Machinists, Hawker Reach Tentative Agreement

Oct. 13, 2010
Seven-year labor contract to cut base wages 10 percent


Oct. 13--The Machinists union at Hawker Beechcraft has reached a tentative agreement on a new seven-year labor contract, one that keeps five major manufacturing operations and two-thirds of the bargaining unit's jobs in Wichita, the union said.

The union's negotiating team is recommending members accept the agreement when they vote Saturday.

The offer cuts base wages 10 percent and reduces earned time off, increases health insurance contributions, includes a cost-of-living adjustment and retains pensions at their current rate.

"Last week, the reality is that the plant teetered close to being gone forever," said the union's negotiating team in a statement. "Our brothers and sisters in Salina can tell us how real it is. The Governor gave us a second chance to save the jobs."

Hawker Beechcraft employs 7,000 people, including 6,000 in Wichita. Of those, 2,400 are represented by the Machinists union.

Hawker Beechcraft has received an offer from Louisiana to move the entire operations to Baton Rouge, the union said.

Last week, company and union officials met with Gov. Mark Parkinson. During the two-hour meeting, the company accepted a package of incentives that would keep "the vast majority" of the jobs in Wichita. The deal is subject to successful conclusion of contract negotiations. The company is also closing its Salina plant and moving the work to Mexico and to outside suppliers.

The union called the negotiations, opened a year early, "extraordinary." With plant closures and threats of relocation, the union kept one goal in mind, officials said. "It's about having a job. It's about survival in this economy."

The proposed contract is just one piece of several initiatives to cut costs, the company said in a statement.

The offer is also concurrent with a reduction of 350 people from the salaried work force, Hawker Beechcraft chairman Bill Boisture said in the statement. The cuts will be implemented no later than Nov. 1.

"Over the last 12 months, we have clearly communicated the need to cut costs throughout our business to cope with the significant downturn in the global economy," Boisture said in the statement. "Many actions have been and continue to be taken to irreversibly change the footprint of the company and its position in the global marketplace, which also is marked by the entry of a foreign competitor."

The company and the union understand that the members are an important part of helping the business adjust to the "harsh realities of a changed global economy and a changed market for business and general aviation products," he said.

The state's investment in the company along with the "positive changes" in the new bargaining agreement that aligns the compensation of all its employees will help Hawker Beechcraft be in a "much more stable position to sustain a Kansas and American benchmark," Boisture said. "Our presence here in Wichita will be smaller, but the remaining people will be better trained and equipped for the realities of global competition. We will work together to form a solid foundation to build on when our markets grow once again."

The Machinists negotiating team said it worked hard to get the best possible outcome for its membership in a bad situation. Although there are concessions, it made "huge improvements" on job security during the talks.

"We believe we negotiated the very best deal we could, saved every job that it was possible to save and secured them for the duration," the union said in the statement.

The contract will be reopened in 2014 to evaluate general wage increases, automatic wage progression, performance pay, pensions and medical, dental and vision care. The talks will not be subject to a strike.

The proposal includes:

--a 10 percent reduction in base wages, which average $27 an hour;

--a performance pay program for future increases that use the same financial criteria as the management plan;

--automatic wage progressions starting Oct. 17, 2011, of 15 cents per hour each 26 weeks until the maximum labor grade is reached;

--lump-sum payment capped at $1,000 per year in a cost-of-living adjustment;

--earned time off reduced from 10 days to five;

--pensions remaining at $51 per month per year of service;

--the retention of current health care providers;

--three-year cost sharing of health insurance of 25 percent beginning in January, raising to 30 percent in January 2013;

*an extension of recall rights.