ANDOVER, Mass., Aug. 27 /PRNewswire/ -- We are surprised and disappointed by the vote to reject Raytheon's proposed contract. We really don't understand why the package was rejected. We hope our employees had adequate information on the entire offer and adequate time to thoughtfully consider the details before making their decision. The contract proposal is comprehensive and addresses the substantive issues brought to the table by the union. -- The union wanted a comprehensive wage package. We delivered. Currently, IBEW 1505 members are paid on average 25 percent more than the local market for similar work. Voluntary attrition is less than 1 percent. More than 70 percent are paid above the rate of their assigned job. Raytheon's offer delivers four general wage increases totaling a compounded 14.7 percent. All of these increases went into employee base pay. The average employee currently earns $39,832 in base wages; with overtime and company paid benefits that average employee earns $53,030 in total compensation. By the fourth year of the proposed contract, average base wages would increase to $45,718, and, with typical overtime and the enhanced benefit package, total compensation would rise to $64,236. -- The union wanted reasonable healthcare cost sharing. We delivered. We offered a $1,500 contract bonus in September to pay for the increased cost of healthcare insurance. The average increase in weekly employee contribution over the four-year term is $6.62, which is essentially covered by the contract bonus. Over the last five years, Raytheon and its employees in Massachusetts have benefited from a multiyear contract that has kept health care costs lower than the regional and national averages. That meant lower premiums for our employees. That agreement is no longer available through any of our insurance carriers. However, the company's contract offer keeps IBEW members paying substantially less than other plan participants. -- The union wanted pension enhancements. We delivered. Raytheon's offer included improvement in the minimum pension benefit formula in each year of the contract. Combined with the general wage increase, the average accrued pension benefit would increase by 31.6 percent over the term of the agreement. This enhances what is already considered to be a highly competitive employee benefits package. -- The union wanted job security through program assurances. We delivered. On the issue of job security, we agreed to continue program assurances for Patriot, Hawk, AEGIS and GBR which keeps work in Massachusetts. Job security is primarily a function of satisfied customers. We need to work closely with our employees to assure Raytheon remains competitive worldwide -- that is the closest we can get to real job security. -- The union wanted income and benefits protection during a layoff. We delivered. Our offer doubled pay continuance for up to 12 weeks for involuntary layoffs during the contract term. Medical and dental coverage during this time was extended and guaranteed minimums were provided. -- The union wanted to continue its vacation, sick and personal days. We delivered. On the issue of vacation, sick time and personal days, the company retained the current schedules. This means Local 1505 members would continue to receive up to seven weeks paid time off, depending on their length of service. That's up to two weeks more than the maximum available to most employees at Raytheon. -- The union wanted improvements in contract language. We delivered. Throughout the course of the negotiations the company agreed to a variety of union proposals. Everyone knows that a strike is not in the interest of the company, the union, employees, or our customers. We are in a tough and competitive marketplace so our efforts should be focused on making our operations successful and satisfying our customers. We should also recognize that neither the company nor the union gets everything they want out of a single contract negotiation. We put a fair and competitive offer on the table that we believed would be the basis for a contract that the company, union and employees would be proud of. Command, Control, Communication and Information Systems 47 Foundry Avenue Waltham, MA 02453 USA Tel 781-642-2681 Fax 781-642-3677 W. James Nichols Director, Labor Relations C3I and Northeast Operations August 26, 2000 Michael T. Zagami International Brotherhood of Electrical Workers, AFL-CIO, Local 1505 2 Rainin Road Woburn, MA 01801 RE: Final Offer Dear Mr. Zagami: As we end eight weeks of negotiations, I'm pleased to present our final offer. The terms are highly responsive to the issues we discussed during the bargaining and provide a fair and equitable job package for our employees that you represent. At the same time, we've arrived at a final offer which recognizes the competitive realities facing our business. The attached documents include an offer summary, proposal highlights, and detailed terms reflecting the many changes negotiated during the past several days. First of all, a four year duration should provide significant predictability in the areas of wages, benefits and contract language. This four-year timeframe is also an opportunity for improved labor-management relations. The pay package keeps wage rates highly competitive and recognizes the skill and contribution of the membership. Personalized rates were retained. Four general wage increases, when compounded, total 14.7% and provide a higher base for the benefit enhancements we negotiated. On the health care side, I believe we responded to your deep concerns with a proposal which fairly addresses escalating health care costs. During the last five years, we've been the beneficiary of a capped, multiyear contract with the carrier that placed our rates well below regional and national averages. However, in spite of the efforts of the company and the union, this capped, multiyear agreement is no longer available. As a result, the best rates available to us reflect significant increases. The structure we discussed should allow us to collectively address this situation. We've continued contribution categories and a "percent of pay" basis from your previous plan. In addition, contributions are gradually increased to an end point that is still lower than what other plan participants currently pay. The $1,500 bonus essentially covers the increased costs for employees over the term of the contract. At the same time we were dealing with health care cost issues, we were able to offer improvements in medical, vision, and disability. We also agreed to continue specific provisions in response to your thoughtful argumentation. Pension formula increases will also occur in each year of the contract. The vacation, sick time, and personal days for your membership were retained. Employees keep their current maximum of seven weeks. Payments for these benefits will be increased as a result of the new wage agreement. Job security received a lot of attention during our negotiations. We all recognize that job security is a function of satisfied customers and a demand for our products and services in the marketplace. As the economy globalizes and competitive pressures intensify, we need to work together to assure Raytheon is world class with respect to product technology, cost, quality, delivery and service. Along these lines, we agreed to continue program assurances for Patriot, Hawk, AEGIS, and GBR. Employees will receive broader income and benefits protection, with up to six additional weeks of Pay Continuance for a total of 12 weeks during the term of the contract, should they experience an involuntary layoff. We also offered an extension of medical and dental coverage during layoff and put in a minimum guaranteed period of 30 days. Lastly, we spent significant time discussing various contract language and practice changes which have resulted in numerous modifications. The remaining task to close out the collective bargaining process is to achieve ratification of the changes we negotiated. While neither the company nor the union ever get everything they want out of contract negotiations, I think we've succeeded in our mission of successfully balancing the various interests of the parties to produce a contract that the company, union and employees can be proud of. Yours truly, W. James Nichols Director, Labor Relations C3I and Northeast Operations Raytheon Company Contract Proposal to International Brotherhood of Electrical Workers Local 1505 PROPOSAL HIGHLIGHTS -- Contract Duration - 4 Year Term -- Pay - General wage increases in each year: -- 3 % GWI (Effective August 26, 2000) -- 4 % GWI (Effective August 25, 2001) -- 3 % GWI (Effective August 24, 2002) -- 4 % GWI (Effective August 23, 2003) -- Pension - Improved pension calculation minimums in each year: -- $35 minimum Effective 9/1/00 -- $36 minimum Effective 9/1/01 -- $37 minimum Effective 9/1/02 -- $38 minimum Effective 9/1/03 -- Vacation, Sick, Personal Day Schedules Unchanged ... NO PTO -- No Bi-weekly Payroll -- Health Benefits -- Blue Cross Blue Shield of Massachusetts, as the medical plan carrier for employees in Massachusetts, New Hampshire, Rhode Island and Maine -- Employee contributions maintained on a percent of pay basis -- Contract Bonus - One-time contract bonus of $1500 to support the transition to the 2001 medical plan, payable in September of 2000 -- Short-term & Long-term Disability (STD & LTD) Improvements -- Enhanced disability benefits -- Premium reduction for LTD -- Job and Income Security -- Continuation of Program Assurances -- Pay continuance maximum doubled to 12 weeks -- 27 Contract Language Improvements PROPOSAL SUMMARY Wages -- Four General Wage Increases compound total of 14.7% Beginning August 26, 2000, employees will see an increase in their pay. A total of four general rate increases 3% (8/26/2000), 4% (8/25/2001), 3% (8/24/2002) and 4% (8/23/2003). Raises in base pay will also increase the value of many other benefits as well as employee pensions upon retirement. The average gain in base pay, compounded, for a full-time employee over the life of the contract is 14.7%. For example, someone who now earns about $40,000 a year will earn $45,900 annually at the end of the contract period. During this period, cumulative additional earnings will be over $14,000. This amount is increased by the $1500 Contract Bonus. Because many employee benefit plans are linked to earnings, every increase in pay also improves the value of the total job package. Benefits linked to earnings include: -- Raytheon Hourly Pension Plan -- Life Insurance -- Raytheon Savings and Investment Plan, including the Raytheon Stock Ownership Program -- Disability Income Plans -- Vacations; Holidays; and Sick and Personal Day Pay -- Future Social Security benefits. Over the life of the agreement, the pay improvements will provide an additional value of $5,400 to the total job package. Vacation, Sick, Personal Day Schedules Unchanged ... NO PTO Local 1505 represented employees retain their current vacation, sick and personal day schedules up to the present maximum (seven weeks). Payroll Changes ... No Bi-weekly Payroll Maintain weekly payroll ... no change to bi-weekly. Effective 1/1/01 the pay week will change to Saturday through Friday. Also, effective immediately, mid-week pay increases will be retroactive to the beginning of the pay week and mid-week pay decreases will not be effective until the following pay period. Pension Formula Increased The minimum pension benefit will be increased by $1.00 to $35 for a pension benefit applicable to active employees effective September 1, 2000. The minimum pension benefit increases in subsequent years to $36 (9/1/01), $37 (9/1/02) and $38 (9/1/03). Health Benefits While health benefit costs were rising significantly in Massachusetts and throughout the country, we benefited from a five-year "capped" contract with Blue Cross Blue Shield of Massachusetts (BCBSMA). This multi-year arrangement expires on December 31, 2000 and is no longer available. Blue Cross Blue Shield of Massachusetts (BCBSMA) Retained The Company has recently negotiated a contract with BCBSMA for 2001. The plan includes some modifications from our current plan. Some modifications were required to comply with state mandates while others were to cap plan costs. We looked at several medical plan alternatives and all were more expensive than the Company's plan. Therefore, we negotiated a one time Contract Bonus of $1500, for each active employee, to assist in offsetting the increased cost of health care benefits during the contract period. Blue Cross Blue Shield of Massachusetts is the same medical plan carrier as we currently have for employees in Massachusetts and Rhode Island. The New Hampshire and Maine plan carrier changes from Cigna-Healthsource to BCBSMA. Medical plan changes are summarized below. However, please note that the following benefit provisions have been maintained. -- No change in office visit co-pay ... stays at $15 -- No change to deductibles, out-of-pocket maximums or lifetime benefit maximums for in-network coverage -- Diabetic kits continue to be available through both retail and mail order prescription drug program (lancets and swabs currently in mail order kit, available over the counter) -- Coverage for foot orthotics retained Plan Improvements -- Fitness Reward benefit added -- $150 per year per individual/family at a health club of your choice -- Out-of-Network 4th quarter carry over deductible benefit added -- Co-pay eliminated for allergy injections and other physician immunizations -- Routine vision exam benefit added in addition to Davis Vision benefit -- $15 co-pay for one visit per member/24 months -- Early intervention-20% coinsurance increased to aggregate maximum of $3,200 per covered child in each calendar year, not to exceed $9,600 during time covered child is eligible -- Routine GYN exams now available out-of-network, with 20% coinsurance after deductible -- Routine adult exams now available out-of-network, with 20% coinsurance after deductible -- 20% coinsurance eliminated for out-of-network ambulance -- Mental health benefits significantly enhanced for 2001 -- Cosmetic surgery -- restorative benefits now available with no limitation regarding occurrence in relation to effective date of Raytheon coverage Other Plan Changes -- Out-of-network annual out-of-pocket maximum $2,500 per member plus deductible, $5,000 per family plus deductible -- Maximum of three $100 co-pays per in-network admission per member, per calendar year, in an inpatient, skilled nursing, or rehabilitation hospital -- $50 co-pay for emergency room visits for accident or medical care (or accidental injury with initial treatment within 3 calendar days), if emergency procedures followed (applies in- and out- of-network) -- $50 co-pay for in-network outpatient surgery -- $15 co-pay up to 90 days per episode for in-network short-term rehabilitative physical, speech, occupational or inhalation therapy -- 20% coinsurance for out-of-network well child care up to age 6 -- $15 co-pay for in-network second surgical opinion -- Chiropractor visits-must remain in PCP state (in NH, treatment plan required after 36 visits) -- In-network retail pharmacy (up to 34-day supply) -- $7 co-pay for generic; $15 co-pay for brand; and $35 co-pay for non-preferred brand Mail order (up to 90-day supply) -- $14 co-pay for generic, $30 co-pay for preferred and non-preferred brand -- Surgical extraction of 7 or more permanent teeth, and gingivectomies involving 2 or more quadrants performed in an inpatient setting -- In-network $100 co-pay for facility charges only, if admission pre-approved for medical necessity. Same for out-of-network, with no co-pay but 20% coinsurance after deductible What Does This Mean To You Combined Medical/Dental Contribution Based on Percent of Pay Year 1 Year 2 Year 3 Year 4 Coverage Category: Employee Only 0.98% 1.13% 1.31% 1.38% Employee and Family 1.96% 2.26% 2.62% 2.76% Average amount per week over current contribution model (.75%/1.5%) Employee Only $1.81 $3.12 $4.73 $5.54 Employee and Family $3.63 $6.24 $9.47 $11.12 *Based on average IBEW annual base pay of $39,832. Contract Bonus - $1500 In order to offset the initial transition to the 2001 medical plan, a one-time contract bonus of $1500 for all active employees. Short-Term and Long-Term Disability Short-term and Long-term disability benefits have been enhanced as follows: -- Open enrollment will be offered for 2001 STD Plus Plan, enabling IBEW 1505 employees to enroll for STD Plus coverage for 2001 without providing proof of good health. -- The STD Plus 25% benefit will be paid without deduction to net take home pay amount. -- The benefit calculation will be based on a five-day workweek. -- The Intermittent Scheduled Absence Program will provide benefits for absences for the following scheduled treatments: chemotherapy/radiation, kidney dialysis, coronary rehabilitation, or organ transplant preparations. -- The benefit waiting period will be measured in weekdays (Monday-Friday). -- Premium change: -- STD Plus from .20 to .30 per $100 of covered pay -- LTD Basic from .52 to .40 per $100 of covered pay -- LTD Plus from .75 to .60 per $100 of covered pay -- IBEW 1505 employees with PTO will receive the same STD benefits as salaried workers. Job and Income Security -- Program Assurances Current Program Assurances will continue for the duration of the four year agreement: -- Patriot -- Hawk -- AEGIS -- GBR -- Improved Pay Continuance Employees who are involuntarily laid off will receive improved income and benefits protection with up to 6 additional weeks of pay continuance, for a total of 12 weeks during the term of the agreement, on the following schedule: Length of Service Maximum Duration of At Least But Less Than Pay Continuance --- 5 years 4 work weeks 5 years 10 years 6 work weeks 10 years 15 years 8 work weeks 15 years 20 years 10 work weeks 20 years or more 12 work weeks Medical and dental benefits will continue during the pay continuance period at the same contribution rate paid by active employees, and for an additional 90 days during the term of the agreement, at no cost to the employee. Employees who have exhausted their maximum pay continuance and benefits during a previous layoff will receive 30 days of continued medical and dental coverage for each subsequent layoff period. Other Provisions C-2 Pay Adjustment -- Company will adjust the rate of a recalled employee to the level of a new hire if that rate is higher. C-2 COS -- Employees may file COS at time of layoff. Vacation Year Clarification -- Incorporate the April 25, 1999 Letter of Intent regarding calculation and adjustment of vacation pay and year. Recall Administration -- Streamline the recall process and notify Chief Stewards. Vacation Year Extension -- Continue current practice as outlined in Letter of Intent JJM-97-89. Bulletin Boards -- Union will have space on department bulletin boards subject to Article 20. Seniority Lists -- COS Reports -- Company agrees to provide seniority lists before and after layoffs, and provide regular change of status reports. Job Postings -- Departmental openings will be posted for three days prior to filling the vacancy. Job Openings -- Company will post IBEW job openings outside each plant Labor Relations office. 20-Mile Clause -- It is the intent to fill vacancies created by twenty-mile clause recalls unless it would cause a departmental reduction. Recall Restrictions -- Employees may restrict themselves from the FOC classification. They also may restrict their recall to a specific level. 25-Year Recognition -- Eligible employees may be paid in lieu of taking the day off. Assignment Outside of Massachusetts -- The Union will be notified or have input in the selection of person being assigned depending on the assignment. Overtime/Andover -- Union given a summary of charges every 6 months. Parties will meet to discuss related issues. RF Components/Material Movement -- Add one Material C on the 4th shift and form a joint committee to discuss related issues. RF Components/Cafeteria Services -- Company will provide abbreviated cafeteria services for a 6-month period. RF Components/Test A Work -- Set up and calibration of burn-in equipment in Fab 2 will be done by ADC Tester A. Education Assistance -- Re-affirm the existing agreement. Scholarship Program -- Joint Scholarship Program will be available to a greater number of participants. Safety -- Changes to department Safety Check Sheets emphasizing area training. Millwright Job Family -- Create new A, B, C classifications Electrical Code Re-certification -- Put program into the CCL Maintenance -- Educational Assistance -- Will be offered for contaminated soil certification. Carpenter License -- Required for new hires. Bargaining Union Employment Opportunities -- Discusses appropriate placement of bargaining unit employees in the Labs. Steward Time -- Establishes new ratio of 1 steward per 65 active employees. Union steward's hours of Company Paid Union Business capped. Training -- Elimination of certification requirement; establish training goals and OJT by department. Separation of Tewksbury and Bedford -- Separate locations for all contractual purposes. Letter of Intent -- The parties have agreed to a joint statement on productivity issues. Classification/Slotting Issues -- Resolved job slotting issues in the Machine Shop and the Sheet Metal Groupings. Contact: David Polk of Raytheon, 781-860-2386 or 800-404-3803.