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Boeing proposes mediation in talks with engineers union

Models of Boeing 747 and 777 passenger planes are displayed at the Boeing booth as part of the China International Aviation & Aerospace Exhi
Models of Boeing 747 and 777 passenger planes are displayed at the Boeing booth as part of the China International Aviation & Aerospace Exhi

(Reuters) - In a move that ratchets up tensions in labor negotiations, Boeing Co on Thursday asked for federal mediators to help unstick talks with the union that represents its 23,000 engineers, saying the sides were far apart on pay and benefits.

"We hope the expertise of the Federal Mediation and Conciliation Service can help move the two sides toward a resolution," Boeing said in a statement.

The move halted discussions around mid-day in Seattle and no further meetings are scheduled, the two sides said.

The breakdown in talks comes as Boeing is speeding up production from 52 jets a month, worth about $8 billion at list prices, to about 60 a month by the end of next year. The company cannot deliver jets without engineer sign-off.

The last time the union struck, in 2000, the company delivered 50 fewer jets that year, said analyst Scott Hamilton, of Leeham Co in Seattle.

The union has balked at a Boeing contract that the union says would cut the growth rate of salaries of professional and technical workers. Taken with cuts in other benefits and inflation, it could cut employees take-home pay, the union says.

Boeing says its latest offer is much improved over its opening proposal, and reflects a tough competitive environment.

Spokesman Doug Alder said company negotiators made the proposal at the end of what he described as a "frustrating" and "contentious" two-hour negotiating session with the union on Thursday. It was the third of three meetings scheduled this week.

He said Boeing was surprised when the union came back with an even more demanding counter-offer - seeking 6 percent pay increases, up from 5 percent in the current contract - despite the fact that the company had come in with an improved offer.

Boeing's new offer of four-year contracts would give professional engineers, one of two bargaining units, annual pay raises of 4.5 percent in the first and third years, and 4 percent in each of the other two years. That's up from 3.5 percent per year in the company's previous offer.

"Both sides are going to need to move," Alder told Reuters. "For them to go above the current offer, just shows you how far apart we are."

Alder said Thursday's meeting included "contentious discussions about salaries," prompting Boeing negotiators to call for a mediator.

Ray Goforth, SPEEA executive director, said in an email to Reuters that the union was dismayed that Boeing left talks on Thursday without committing to further negotiation dates. He added that SPEEA has been in contact with federal mediators.

"SPEEA is willing to consider any option to avoid a work stoppage," Goforth said.

The two sides differed on how the meeting broke up.

Alder said Thursday's meeting "ended normally, just as every other negotiating session has. The assertion that we walked out - I don't know where they get that. It ended with them saying they would have to get back to us on mediation."

Bill Dugovich, a SPEEA spokesman, said, "It did not end normally. We were asking questions and Boeing stood up and walked out. This was a surprise to us. We were fully engaged in negotiations. Our team is still in the building now going through issues."

Since the contract expired Sunday, the union has been technically able to strike. But it must first ask members to vote to authorize a strike.

"Right now, we're still a ways away from any kind of labor action like that," Dugovich said. " That wouldn't happen before the holidays."

In an update on its website on Thursday, SPEEA said Boeing negotiators restated a belief that union members were overpaid and added that union proposals were looking to align pay "to the value we bring to Boeing."

Before the meeting in Seattle, Dennis Muilenburg, president and chief executive of Boeing Defense Space & Security, told Wall Street investors that the two sides were engaged in productive discussions and he expected them to reach agreement eventually.

Muilenburg told an investor conference hosted by Credit Suisse that he had "a great deal of respect" for the engineering team in Seattle that is represented by the union, noting that he had begun his career as an engineer there.

Alder said the talks were at a critical juncture, and Boeing wanted to bring a mediator in as soon as possible.

"We feel it's important to get a mediator in sooner rather than later before one side gets locked into a particular position," he said, noting that Boeing had used mediators in the past and found them to be productive.

(Reporting by Karen Jacobs in Atlanta and Andrea Shalal-Esa and Alwyn Scott in New York; Editing by Bernard Orr)

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