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Boeing Union Agrees to Delay Strike

But the company only has 48 hours to reach a deal with the IAM that will prevent a work stoppage.


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and the International Association of Machinists are headed back to the bargaining table.

The two sides agreed late Wednesday to extend a

Boeing strike

deadline for 48 hours -- until 12:01 a.m. Saturday -- after workers voted overwhelmingly to strike. According to the tally, 87% of the voters favored a work stoppage, while 80% rejected the contract offer. The IAM constitution requires separate votes on the two issues.

The extension was sought by federal mediators and Washington Gov. Chris Gregoire. Boeing is now in a position where it must reconsider the proposal it gave the union last week, when it said it had made its best and final offer.

Boeing lead labor negotiator Doug Kight spoke carefully at a late night news conference.

"Our job at this point is to listen to the union," he said. "We put the last contract offer on the table, and we are very interested in understanding from them what are the critical few issues. And we will do that. We will seek to understand and make an assessment of whether there is a path forward."

Asked whether the company had erred in adopting a strategy to make a final offer six days before a contract vote, Kight responded: "It wasn't a strategy. It was a response to the request of our employees." He said workers had repeatedly asked for several days to review a proposal before voting.

In a sense, the next 48 hours will provide the sort of down-to-the wire negotiating window lost to that decision. It is now clear that a strike will follow if the two sides cannot reach an agreeement. That, combined with the overwhelming vote, puts pressure on Boeing to revise its offer. The two sides have agreed to a news blackout during the next two days.

Union leaders face pressure of a different sort, because some members are clamoring for a strike.

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At a raucous meeting where several hundred workers gathered late Wednesday night to hear the results of the vote, some were angry that a walkout would not begin immediately.

IAM chief negotiator Mark Blondin said he had been contacted by Gregoire and mediators, who told him that Boeing wanted to return to the table. Many of the workers balked, but Blondin told the rank and file that Boeing has "48 hours to bring a deal that's acceptable to you."

Subsequently, communications representative Connie Kelliher took a turn at calming the crowd. "It's 48 hours," she said. "The issues are the same. We would not be responsible as leaders if we did not go back to the bargaining table and listen to what the company has to say. If nothing changes, the strike is on."

Just a few hours later, in an email message to members, IAM District 751 President Tom Wroblewski said the next two days represent "one last chance for Boeing to bring us an exceptional contract offer. We will not sell you out. If Boeing does not produce the offer you expect, the strike is still on."

Key issues remain salary, benefits and outsourcing. The company's last offer was an 11% raise, while the IAM sought 13%. The union also wants to limit future outsourcing at a company that already sends about 70% of its aircraft manufacturing outside the company.

Boeing needs outsourcing to remain competitive, but at the same time, continuing delays in the 787 program highlight the problems in establishing a global supply network.

In a report, Bank of America analyst Harry Nourse said the two sides appear close on the financial issues, but "it may be difficult for the union to achieve specific guarantees regarding future outsourcing."

He added that the union "may feel emboldened by the overwhelming majority of its members voting in favor of the strike."

Nourse said Boeing shares tend to trade down during strikes "before generally recovering in anticipation of an impending resolution." He reiterated a neutral rating and a $70 price target. Boeing shares closed Wednesday at $66.07.

Bank of America has a financial relationship with Boeing that includes providing investment banking services, nonsecurities services and ownership of 1% or more of a class of common stock.

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