One small concession and three "deal breakers." That's the Machinists union's tally after it reviewed Boeing's initial offer for a new contract Friday.

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One small concession and three “deal breakers.”

That’s the Machinists union’s tally after it reviewed Boeing’s initial offer for a new contract Friday.

Boeing dropped a proposal to separate Machinists in Wichita into a distinct bargaining unit.

However, the offer also contained what International Association of Machinists (IAM) national aerospace coordinator Mark Blondin referred to as “deal breakers”:

• Allowing Boeing to outsource building-maintenance work, provided the union is given 90 days to bid for the work against outside contractors;

• Eliminating early-retiree medical benefits for workers hired as of 2010;

• Replacing the traditional basic pension with a 401(k)-style plan for workers hired as of 2009.

The union had asked Boeing in a meeting Thursday night at the SeaTac Doubletree Hotel to change a clause in the current contract imposed by the company in 2002 that allows outsourcing of parts delivery inside the factory. Instead of doing that, Boeing expanded the potential for outsourcing with the building-maintenance provision proposed Friday.

“They want to bring in suppliers to do virtually any job here,” Blondin said, citing electricians, plumbers, maintenance mechanics and heating technicians. The language proposed, he said, “would put thousands of facilities-maintenance jobs at risk.”

Boeing spokesman Tim Healy said an initial offer is just a starting point, implying that the terms can only improve for the Machinists over the next week.

“This is the first full day of negotiations,” Healy said. “We are going to be negotiating until we drop the final offer.”

On the economic side, the pay raises are significantly boosted by the addition of a productivity-incentive plan.

If targets are met, the incentive plan would add two weeks base pay per year, or just shy of 4 percent of annual pay. (It could pay out up to twice that much if targets are exceeded, or pay nothing if the targets are completely missed.)

Boeing said the wage increase, lump sum and incentive-plan payments would add about $8,000 each year of the contract for a typical machinist.

The highlights of the initial Boeing offer:

• Pay raises totaling 6.5 percent, paid in three installments over the three-year duration of the contract.

• Retention of the current cost-of-living adjustment formula, which Boeing estimates will add a further 3 percent pay increase over the three years.

• A single lump-sum payment after contract ratification of $2,500.

• A new incentive plan that will pay out up to 20 days extra pay annually, depending on performance as measured by company profits, quality of work and days lost due to injury. Assuming an average incentive payout of 10 days pay in a year, that would add about $2,000 to the average machinist’s annual base pay of about $56,000.

• Pension increased to $75 a month for each year of credited service, a 7.1 percent increase from the current $70 figure. This basic pension is in addition to a 401(k) plan where the company adds 50 cents on the dollar up to 8 percent of salary.

• Improved health-care benefits, but with higher premiums in two of the health plans offered. One Boeing health-care plan has zero cost to employees. Of the two plans for which employees must pay, the company offer would double the monthly premiums in one and raise them 28 percent in the other.

For one Everett machinist, Joe Albanese, the incentive plan made the pay side of the package at least close to adequate, if not generous. But Albanese said the whole package becomes totally unacceptable with the take-aways from future hires.

“They want to divide us from anyone hired after 2009,” Albanese said. “If they don’t pull that pension proposal off the table, we’re striking.”

Albanese said the 6.5 percent wage increase is initial posturing by the company, and he expects Boeing to raise it during talks in the week ahead. He also said the incentive-plan terms need to be nailed down so that the union can see that the company won’t manipulate the targets that trigger payments.

But given those assumptions, he said, “the money there isn’t bad.”

Albanese, 44, who delivers parts to the assembly lines in Everett and has 14 years with the company, said he’s ready to strike over the three deal-breaker issues.

On the other hand, he said that if the company removes the two proposals for future hires and also pulls out any provision that allows Boeing to outsource parts delivery or building maintenance, then “the contract will have a good chance of flying.”

Tom Wroblewski, president of IAM District 751, who leads the union side along with Blondin, was less amenable. He said he doubts the talks can end by noon next Friday.

“We’re standing our ground. We’re not happy,” Wroblewski said. “We’re here until the 3rd [Sept. 3] if that’s what it takes.”