Smarting from a union vote rejecting a contract offer but still intent on buying Boeing Co.'s Wichita production plant, Onex Corp. said Thursday that it plans to mail employment offers directly to its machinists--at terms that are less attractive than the contract the workers rejected.
Onex's move is the latest brinksmanship in its struggle to redefine work terms with unionized workers before the Toronto-based company closes on its $1.2 billion purchase of Boeing's Wichita operation and two other plants.
The standoff with the International Association of Machinists and Aerospace Workers also will be a litmus test for Boeing's strategic plan to sell key production plants and focus on the design and final assembly of airplanes. The Wichita plant is key to Boeing's future because it is slated to build the nose section of its new 787 Dreamliner, in addition to the fuselage sections it already builds for Boeing's best seller, the 737.
Nigel Wright, managing director of Onex and a lead negotiator for the Wichita purchase, backed away from an earlier threat to abandon its purchase if the union rejected the contract offer. In a vote Tuesday, 57 percent of workers who have been offered jobs voted against the contract.
Wright, in an e-mail exchange, said Onex was not required to negotiate with Boeing's unions in the first place.
"We were never required to negotiate with the union. We simply chose to do so because we thought it right to give that process a fair chance. And we worked hard at it," Wright wrote.
"We will be a new employer, hiring people for the first time. We are entitled to choose our workforce and to make offers of employment on terms we think reasonable."
The new offer will be less than the one rejected, Wright said. The machinists no longer will receive options convertible into 1,000 shares of stock in the Onex unit that will operate Wichita, called Mid-Western Aircraft Systems, he said.
Onex also is replacing a defined-benefit pension plan with a 401(k) plan, and, in a change from the proposed contract, it will not allow the union to manage the company's 401(k) plan, Wright said. Instead, an independent manager will operate the plan.
Onex plans to complete its purchase of Boeing's plants in Wichita and in Tulsa and McAlester, Okla., by mid-June. Wright said Onex intends to recognize the machinists union as bargaining agent and resume contract negotiations after the purchase is completed. He would not say whether stock options and a union-managed 401(k) plan might be put back on the negotiating table.
Steve Rooney, president of machinists union District 70 in Wichita, did not return phone calls seeking comment.
In a typical merger, the purchasing company is required to abide by union contracts. But in its deal with Onex, Boeing allowed the buyer to lay off unionized employees and then require them to reapply for work.
Boeing in a May 23 letter to union leadership that was posted on the machinists' Web site has committed to paying benefits of workers who are laid off by Onex and not rehired. Before Tuesday's vote, about 800 workers received letters advising them they would not be rehired.
It is not known how many of the union's 5,300 members Onex intends to retain, although the company has said it expects employment to increase at Wichita once the plant begins pursuing new work from Boeing and other companies.
Onex has said it wants to complete negotiations with the machinists, the Wichita plant's largest bargaining unit, before proceeding with the plant's two other union groups, the International Brotherhood of Electrical Workers and the Society of Professional Engineering Employees in Aerospace.