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Washington governor to announce tentative deal on Boeing 777X

The Boeing logo is seen at their headquarters in Chicago, April 24, 2013. REUTERS/Jim Young

By Alwyn Scott

SEATTLE (Reuters) - Washington State Governor Jay Inslee is set to announce a major agreement on Tuesday that would bring key parts of Boeing Co's newest jet program, the 777X, to the Seattle area.

Ahead of the announcement, the machinists union said its members will vote on a proposal guaranteeing that fuselages and wings for Boeing Co's new 777X jet will be built by union members in the Puget Sound region, the union said.

In exchange, the union would ratify a new eight-year contract expiring in 2024 that includes $10,000 signing bonuses for all workers, and would make changes to the pension plan.

The union agreement is part of a broader deal that also will include significant tax incentives for Boeing and investments to improve transportation in the state that would need to be passed by the legislature, according to a person familiar with the discussions.

Three sources cautioned that details of the agreement remain subject to change. But it provides "a path" to bring the program to the state and will be seen as "major good news," one of the sources said.

"It will be clear today that we have what the company and the machinists can call an agreement," that source said.

The sources spoke on condition of anonymity because the discussions are still confidential.

Reuters reported on Monday that Boeing was in advanced talks with its machinists' union to assemble the 777X and build its wings in the Seattle area, according to several people familiar with the negotiations.

The proposal made by Boeing would halt additions to workers' pensions and set up a different retirement plan funded by the company, the union said.

Under one form of the deal that circulated in recent days, union members older than 58 would be offered a buyout that provides enhanced pension benefits.

In exchange, members would make concessions on pensions and health care coverage.

The agreement would provide "an unprecedented degree of labor stability in the volatile and competitive industry."

The last machinists strike, in 2008, shut down production for two months.

Boeing and the governor's office declined to comment.

The announcement is set for 3:30 pm Pacific Time.

Where the jet should be built is one of the most keenly awaited decisions in global aerospace. Workers at Boeing's commercial base in Washington State are competing with non-unionized workers in southern states where wages are lower. Washington State officials have also been working on incentives to keep the work local.

(Reporting by Alwyn Scott and Bill Rigby; Editing by Leslie Adler and Phil Berlowitz)