1 In the second step of a reorganization that began earlier this year, Boeing Co. said it will create a Defense and Space Group to consolidate several divisions.
2 Meanwhile, Boeing officials and representatives of the Machinists union met separately last night with a federal mediator in an attempt to break the month-old strike that has shut the aerospace giant's assembly lines at a time when it has an $80 billion backlog of jetliner orders.
3 The two sides were scheduled to meet with the mediator this morning.
4 Machinists already have rejected a package that would provide a 10% pay raise plus bonuses over the three-year life of the contract.
5 Boeing has said repeatedly it won't expand its offer and the machinists have responded that the offer isn't good enough.
6 However, the resolve of some of the striking 57,000 machinists might be weakening.
7 About 1,000 strikers signed petitions last week calling for Boeing and Machinists representatives to schedule new meetings.
8 The two sides hadn't met since Oct. 18.
9 While Boeing's commercial business is booming, its military business is feeling the effects of a declining defense budget after a strong buildup during the Reagan presidency.
10 In May, the company consolidated its Aerospace and Electronics groups; the new Defense and Space Group will contain the Aerospace and Electronics division and Advanced Systems, both based in the Seattle area; Boeing Helicopters in Philadelphia; Boeing Military Airplanes in Wichita, Kan., and ArgoSystems in Sunnyvale, Calif.
11 B. Dan Pinick, president of Boeing Aerospace and Electronics, will become president of the new group, which will become operational Jan. 2.
12 In addition, Boeing said it also will reorganize all its work in Wichita into military and commercial divisions.
13 All of the changes will reduce its overhead and streamline operations, Boeing said.
14 Analysts agreed. 'It's a further step to better returns in the hemorrhaging defense business,' said Steven Binder, an analyst with Bear, Stearns & Co. in New York. 'They had to do it.'
15 Howard Rubel, an analyst with C.J. Lawrence, Morgan Grenfell Inc. in New York, said the shift reflects Boeing confidence in Mr. Pinick, described by Mr. Rubel as an expert on doing business with the military. 'His side of the business has been successful in a tough environment,' Mr. Rubel said.

Machinists already have rejected a package that would provide a 10 % pay raise plus bonuses over the three - year life of the contract .
rejected a package
Why did the machinist rejected a package?