Questions And Answers About Machinists' Strike
Seattle Times Business Reporter
Here are answers to frequently asked questions about the International Association of Machinists & Aerospace workers' 49-day strike against The Boeing Co. It began Oct. 6 after negotiations for a new three-year contract broke down to replace the contract that expired Oct. 1.
Q. What do these workers do at Boeing?
A. They are traditional blue-collar workers who build airplanes and parts - riveters, painters, electricians, plumbers, mechanics, molders, inspectors, crane operators, tool makers, etc.
Q. How many members does this union have?
A. 32,500 (23,500 in Washington state).
Q. What is their average salary?
A. About $45,000 a year, or $865 per week, including overtime.
Q. What are the issues?
A. The company wants workers to pay part of the cost of their medical coverage; workers want higher lump sum bonuses, full medical coverage and stronger assurance of job security.
Q. What was the offer they rejected on Tuesday?
A. 30-cent per hour immediate cost-of-living increase. Lump-sum payment of 5 percent this year; 3 percent in 1996; 3 percent general-wage increase in third year. Semi-annual meetings between union and company to discuss subcontracting. Elimination of subcontracting on facilities maintenance on Boeing premises. Increased layoff benefits. Increased medical deductibles of $125 for individuals and $375 for families. For the first time, some employees would pay monthly health premiums, of $10 to $30.
Q. What will it take to get the strike settled?
A. More money to offset medical co-payments or deductibles, and/or elimination of the medical payments; stronger job security guarantees.
Q. Why isn't Boeing offering more?
A. It is trying to cut costs to be more competitive. Cutthroat airline competition and low airfares are forcing Boeing to cut its aircraft prices to avoid losing business to Europe's Airbus Industrie.
Q. Why did Boeing executives get millions of dollars in stock-option bonuses this week?
A. The bonuses were granted two years ago as an incentive to guide the company through an industry slowdown and to increase Boeing's stock price. Tuesday's closing price of $73.375 per share triggered the final step in achieving the goal of 20 trading days with the price averaging $70 or more. The execs may exercise their options to buy Boeing stock, some as low as $40.56 per share, and sell it at market price any time through 1998. Chairman Frank Shrontz, who received options for 200,000 shares priced at $40.56 each, could have sold them at yesterday's $74 closing price and pocketed $6.69 million.
Q. Is Boeing doing any work during the strike?
A. All non-IAM employees are working, though some in subsidiaries in Texas that make electronic parts have been furloughed or had their work weeks cut to 32 hours. Some supervisors are working in factories.
Q. Has Boeing delivered any jets during the strike?
A. Fourteen airplanes, nearly finished before the walkout, were delivered in October. As many as 20 might be delivered this month, but the number will dwindle in December. The company had planned to deliver 65 in the last three months of 1995 and will fall short because major production is halted.
Q. Will Boeing profits be hurt in the fourth quarter?
A. Yes. How much depends on how long the strike lasts. Some analysts see a loss in the quarter if the walkout continues longer. Analysts had expected Boeing to have a profit of 42 cents per share for the quarter, but estimates now are falling below 18 cents.
Q. Will the company be able to make up some of the loss?
A. Airplanes not delivered in this quarter will be delivered after work resumes, so Boeing eventually will get paid for them. During the strike, the company is estimated to be saving $20 million a week in payroll (less than the price of a $35 million 737, its smallest jet).
Q. Are airlines upset about delayed deliveries?
A. None have said so publicly. Stock analysts say most airlines are content to wait for their new jets because of their own insecure financial situations and because there is no major traffic growth to fuel a need for more airplanes. Analysts and others doubt there are any late-delivery penalties facing Boeing, which doesn't discuss contract terms.
Q. How is the strike affecting Boeing suppliers such as area machine shops?
A. Most say they have been told by Boeing to continue to ship their parts.
Q. What does the strike mean for the local economy?
A. Impacts on sales-tax and other revenues are expected to be minimal, though retailers fear cuts in local holiday shopping. Economists say many strikers still will buy. They'll be using more credit cards, expecting to get bonuses when the strike is settled. Most workers are believed to have made arrangements to continue mortgage or rent payments. Major personal bankruptcies are not anticipated.
Q. What about the 45-day "myth"?
A. It's a concept often mentioned, but unconfirmed, by Boeing and union officials. One version says Boeing wanted a strike for at least 45 days, a point when penalty-clauses for late deliveries would be lifted. Another has it that the company wanted to settle in 45 days because that's when penalties kicked in. There are other variations.
Q. Will machinists work without a contract?
A. No. Only about 10 percent have crossed picket lines.
Q. What is the status of union charges filed with the National Labor Relations Board?
A. A hearing is set for Dec. 19 in Seattle on four alleged unfair labor practices regarding the company's withholding of information on medical benefits and subcontracting.
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