Leaders of Boeing Co.'s Machinists union called for a strike Friday after deciding a proposed labor contract the aerospace company called its "best and final" offer wasn't good enough. They urged members to reject the offer in an upcoming vote.
The Chicago-based company hoped the proposal, which provides added pay and incentives to workers over three years, would help it avert a labor standoff. The talks come as Boeing tries to keep up with a backlog of plane orders and avoid more penalties caused by production delays of its next-generation passenger jet.
A Boeing spokesman said the company was "extremely disappointed" by the union's response. Boeing has about 740 employees in Utah.
The sides have been negotiating over a new three-year contract since May 9, and round-the-clock talks began Aug. 21 at a Seattle airport. In 2005, about 18,400 machinists in the Pacific Northwest and Wichita, Kan., struck for four weeks, forcing the company to halt commercial airplane production. The machinists assemble Boeing's commercial planes and some key components.
The proposal, Boeing's third offer, was delivered to the union Thursday. It would have increased pay by 11 percent on average for more than 27,000 union workers in Washington state, Kansas and Oregon, the company said.
The tentative deal also included a $2,500 bonus for workers if the agreement was ratified by Wednesday, when the current contract expires and a union vote is scheduled.
Boeing said it had withdrawn certain contentious proposals, such as plans to cut early retiree medical coverage and create a new defined-contribution retirement program for future employees.
The union held a preliminary vote to authorize a strike in July. On Wednesday, members are scheduled to cast two ballots: one to accept or reject Boeing's latest offer and another on whether to launch a strike. A simple majority is required to reject the contract, and a two-thirds majority is needed to call a strike, which would trigger a work stoppage at 12:01 a.m. Thursday.
Tim Healy, a Boeing spokesman, said: "We're extremely disappointed that the union is recommending that our employees reject what adds up to the best contract in the aerospace industry."
"We hope our employees recognize the value of this offer," he said. "We encourage them to study it, calculate what it means to them and their families and vote in their best interests on Sept. 3. This is our best and final offer, and that's what it means."
Analysts say a strike could cost Boeing about $100 million per day in deferred revenue. In 2005, Boeing was unable to deliver more than two dozen airplanes as scheduled because of the strike that year.
Boeing's union machinists have walked off the job six times since the labor group was formed in 1935.
Boeing's latest offer followed a counterproposal from the union asking for more money and stronger language about job security.
Besides the proposed wage hikes, the offer included pension increases and a 3 percent cost-of-living adjustment. The added pay and benefits would total an average $34,000 over the life of the three-year contract, according to the company.
The average Boeing machinist earns $27 an hour, or about $56,000 a year, before overtime and incentives.
Scott Hamilton, an analyst with Leeham Cos., said earlier that such bargaining usually continued until seconds before the deadline, but that Boeing had thrown a "Hail Mary pass" five days ahead of time in hopes of appealing directly to union members.
"Boeing is rolling the dice on this, there's no question about that," he said.
From a financial standpoint, Hamilton said, the offer appeared to be "pretty good" for a labor force that hasn't had a wage increase in its past two contracts.
But he believes the union was looking for more perhaps 13 percent rather than 11 percent in wage increases, he said.
The effect of a possible strike would depend on its duration, particularly for Boeing's 737 and 777 production lines, which are running at capacity, with 31 737s and seven 777s produced monthly, Hamilton said.
The union currently represents 25,000 Boeing employees in the Seattle area, around 1,500 in Portland and 750 in Wichita.
Boeing's commercial airplane manufacturing operation, based in the Seattle area, has led a resurgence by the company over the past two years amid heavy orders for the much-awaited and increasingly delayed 787.
But Boeing faces billions of dollars in anticipated additional costs and penalties, with three delays in the 787's delivery schedule that leave it more than a year behind the original schedule.
Airlines, meanwhile, have been struggling with rising fuel costs. Several carriers have posted big losses in recent months and some have been forced to postpone aircraft deliveries.
Shares of Boeing fell 78 cents, or 1.2 percent, to close Friday at $65.56.