The Machinists union and Hawker Beechcraft reached a tentative agreement early Wednesday morning on a seven-year labor contract that would keep five major manufacturing operations and two-thirds of the bargaining unit's jobs in Wichita.
The union's negotiating team is recommending members accept the agreement when they vote on Saturday.
The offer cuts base wages 10 percent and reduces earned time off, increases health insurance contributions, includes a cost-of-living adjustment and retains pensions at their current rate.
"Last week, the reality is that the plant teetered close to being gone forever," the union's negotiating team said in a statement. "Our brothers and sisters in Salina can tell us how real it is. The Governor gave us a second chance to save the jobs."
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Sources have said Hawker Beechcraft, which announced earlier this year that it will close its Salina plant and move the work to Mexico and to outside suppliers, received an offer from Louisiana to move its operations to Baton Rouge.
Last week, company and union officials met with Gov. Mark Parkinson. During the two-hour meeting, the company accepted a package of incentives that would keep "the vast majority" of the jobs in Wichita. The deal is subject to successful conclusion of contract negotiations.
Hawker Beechcraft employs 7,000 people, including 6,000 in Wichita. Of those, 2,600 are represented by the Machinists union.
Under the agreement, Hawker Beechcraft would retain 1,718 hourly jobs and eliminate 821 jobs. There are currently no plans to eliminate 86 jobs in modifications, the union said.
Jobs to be eliminated are manufacturing fabrication in Plant 1; piston backshops in Plant 2; King Air backshops and small parts in Plant 4; electrical and upholstery in Building 94; and tooling fabrication and the associated quality assurance and support groups.
The company did not say where the work would be moving or when.
Those decisions will be made over the next several months, said spokeswoman Nicole Alexander.
Laid-off Wichita workers will have extended recall rights and training opportunities, information from the union said.
The Machinists called the negotiations, opened a year early, "extraordinary." With plant closures and threats of relocation, the union kept one goal in mind, officials said. "It's about having a job. It's about survival in this economy."
The proposed contract is just one piece of several initiatives the company said it is taking to cut costs as it deals with an unprecedented slowdown in the general aviation market. Last month, Hawker Beechcraft said it will lay off 350 people from the salaried work force by Nov. 1.
"Over the last 12 months, we have clearly communicated the need to cut costs throughout our business to cope with the significant downturn in the global economy," Hawker Beechcraft CEO Bill Boisture said in a statement Wednesday. "Many actions have been and continue to be taken to irreversibly change the footprint of the company and its position in the global marketplace."
The company and the union understand that the members are an important part of helping the business adjust to the "harsh realities of a changed global economy and a changed market for business and general aviation products," he said.
The state's investment in the company along with the "positive changes" in the new bargaining agreement that aligns the compensation of all its employees will help Hawker Beechcraft be in a "much more stable position to sustain a Kansas and American benchmark," Boisture said. "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."
The Machinists negotiating team said it worked hard to get the best possible outcome for its membership in a bad situation. Although there are concessions, it made "huge improvements" on job security during the talks.
"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," the union said in the statement.
The contract will be reopened in 2014 to evaluate general wage increases, automatic wage progression, performance pay, pensions and medical, dental and vision care. The talks will not be subject to a strike.
The proposal includes:
* A 10 percent reduction in base wages, which average $27 an hour
* A performance pay program for future increases that uses the same financial criteria as the management plan
* Automatic wage progressions starting Oct. 17, 2011, of 15 cents per hour each 26 weeks until the maximum labor grade is reached
* Lump-sum payment capped at $1,000 per year in a cost-of-living adjustment
* Earned time off reduced from 10 days to five
* Pensions remaining at $51 per month per year of service
* The retention of current health care providers
* Three-year cost sharing of health insurance of 25 percent beginning in January, raising to 30 percent in January 2013
* An extension of recall rights.