Boeing machinists to strike as contract talks fail

NEW YORK/EVERETT, Washington (Reuters) - Boeing Co's 27,000-strong machinists' union declared it will strike at midnight Pacific time on Friday, as the plane maker failed to improve its contract offer after two days of emergency talks.

"Despite meeting late into the night and throughout the day, continued contract talks with the Boeing Company did not address our issues," Tom Wroblewski, the IAM's Seattle-area president, said in a letter to members. "The strike is on."

The vast majority of the International Association of Machinists and Aerospace Workers' (IAM) 27,000 members voted to reject Boeing's "best and final" offer on Wednesday, but postponed a strike for 48 hours to give negotiators more time.

Boeing and IAM teams, along with federal mediators, were meeting at Walt Disney Co's Coronado Springs resort near Orlando, Florida, where the IAM is set to have its convention, held every four years, starting on Sunday.

"Over the past two days, Boeing, the union and the federal mediator worked hard in pursuing ... options that could lead to an agreement. Unfortunately the differences were too great to close," said Scott Carson, CEO of Boeing Commercial Airplanes, in a statement.

Boeing's machinists were already preparing to strike before talks over the last three-year contract were called off.

Union volunteers rolled out 52-gallon oil drums -- known as "burn barrels" -- and readied coffee and soup to keep expected picketers warm at the company's Everett, Washington plant, despite the balmy 65 degree weather.

Boeing has proposed shifting more health care costs onto workers, one of the major sticking points in negotiations.

"We're not at it for the money, we're at it for the medical, which they (Boeing) are freaking crushing," said Joseph Young, a 48-year-old insulation installer who has worked at Boeing for 21 years.

Workers outside the gates said colleagues inside were reporting only about 25 percent attendance by mechanics at the plant.

Boeing declined to comment on activity at its factories.

MIDNIGHT DEADLINE

The strike begins for most of the union members at midnight Seattle time, which is when the current three-year contract expires. The bulk of Boeing's machinists work at plants around the Puget Sound area.

A strike would bring Boeing's massive plants at Everett and Renton, Washington to a standstill, halting production of its 737, 747, 767, 777 and 787 planes.

Boeing, which made a $4.1 billion profit last year and has a record $275 billion worth of commercial plane orders in its books, could financially survive a short strike, but it would further complicate its efforts to get the already-delayed 787 Dreamliner into the air.

If the strike prevents plane deliveries, it would cost Boeing about $100 million in revenue per day and knock about 1 cent per day off earnings per share, according to Wall Street analysts.

A walk-out by the IAM would be the fourth at Boeing in 20 years. The union struck for 48 days in 1989, 69 days in 1995 and 28 days in 2005. In 2002, a contract was adopted by default, as it was rejected by workers but fewer than two-thirds approved a strike.

BEST AND FINAL

Boeing's "best and final" contract offer this time around was delivered to union members a week ago, proposing an 11 percent wage increase over the three-year life of the contract, a one-time lump sum and ratification bonus, and other incentives that the company said would add about $34,000 to the pay of the average machinist, who now makes about $65,000 a year including overtime.

That failed to meet union demands for a 13 percent wage increase, no change to health care contributions and the roll-back of provisions allowing Boeing to outsource work.

"I'd use this contract for toilet paper, but there's too many holes in it," said Randy Carroll, a 52-year old mechanic at Boeing's plant in Auburn, Washington, who traveled to Everett in support of a likely strike.

Boeing shares fell 14 cents to close at $62.89 on the New York Stock Exchange.

(Reporting by Bill Rigby in New York and Laura Myers in Everett, Washington and Daisuke Wakabayashi in Seattle; editing by Carol Bishopric, Richard Chang)