase for every year of the contract. One of the biggest battles is over Boeing's proposal to have an "enhanced" 401(k) plan that would replace a defined benefit plan for new hires.

The union's motto during contract talks is: "It's our time this time.''

"It's payback time,'' one union leader, Mark Blondin, recently told the P-I. He is the union's lead negotiator.

Blondin said the union will hold firm on pensions and medical benefits and a good wage increase for each year of the contract.

"We have the leverage now that the company had in 2002 and in 2005," he said in last month's interview. "And we are going to use it. They are going to have to pay up to get an agreement from this membership. A lot of our members have it in their gut that it's payback time."

Boeing must also negotiate a new labor contract with the Society of Professional Engineering Employees in Aerospace (SPEEA), the union that represents Boeing engineers and technical workers. The current SPEEA contract ends in early December.