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Boeing gives up on pension-plan modifications
By Christopher Hinton, MarketWatch
Last update: 12:58 p.m. EDT Aug. 27, 2008

NEW YORK (MarketWatch) -- Boeing Co. has reportedly withdrawn an offer
to begin replacing its traditional pension plan with an
employer-sponsored plan, such as a 401(k), after its machinist union
threatened to strike.

According to a Wall Street Journal article late Tuesday, the
Chicago-based aircraft manufacturer has instead offered to lift its
monthly pension payments by 11.4% and give its machinists raises
totaling 9%.

Over the weekend, leaders of the International Association of
Machinists and Aerospace Workers warned that the company's first offer
would almost certainly result in a strike. The union's last walkout,
in 2005, left 18,000 machinists off the production lines for four weeks.

Boeing wanted new hires to sign up for 401(k)-type plans that are
supported in part by employee contributions, saying employer-sponsored
plans have become too costly. Such a move would be the first step
towards the plan's termination.

Companies across multiple industries are trying to dump their pension
plans as health-care expenses have climbed and as former employees now
live longer. At the same time, companies have been posting record
profits and paying their top executives salaries in the millions of
dollars, leading many unions to cry foul over such attempts to trim
employee packages.

Boeing and its largest union began "round-the-clock" negotiations on
Friday after months of formal talks to hammer out a new agreement by
the end of this week. The union wants a new contract ratified on Sept.
3, before the current contract expires Sept. 4.

In addition to pension plans and wages, the union's demanding that
Boeing contribute more to its health-care and prescription-drug plan.

Christopher Hinton is a reporter for MarketWatch based in New York.