January 18, 2013 / 1:38 AM / 5 years ago

UPDATE 3-Union urges engineers to reject Boeing offer; strike possible

* Move ends talks, puts offer to vote as Boeing faces 787 safety review

* Ballot may include strike plan with walkout by mid-February possible

* Boeing agrees to extend some terms of expired contract for 4 years

* Healthcare plan remains same with no rise in employee contribution

By Alwyn Scott

SEATTLE, Jan 17 (Reuters) - The union representing 23,000 Boeing Co engineers and technical workers urged members to reject the company’s latest contract offer on Thursday, a move that ended negotiations and positioned the union a step closer to calling a strike even though the two sides earlier appeared close to a deal.

Boeing on Thursday said its “best and final” proposal would mostly extend the existing contract for four years, something the union had proposed on Wednesday. However, Boeing’s offer would eliminate a defined-benefit pension plan for new hires, replacing it with a 401(k) plan.

“Agreeing to this contract as soon as possible will allow all of us to focus our time and energy on the immediate challenges facing the company,” Boeing said in a statement.

Those challenges come in the form of a global grounding of the company’s new 787 Dreamliner, which is being investigated by regulators and safety officials around the world after an escalating series of malfunctions.

A team of experts from U.S. aviation authorities and Boeing arrived in Takamatsu in western Japan on Friday to inspect a 787 jet that was forced to make an emergency landing on Wednesday because of a battery problem, the second in two weeks.

The Dreamliner setback for Boeing has strengthened the negotiating position for engineers, who are considered by aviation experts to be crucial to the global safety review.

Bill Dugovich, a spokesman for the Society of Professional Engineering Employees in Aerospace (SPEEA), said union leaders would meet next week to formally approve a vote on Boeing’s offer and decide whether to include a strike authorization on the ballot.

Union members then have 10 days to vote. If they reject the contract and authorize a strike, a walkout could not occur until seven days later following a “cooling off” period, or around mid-February at the earliest, he said.

Dugovich said the value of the 401(k) match that Boeing proposed for new hires was about 40 percent less than what members currently receive in their pensions.

Boeing said the offer gives current employees everything the union sought.

“Our offer for new hires would lead the market among peer companies,” Boeing spokesman Doug Alder said.

Boeing’s offer would cap the company’s pension liabilities, which run into the billions under standard accounting rules, said Scott Hamilton, an analyst with Leeham Co, an aerospace consulting firm in Seattle.

“Assuming the Boeing best-and-final is what its press release says it is, we believe this to be a reasonable compromise with both sides getting wins,” Hamilton wrote in a blog post.

Boeing’s proposal extends the 5 percent annual raises included in the current contract for four more years. Healthcare plans would remain in place with no increase in employee contributions and the pension’s basic benefit would be increased, Boeing added.

Professional engineers would receive, on average, $84,071 more in pay and performance-based incentives under the agreement, Boeing said, while technical workers would receive about $64,515 more, on average.

In response, the union said that although Boeing’s offer contained improvements, “both the professional and technical negotiation teams unanimously recommend rejection.”

“While the company agreed to extend parts of the existing contracts, the offers put retirement benefits for all 23,000 engineers and technical workers, including retiree medical, at risk.”

SPEEA’s own “best and final” contract offer to Boeing on Wednesday proposed extending the current contract for four years without altering the pension. The union said that would avert a strike and allow the company to focus on addressing safety concerns with the Dreamliner.

The negotiations with SPEEA began in 2012 and the previous contract expired in October. A 60-day extension ran out in November. Federal mediators joined the talks in December when the two sides appeared to be at an impasse.

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