Manufacturing Industry

Onex Corp says Boeing plant transaction will go ahead

Airline Industry Information, May 27, 2005

Onex Corp has said that it intends to go ahead with the acquisition of several plants from Boeing Co in the US despite a rejected contract offer.

The Canada-based investor announced in February that it would acquire Boeing's commercial aircraft manufacturing plants in Wichita, Kansas, and in Tulsa and McAlester, Oklahoma.

Members of the International Association of Machinists and Aerospace Workers at Boeing Co's commercial aircraft division in Wichita, Kansas however rejected a proposed labour agreement. Onex has reportedly said in the past that the agreement is vital to the acquisition of the plant. The proposal was rejected by 57% of the union members, according to The Associated Press. The plant employs about 7,200 people while the union represents about 5,300. An estimated 70% of these 5,300 are union members.

The union members have reportedly been critical towards the proposal, which called for an initial wage cut of 10% as well as higher health insurance costs. It also provides for general pay increases during the three-year contract period, with performance bonuses that are tied to financial targets, giving each employee 1,000 shares of company stock that would be paid out during certain circumstances, The Associated Press said.

It was speculated that Onex may not complete the deal after the rejected offer, Reuters reported. However Onex, although expressing disappointment with the rejection, said that it expects the transaction to be completed by mid-June.

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