787 Line 2: Countdown to Decision; Opportunities on Both Sides

It’s Monday, October 26, and the final countdown to a decision on where to put Boeing’s 787 Line 2 assembly site may come as early as this week. We understand the Boeing Board of Directors meets today or tomorrow; Boeing’s permit applications in Charleston (SC) to expand the facility there has a November 2 start date. Boeing management and the International Association of Machinists, at loggerheads for years, struggle to find an agreement that will tip the decision to Everett (WA).

We don’t need to recount the high drama of the last week, nor issues that we’ve already discussed.

Instead, we’re going to touch on some issues we’ve not covered, or at least recently, as well as some new things that have come up since last week.

Opportunities

Boeing and the IAM have a real opportunity to undertake a dramatic shift in its relationship. Behind the scenes, talks have been going on between the IAM 751 local and Boeing on other issues, where progress has been made and relations seem to have been inching forward. But these pale compared with siting Line 2 and the demands of each side.

To us, the resolution seems pretty straight-forward: Boeing wants a no-strike agreement for 10 years. The only way to effectively accomplish this is to extend the contract agreed to in 2008 from 2012, when it is amendable, to 2019. Extend the salary, benefits, pension and other terms and conditions. Extend the no-strike clause that is contained within the contract.

In return, put Line 2 in Everett.

The union has made no secret that it also wants more work brought back in-house for the 787-9. Since Boeing CEO Jim McNerney, former BCA CEO Scott Carson and Mike Denton, vice president of engineering, all have said Boeing will bring more 787-9 engineering and production in-house, it seems reasonable to us that now is the perfect time for Boeing to be specific on this point.

According to the story last week by Dominic Gates of The Seattle Times, the union wants a guarantee that the successor airplane to the 737 remains in Puget Sound as a condition to extending the contract. (We also presume the same is true for the successor to the 777, but Gates’ article doesn’t address this.) We know of a couple of other conditions reputed to be demanded by the IAM. We think these are unreasonable at this time and in these circumstances and only serve to muddy the waters and threaten an agreement.

The quid pro quo should be a straight-forward contract extension-for-Line 2, with the 787-9 issue tossed in. And you’re done.

Improving relations

If an agreement is reached as outlined above, we think this will go a long way toward repairing the hard feelings of contract negotiations in the recent past. But we also believe there is a good chance relations between Boeing and IAM 751 could improve under the leadership of BCA’s new CEO, Jim Albaugh, an engineer who understands engineering and production in a way that Scott Carson, for all his talents, never did.

After Albaugh’s appointment, we did some digging to learn about him, whom we had not followed during his tenure as the CEO of Boeing’s defense unit. One thing we found was that relations with IAM 837, the local there, seemed far better than that between BCA and 751.

There were no strikes by 837 during the eight years Albaugh was IDS CEO. It’s true that negotiations for the 2007 contract reached the point where a strike vote was taken (not an uncommon occurrence in contract negotiations) and approved by the 837 membership, but a settlement was reached before the deadline for a walkout.

The IAM 837 contract includes items that 751 has been seeking for years from BCA, without success, such as an incentive-based cost-efficiency program under which IAM 837 members share in the savings of cost benefits they suggest. Operational committees involving the IAM exist in St. Louis that 751 would like to see in the Puget Sound.

Although Albaugh is widely described as an aloof CEO who doesn’t get down into the nitty-gritty of contract negotiations, he met with IAM 751 and SPEEA, the engineers union at BCA, in the first week of his appointment as BCA CEO. Initial interaction was described by labor as encouraging.

Albaugh, as CEO of IDS, came to Renton for the roll-out of the 737-based P-8A Poseidon, praising 751 and SPEEA for their contributions to a smooth program that rolled the airplane out one time and on budget. Labor noted the long absence of such acknowledgment from Carson.

We think that given the opportunity–there’s that word again–Albaugh can effect a major change in management-labor relations at BCA.

Dominic Gates’ story last Thursday characterized the talks between Boeing and the IAM as deadlocked. We understand there have been additional contacts over the weekend (we’re not sure they can be truly characterizes as talks, however). We infer from this that the matter is still open.

We truly hope an agreement can be reached. We shudder to think what will happen if Boeing does put Line 2 in Charleston because of the labor issue–we opined on this last week. For The Boeing Co. as a whole, as well as its customers, the result would not be good. Boeing could well be put in a position of winning the battle but losing the war to the IAM’s guerilla activities, which in the end would be as damaging to the membership as it is to Boeing.

Both sides have a tremendous opportunity. Let’s hope neither one of them blows it.

19 comments on “787 Line 2: Countdown to Decision; Opportunities on Both Sides

  1. IF BA were serious- they would have since presented their case in a formal fashion to both IAM and SPEEA membership. That they have not done so, and leaving no time to do so is proof that it is all a major PR effort by BA- with the help of the Seattle Times to CYA. Note that the Times has yet to publish IAM comments by Wrobleski re the FACT that members must vote to make such changes, and to date there is no such movement.
    This simply reinforces the (NON) credibility of the Boeing management.

  2. DON S, the entire civilized world knows that the membership must ratify any agreement made by the union negotiators. Why belabor the obvious? I doubt either side contemplated negotiating on C-SPAN.

  3. Auroa – Most negotiations involve a position taken by both sides. What position was approved by SPEEA members to be presented to Boeing several weeks ago ? Where is there mention of SPEEA negotiations ? It was not until 22 Oct that SPEEA made public to members their position, ” we will organiz . . . ” and no mention of other ‘ trades, compromise, or negotiations.

    BTW Mr Buffenbarger has no real authority to negotiate for IAM 751 or ‘ guarantee’ anything .

    I’ll stand by my comments-

    • I suspect these aren’t one’s “textbook” negotiations, thus the need for expediency and “discretion”. However, NOTHING will be final until ratified by the membership. You’ll admit, these are “special circumstances” if there ever were “special circumstance”? I don’t live in WA state, but I would hate to see it go the way of New York or California with regards to the aerospace sector.

      Frankly, I don’t see the union (or at least the national leadership) acceding to the no-strike provision. I hope they prove me wrong and do the smart thing.

      As noted on the last thread here, binding arbitration would serve as check on either side during the “no strike” period. Perhaps during that period the 737RS and 777 negotiations would obviate the need for strikes in the future?

  4. groooannnn.

    That BA planned to open a second line has been local knowledge for months -years.

    My point was and is that there has been NO need to have ‘ emergency’ negotiations, pending a meeting by the BA board today- and a decision within a few weeks.

    In keeping with a long standing anti- union – anti-IAM policy, Boeing is IMO using this as a hammer. While there MAY be some long term advantages to SC, and it does take a few years to build and staff a new facility, the methods used by Boeing- including the slanted PR games are really NO different than that used re any negotiations or strike.

    In any case – no need to continue my responses to this part of the issue.

    I’ve been there – done that . .

  5. “I’ve been there – done that . .”

    Seriously, maybe its time to do something else?

    Ever play poker? Ever negotiate? Does it pay to have a strong suit in negotiations?

    You are castigating the company for acting in the rational self interest of its…dare I say it?…owners.

    I made a comment in the last thread suggesting the work force take a serious equity stake in the company. Become owners.

    This endless cycle of conflict will guarantee only one thing… and I’ve been to Charleston and love the place. Most of the younger workers at Boeing that are willing to move will love it too if these talks fail.

    For those 50 somethings that won’t adapt…well there’s still deer camp to look forward to….

  6. Hmmmm…

    http://home.att.net/~dprops/

    http://home.att.net/~dshuper/welcome.html

    The above links are several years old – and have not been updated

    I’ve ‘ won ‘ 4 of 6 negotiations with the BA BOD re shareholder proposals

    Suggest you learn a bit more about employee- shareholder issues, and just how many shares in the Boeing VIP of BA stock are owned by employees past and present ..

    Available in the annual report and/or proxy statements

    Have a nice day

  7. As you pat yourself on the back, ponder what will happen to Washington state if these negotiations fail. For starters, look to Detroit.

    • This argument implies that the primary competition to Boeing has an advantage in lower wage rates, which is what killed Detroit. Is that the case in the airliner business? Boeing is in a duopoly with Airbus, which has a heavily unionized work force operating in highly taxed, highly regulated nations.

  8. Ok, say the word ‘Detroit’ and all that does is to tell me that there is a very basic lack of understanding of the situation, which bears little to no relationship between the automakers and the UAW.

    Don S, I’ve read your posts elsewhere, maybe you can explain just why, on a legal basis, it would be quite impossible to have any sort of legal vote within such a short timeframe.

    I just can’t seem to get anyone to believe that this is all a farce, a sham, a red herring.

    And I cannot understand why Scott buys into the notion of a sudden contract extension. A contract that took months of hard core negotiations and a two month strike to settle. Actually, a contract that is probabaly more a compilation of decades of such labor agreements. And it’s all supposed to be re-negotiated in secret without consultation of the rank and file, in just a couple of weeks.

    There are no negotiations. There is no sincere effort By Boeing. Never was. There is just groundwork being laid to place the blame at the IAM’s feet, a move that will backfire on Boeing in ways it cannot imagine.

    There is no effort on the IAM’s part, because there can’t be. They have a contract, and they are legally and proceedurally bound. Pretty much all they can do is trade bluster with Boeing in the short term. If anything serious were to take place, it would have had to start a year ago.

    Boeing will still have years of business to conduct out of puget sound, with the labor force it has on hand, and the cash it doesn’t. And the three years until expiration of it’s current labor contracts will go by quickly.

    It would be much cheaper, and more effective to buy off the rank and file than to move 787 and face the mother of all strikes in 2012. That’s the pragmatic view.

    Pragmatism will make sharholders money. Anti union idiology in the case, will lose it.

    I don’t predict the IAM will try to disrupt, but I will predict less efficiency and additional costs as workforce moral sinks and a collective sense of hopelessness sets in. People will work, but I very much doubt with much enthusiasm or intensity.

    It’s my State, and some of my money we are talking about here. And in this case, I’m tired of seeing both diminished because of James McNerny’s personal and seemingly pathological hatred of the IAM. He’s a ceo gone captain Ahab, leading the Pequot to a watery doom.

    • Rather than Detroit, the former aerospace epicenter of Southern California is the better comparison.

      As for extending the contract, it is the most pragmatic, expedient solution.

  9. An extension, even if pragmatic, is hardly expediant, and legally and proceedurally impossible in the timeframe as stated by Boeing.

    For example Scott, what should the pay of the average IAM memebr be say, 9 years from now? Pension? What about the deductable on thier medical insurance?

    Or are you saying everything should just be frozen at the current levels? How do you get from here to there?

    You can’t, and Boeing knows it.

    There is no legal framework for the IAM to make a proposal, And Boeing knows that too.

    As to Southern California Aero, what happend there is that it didn’t move, it was murdered by high taxation, merger, mismanagment, and buyout. Not Labor relations

  10. An extension of the type discussed COULD be legally possible within say a few weeks- but a probability of success is near ZERO.

    And IF both sides agreed to open the contract and PUBLISH ALL the terms and conditions, AND conduct a vote- it is THEORETICALLY POSSIBLE – BUT NOT LIKELY.

    Then there is SPEEA. Ditto the same problems.

    more later

  11. My point WAS and IS that the so called time frame wherein the BA bored of directionless is supposed to make a decision- and permits to start building on Nov 3rd being reported essentially forecloses any real chance of of a new contract or extension acceptable to the MEMBERS of IAM 751. And BA hasn’t even had a serious discussion with SPEEA.

    IMHO- the SC plant is a done deal – BA bored is now in CYA and will blame everything on union so as to stop any organizing attempt.

    • well here is the official statement from the IAM . .

      http://www.iam751.org/

      Statement of District President Tom Wroblewski in Response to Second 787 Line Announcement

      October 28, 2009 – “Boeing has betrayed our loyalty once again, walking away from our discussions just like they walked away from Seattle eight years ago to move to Chicago.

      We tried very hard to reach an extended agreement with Boeing. We listened closely to what executives said, and suggested ideas to meet their needs. We offered concrete, real-world solutions.

      But I can tell you now, no matter what Boeing says or implies, the truth is this: We did offer Boeing a 10-year contract, and even offered to go longer than that. And when we did, they seemed stunned, and stopped talking.

      It was obvious to me that Boeing wasn’t really interested in working with us. They didn’t take our proposals seriously and they never offered any proposals of their own. Most of the time, they didn’t even take notes.

      It’s now clear that Boeing was only using our talks as a smoke screen, and as a bargaining chip to extort a bigger tax handout from South Carolina.

      I haven’t reported this before — not to our members and certainly not to the media — because Boeing had asked for confidential talks. My word means something, so I said nothing, even while the company was leaking half-truths to reporters.

      When our team asked Boeing if 10 years was going to be enough for them, they didn’t respond. And when I asked them to confirm that the extended contract would secure the second 787 line for Washington state, their reply was only: “Well, it would be helpful.” But they would not commit to anything.

      Still, we tried to get a deal, because I know that’s what our members and our community wanted. To do that, we were willing to discuss any issue to get a deal that we could recommend to our members. We floated ideas on health care costs, wages, pensions and lump sums.

      None of this mattered to Boeing. They didn’t want solutions, but only a scapegoat.

      Our seven-week strike last year is not the reason the 787 is already more than 120 weeks behind schedule.

      Instead of investing in our shared future and a highly talented workforce in a region ideally suited for aerospace, Boeing has decided to double-down on its failed 787 strategy and place an ill-advised, billion-dollar bet on a strategy that’s a proven loser.”

      +++

      as I said – it has been a done deal and BA was NOT serious – but in a CYA mode

  12. ME- why do u turn to slams and personal attacks ? On company time ?

    for the record, should you care to look me up via google , you would find that I do not work at Boeing.

    And that I have dealt with ALL levels of BA from the Bored of Directionless, Ethics, program managers, and grunt workedrs.

    On the other hand YOU do seem to work at Boeing – so how do YOU get the time to read all the blogs ?

    Why not stick to the subject at hand

    Don

  13. All right, people, tone it down. We know this is a highly emotional issue but knock off the personal attacks. Keep to the issues or we’ll start deleting the posts that go personal.

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