Raytheon Response to Strike Vote of IBEW 1505

Aug 27, 2000, 01:00 ET from Raytheon

    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
     -- 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
     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
           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
       -- 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
     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
     -- 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
     -- $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
     -- 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
     -- 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
           -- 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
     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
     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
     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
     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.

SOURCE Raytheon