(Reuters) - Engineers at Boeing Co (BA.N) inched closer to a strike on Wednesday after the union balked at the U.S. aircraft manufacturer's latest offer on two contracts that expire Sunday.
The Society of Professional Engineering Employees in Aerospace(SPEEA)said the new offer still represents a cut in salary and other benefits for the 23,000 members of its two bargaining units, professional and technical workers.
"We're closer to calling a strike authorization," SPEEA executive director Ray Goforth said. "We don't have a date or plans" to call a vote, he added.
Boeing said the offer is much improved over its opening proposal, and reflects the tough competition with rival Airbus EAD.PA and the needs of price-sensitive airlines.
"It's going to take movement from both sides" to get a deal, said Doug Alder, a Boeing spokesman. "And we made a big move."
The union's current contracts expired on October 6 and a 60-day extension runs out Sunday, canceling the no-strike clause that had prevented the union from staging a walkout.
However, the two sides met on Wednesday in Seattle, where most of SPEEA's members are based, and plan to meet again next week.
"As long as we're continuing to negotiate, work goes on as normal," Alder said.
While a strike was now possible, he noted that the union has not taken a strike-authorization vote.
Boeing churns out 52 jets a month, worth nearly $8 billion at list prices, and is stepping up its pace of production to work through a backlog of more than 4,000 orders.
The professional engineers and technical workers could stop production if they walked out.
The standoff has the potential to affect jet production even if the union doesn't call a strike, as engineers could work more slowly and limit their hours, something the union already is asking them to do.
"It is becoming clear Boeing corporate will need additional persuasion" to reach a deal, Bill Dugovich, SPEEA communications director, said in a statement. "Our teams encourage members to continue workplace actions, including refusing to work voluntary overtime and other ‘work-to-rule' actions to bring pressure on Boeing."
Goforth said members were "conducting work-to-rule activities" in Oregon and Washington, and declining overtime during the Thanksgiving holiday. Alder said Boeing had not seen any impact so far.
After Wednesday's meeting, SPEEA said Boeing had restated its plan to eliminate its defined-benefit pension for new hires.
The engineers argue that Boeing has rewarded executives with hefty pay raises and shareholders with a 4.8 percent dividend increase. The company is reporting strong profits and yet is offering engineers less than when the last contract was struck in 2008.
Shares of Boeing, among the 30 companies in the Dow Jones industrial average .DJI, rose 0.8 percent on Wednesday to close at $73.15.
Boeing says its pay and benefit offers are industry leading at a time of high unemployment when many workers are getting modest raises and paying much more of their health-care costs.
The situation puts both sides under pressure. The union knows it is strategic to Boeing.
"They also know they have to deliver at the bargaining table," said Gary Chaison, a professor of industrial relations at Clark University in Worcester, Massachusetts.
"Boeing has an embarrassment of riches," he added. But the company "has to maintain its reputation of being a tough negotiator to get what it wants."
Boeing's new offer of four-year contracts would give professional engineers 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.
Technical workers, whose work provides a crucial bridge between that of engineers and machinists, would get a 3.5 percent raise in each of the first and third years and a 3 percent raise in each of the other two years. That's up from 3 percent in the first year and 2.5 percent a year in the proposed contract's other three years in the company's previous offer.
Boeing said it also lowered employees' out-of-pocket contribution for health care and eliminated hospital copays, among other steps, in response to the union's rejection of its first offer. Members voted it down by a margin of about 96 percent.
The negotiations are set to resume on Tuesday.
Reporting by Alwyn Scott; Editing by Jan Paschal