and the International Association of Machinists say they have tentatively agreed to a landmark deal that extends their contract, locates construction of the new 737 MAX in Renton, Wash., and ends a bitter dispute over whether Boeing can build 787s in South Carolina.
The deal appears to reverse what had been a combative relationship and provide a global solution to a series of contentious issues that have troubled both parties.
The deal represents "an unprecedented commitment by Boeing to Puget Sound and Portland for the 737MAX and the related manufacturing that's currently being performed here," the IAM negotiating committee said, in a prepared statement. "This will generate long-lasting security for our members."
The two sides have been secretly discussing a deal for about six weeks. The contract was due to expire in September 2012. It would be extended for four years. The negotiating committee unanimously recommended approval.
"In late October, senior executives from Boeing approached us to ask if we could get together to talk about issues that were going to come up in the 2012 contract talks," the committee said, in its statement. "We agreed to meet with them to hear what they had to say. What resulted was an ongoing dialog and a series of meetings that ended with a proposal by the company to extend the current contract with some changes in certain areas -- but a huge improvement in job security, which was your No. 1 issue in our first survey for the 2012 contract negotiations."
The union said it did not publicly announce the talks because "in the past, we've gone through negotiations with media, politicians and bloggers second-guessing our moves and trying to determine the outcome while we work against a looming deadline."
Boeing issued a relatively brief, seven-paragraph statement affirming that it had reached the agreement.
"If our employees ratify a new agreement, building the 737 MAX in Renton will secure a long and prosperous future there, as well as at other sites in the Puget Sound area and in Portland, Ore., where 737 parts are built," noted Jim Albaugh, CEO of Boeing Commercial Airplanes.
In a note, RBC Capital Markets analyst Robert Stallard said the union has agreed to stop pursuing its National Labor Relations Board case against Boeing. In that case, the board's counsel has found that Boeing violated labor law by moving work to South Carolina in retaliation for a strike, but the two parties were at the start of a lengthy legal process to determine if that charge would be upheld. Stallard said the agreement is for four years.
The union noted that the proposal includes shared increases in health care costs, but said "negotiations are about give and take and to achieve gains in job security, pension and wages, we had to be willing to compromise elsewhere.
"In doing so, we were also able to increase benefit levels in dental and vision, and win protections that cap the amount you will be paying," the union said. The deal preserves retiree medical care and also includes a $5,000 ratification bonus.
-- Written by Ted Reed in Charlotte, N.C.
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