- The Washington Times - Tuesday, September 9, 2008

SEATTLE — Boeing Co. machinists striking over job security and compensation Monday may be walking the picket lines for more than a month, if history and industry analysts prove any guide.

Members of the Chicago-based plane maker’s largest union, the International Association of Machinists and Aerospace Workers, have stopped work during three of the past six contracts. Those strikes lasted four to 10 weeks. This one started Saturday.

“I would expect this one’s going to be long,” said Scott Hamilton, founder of Seattle-based aviation consultancy Leeham Co. who has been following Boeing for 20 years. “There are some pretty serious issues that they’re pretty far apart on.”

The union’s 27,000 members in Washington, home to Boeing’s Seattle-area manufacturing hub, Kansas and Oregon are using the leverage of a record order backlog and the tight timetable of Boeing’s delayed 787 Dreamliner in an effort to gain a sweetened deal from the plane maker. The company still needs to make about 40 jets a month to meet its 2008 deliveries forecast, and it had planned to test the Dreamliner in flight in November in order to start shipments in next year’s third quarter.

Boeing, which trails only Airbus SAS in commercial plane making, last week said a protracted strike would keep the 787, its most successful new plane based on orders, from flying this year. Airlines have been counting on newer, more fuel-efficient aircraft to help them overcome record oil prices, and Airbus, a unit of European Aeronautic, Defence & Space Co. based in Toulouse, France, has bested Boeing in deliveries since 2003.

The strike led aircraft components maker Spirit AeroSystems Holdings Inc. to withdraw its previous 2008 financial forecast Monday and to reduce production volumes on some Boeing products. Some employees at the Wichita, Kan.-based company will work a reduced week, the company said. Spirit makes parts including the 787’s nose section.

“We know the strike is disappointing customers and it’s not good for the company or employees,” Boeing spokesman Tim Healy said. “No one benefits from a strike.”

A monthlong strike would shave 31 cents a share off Boeing’s earnings and cost $2.8 billion in lost revenue, Merrill Lynch & Co. analyst Ronald Epstein of New York estimates. The last machinists’ walkout, for 28 days in 2005, reduced Boeing’s second-half profit by $300 million. Boeing was forecast to earn $5.81 a share this year, the average of 20 estimates in a Bloomberg analyst survey.

Boeing offered the employees who make parts and assemble planes a package including an 11 percent raise over three years, bonuses and a 14 percent gain in pension payments. The proposal fell short of the 13 percent raise the IAM sought and didn’t address its request to limit the use of outside contractors for work the machinists have traditionally done. Boeing also asked that workers pay higher medical co-pays and deductibles.

Union members voted to reject the contract and to walk out as of 12:01 a.m. on Thursday. The contract was extended for 48 hours so the two sides could meet with federal mediators in Florida. The strike started Saturday after no compromise was reached.

“There were no solid proposals back from the company,” Mark Blondin, the union’s national aerospace coordinator and a participant in the Florida talks, said in an interview Sunday. “It was really just a lot of what-ifs.”

Mr. Blondin said he’s open to talking with Boeing again with the caveat that “it’s got to be on improvements in the areas of job security, health care, wages and pension. They can’t just move existing money around. There’s got to be new money put into it and new job security.”

The average machinist is 46 years old and makes $26 an hour, or about $54,000 a year. About 2,300 are younger than 30, and more than 4,000 earn less than $30,000, according to the IAM.

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