(Reuters) - In a widely expected show of force, Boeing Co’s (BA.N) engineers and technical workers rejected a pay offer late Monday, setting the stage for talks to resume Tuesday for labor agreements covering 23,000 workers.
The Society of Professional Engineering Employees in Aerospace said 95.5 percent of engineers and 97.1 percent of technicians voted against the contract offer, sending their bargaining teams back to the negotiating table.
The union and Boeing had agreed before the mail-in ballots were counted that if the contract offer was voted down they would meet Tuesday to continue discussions on a deal to replace two labor agreements that expire on October 6.
Figures released by Speea showed 15,097 members voted to reject the contract, compared with 608 who supported it, with 72 percent of all members voting.
“We hope the vote results clear away the nonsense and allow us to begin substantive negotiations,” said Ray Goforth, executive director of Speea in a statement.
Boeing issued a statement saying: “We are committed to continuing discussions, answering questions and considering any proposals or counter-proposals from your negotiations team.”
Analysts said they did not expect the vote to affect Boeing’s operations or share price in the short term, since engineers can continue working under the current contract after it expires on October 6.
Boeing said that should talks go beyond October 6, the contract would terminate on November 25 because Speea had filed a 60-day termination notice.
“No strike can take place until after November 25,” Boeing said.
A separate vote is required to authorize a strike, and most experts, including union and Boeing officials, say they consider a strike unlikely.
Earlier on Monday Boeing’s chief executive, Jim McNerney, said he expected negotiations to result in a “successful resolution over the next few weeks.”
“(Boeing) will simply have to come back with a more generous contract,” said aerospace analyst Richard Aboulafia of the Virginia-based Teal Group. “That’s what it comes down to.”
He said the November 25 deadline didn’t pose a major concern. “That should be enough time to reach an agreement.”
Russell Solomon, senior vice president and analyst at Moody’s Investors Service, said he had been expecting Boeing and the union to have to agree within 30 days. The longer timeframe “actually indicates more of a willingness and certainly an expectation that some mutually accept agreement will be reached.”
Boeing had said its “market leading” offer reflected the competitive market for commercial aircraft and its defense businesses.
Michael Delaney, vice president for engineering, Commercial Airplanes division, has also said that the company would have to send work to engineers outside of the Seattle area if the union demands higher pay and benefits, according to The Seattle Times.
The union says its members rejected a contract offer which would give annual pay rises of 3.5 percent for engineers for the next four years, a cut from the current 5 percent annual rise, raise healthcare costs and appeared to allow the company to make changes to the agreement after it was ratified, Speea spokesman Bill Dugovich said.
The union says it deserves a better offer, considering Boeing is posting strong profits, has increased its dividend and has more than 4,000 aircraft orders.
“Boeing is pointing towards that external climate, which is completely different than the climate for the Boeing company,” Dugovich said.
The union and analysts said the contract vote was aimed at showing Speea’s negotiators have the backing from rank and file workers.
“It’s symbolic,” said Carter Leake, an aerospace analyst with BB&T Capital Markets in Richmond, Virginia. “It’s a way to signal your disgust — a kabuki dance we’ve got to go through.”
The vote follows rallies last week in the Seattle area, where most Speea members are based, aimed at showing that the rank and file are united behind bargaining units for the engineers and technical workers. The union made a contract offer in June, and Boeing tabled its offer in September.
Dugovich said the vote “shows that our members are not going to stand for being treated like second-class citizens when the executives are getting double-digit raises and bonuses equivalent to a year’s salary.”
According to company filings, McNerney received $1.9 million in base salary in 2011 an amount that has not increased since 2008. He received a $4.4 million bonus in 2011 and an additional bonus of $4.3 million for 2009-2011.
Editing by Greg Mahlich and Leslie Gevirtz