Boeing machinists ratify new contract

09/30/2005

SEATTLE (Reuters) - Boeing Co.’s (BA) commercial jet workers voted on Thursday to ratify a new labor contract that ended a four-week strike, kept intact most benefits and reopened factories for jetliner production.

Eighty percent of unionized workers at Boeing factories in Seattle, Oregon and Kansas voted in favor of the new contract. Some workers said they would return to shifts beginning as early as Thursday night.

The three-year contract increased pensions and preserved health care and other benefits which the company had sought to reduce.

“We want to build airplanes and we to build them under good conditions,” Mark Blondin, president of Machinists Union District 751 told reporters.

The end of the strike came as Boeing is experiencing healthy demand for its jet planes. Orders at the Chicago-based company are likely to overtake European rival Airbus SAS in 2005 for the first time since 2001, although Airbus retains a lead in plane deliveries.

“Our focus now shifts to ensuring a smooth restart of our production system and a return to a steady flow of airplane deliveries to our customers,” Alan Mulally, chief executive of Boeing’s commercial airline unit, said in a statement.

“We have tremendous momentum in the market and a very bright future,” Mulally said.

The strike was the shortest-ever by the machinists, reflecting in part healthy economic conditions for the company, a fact that union leaders recognized.

“With orders coming in, you feel you’ve got a lot of leverage,” Blondin said.

Some analysts had expressed concern that Boeing would be forced to shut down production for months. When a deal was announced earlier this week, they said they were surprised by the quick resolution, after reports the two sides were far apart on issues like pensions, health care and job security.

Union-friendly former Democratic Rep. Richard Gephardt of Missouri helped Boeing in the talks and Boeing’s Mulally participated at the bargaining table.

Under the terms of the contract, Boeing agreed to raise to $70 from $60 the monthly pension multiplier for each year served, a $4 improvement from its previous offer.

The company agreed to retain the health benefits under the previous contract, retreating from a request for higher monthly premiums, as well as co-payments and deductibles.

The company also pulled back from a proposal to eliminate retiree medical benefits for new hires. Employees will receive a “ratification bonus” of 8 percent and lump sum payments of $3,000 in each of the next two years.

Resolution of the strike which began on September 2 is good news for leading Boeing suppliers including Triumph Group Inc. (TGI), Rockwell Collins Inc. (COL), and Goodrich Corp. (GR), some of which had been reducing hours and furloughing workers as a result.