Hawker Beechcraft has offered its machinists a seven-year contract offer that includes a 10 percent pay cut and other concessions in a move to keep the majority of its 6,000 jobs in Kansas.
The airplane maker's union recommended early Wednesday that its members accept the contract to protect two-thirds of the remaining machinists jobs for the long-term. The state is guaranteeing the remaining jobs and providing tuition assistance for those workers who lose their jobs, the union said.
"We have worked hard to get the best possible outcome for our membership in a very bad situation," union negotiators said in a statement. "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."
Under the contract deal, five major production lines will remain in Wichita. The company said 350 salaried jobs will be cut by Nov. 1.
"This contract vote is another defining moment in Hawker Beechcraft's history," CEO Bill Boisture said in a statement. "It is critical that the union membership give careful consideration to the role they will play in the company's long-term success."
Talks between the company and the union on a new contract began in August, a year before the current contract was set to expire, amid reports the company was considering moving its entire operations to Louisiana. Contract negotiations were suspended so Kansas Gov. Mark Parkinson could broker the state's own incentive package, which required Hawker Beechcraft to reach a long-term contract with the International Association of Machinists and Aerospace Workers.
Boisture cited the "decisive action" taken by the state of Kansas, saying if the company can combine the state investment with its own changes and a new, long-term union agreement it would be in a much more stable position to sustain the company.
"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," he said.
In addition to the 10 percent cut in base pay, the offer to the machinists includes a provision to reopen the contract in 2014 for the limited purpose of evaluating wage increases, pension and other benefits. The average pay at the company is now $27 an hour.
Pension benefits remain unchanged, but employees will be progressively shouldering a greater share of their health care insurance costs.
"We have worked toward a commitment to keep jobs in Wichita, while competing against other states who wished to poach our jobs, with a company fighting for survival, too," the negotiating team said in a statement. "Although there are concessions, we made huge improvements in job security."
The mood going into the early negotiations sharply contrasted talks in August 2008, when striking machinists accepted a three-year labor contract after nearly a month on the picket lines. That contract covered about 4,700 hourly workers at the Wichita plant and 500 in Salina.
Since then, Hawker Beechcraft has said it was closing its Salina plant and has issued several rounds of layoff notices at its Wichita facility that have left the machinists union now representing about 2,400 workers.
"Last week, the reality is that the plant teetered close to being gone forever. Our brothers and sisters in Salina can tell us how real it is. The governor gave us a second chance to save the jobs," the union said.
This contract protects two-thirds of the bargaining unit jobs.
Union members vote on Saturday.