Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Dissecting Boeing CEO’s statement next new airplane will cost $50bn April 15, 2024
- Bjorn’s Corner: New engine development. Part 3. Propulsive efficiency April 12, 2024
- A350-1000 or 777-9? Part 2 April 11, 2024
- Pontifications: Boeing “transparency”–not so much. April 9, 2024
- Airbus charges and write-offs since 1999: more than €33bn April 8, 2024
Wake up notice to IAM, SPEEA and WA State
The news that Boeing is leaning toward proceeding with a new airplane instead of a re-engined 737 serves as yet another wake-up call for Boeing’s labor unions and Washington State officials to get their act together.
As we report in the preceding post, Boeing may forget about re-engining the 737, a widely-held belief that the company would do so. If Boeing did, Washington State and the unions that build Boeing’s airplanes here were assured jobs would be safe as long as these legacy programs remained in production.
We have been speech-i-fying on this topic for a year in which we have repeatedly warned that once a clean-sheet airplane program is undertaken, Washington officials and the unions need to be concerned that Boeing will compete the production with other states to get better business and labor costs.
Boeing Commercial President Jim Albaugh is on record saying he wants to build the 737 replacement airplane right here in Puget Sound (Seattle). But he added a significant caveat: it depends on labor. And the IAM still doesn’t get it.
Tom Buffenbarger recently threatened Boeing with a strike in 2012, when the next contract amendable date comes up. This is an astounding position to take, given that Boeing located 787 Line 2 in Charleston because officials said they were fed up with the IAM and repeated strikes.
While the IAM Local, 751, believes it was “used” to gain more concessions out of South Carolina and that the decision was already made regardless of its willingness to provide longer stability (and there is compelling evidence this was the case), there is no getting around that Boeing wants to reduce its exposure to the militant IAM.
(We believe the IAM 751 Local is much more willing to work with Management than Buffenbarger, whose agenda is markedly different due to his national concerns than the Local has for its own membership. If left to their own devices, we think IAM 751 and its president Tom Wroblewski could reach an accord with Boeing that would best serve local needs but which could very well be at odds with Buffenbarger’s national concerns. This is why we suggested in February that IAM 751 should divorce from IAM International, an idea that earned us a tongue lashing from the union. We stick to our guns, however.)
We remain absolutely convinced that Boeing will compete the production location for the 737 replacement (and, should it come to it, a 777 replacement as well).
The IAM and an increasingly discordant SPEEA, whose own relations with Boeing appear to be getting increasingly testy, have to ask themselves if drawing lines in the sand and losing jobs is more distasteful than figuring out how to provide long-term stability at lower costs and retaining jobs.
We certainly understand resistance to giving up hard-won gains, but there is the old cliche that it is better to have 50% of something than 100% of nothing (“50%” being the number in the cliche, but this figure is variable).
Boeing has the upper hand. It can put production anywhere and with the 787 Line 2 has proved its willingness to do so.
As for Washington State, there are still business climate issues affecting Boeing, Washington aerospace more broadly and business in general that need to be adjusted. Washington’s elected officials have a history of waiting till the last minute to address what by then becomes a crisis. A little forward-thinking, beginning now, is the far better course.
All parties have a to begin thinking about these issues now. Boeing is to decide by the end of the year about the future of the 737. This is not far away. If Boeing decides to proceed with a new airplane, there will be about a year before it decides about production location.
We said a year ago the clock is ticking. It won’t be too long before Boeing sets the alarm.
I am not surprised at all, Boeing really had no choice, because they ran into the same problem 30 yrs ago, when the CFM56-5 engine was too big to fit underneath the 737 wing, without major structural changes to the wing and fuselage, making the change “not cost effective.”
Only after Lufthansa and several other carriers had ordered large numbers of 737-200ADV aircraft, did SCECMA/GE finally agree to reduce the CFM56 fan diameter and offer the smaller diameter CFM56-3 engine, was Boeing able to offer the 737-300, which contributed in a major fashion, to making the 737 airplane, the best- selling airplane in aviation history and enable SNECMA/GE to share the glory!
The above could mean, however, that Airbus may still re-engine the A320 with one of the new gen. engines and save money on the cost of building an all new aircraft.
The new engine being the key to the economic efficiency of both aircraft, the A320 fly- by-wire system, wider cabin and being higher of the ground compared to the 737, to begin with, gives
Airbus that option, while for Boeing, it is a must.
However, once Boeing offers the all new 737 and Airbus should, at least at
the beginning. re-engine the A320 only, to save cost and get the A380 financial
losses reduced, the all mew 737 will be the real winner in that market!
As you quoted:
“And the IAM still doesn’t get it.” Tell me, which union in ANY industry “gets it”??
Unions in 2010 are the bane of industry-both in manufacturing and non-manufacturing.
If a company can’t compete efficiently and effectively against its competitor, it will either shrink or become eliminated.
With the ‘ promotion ‘ of Doug Kight to a front office position in Chicago. it is even more evident that the boeing mantra of bribe em or bust em will be in full play.
many years ago, Boeing skated on the Tom Baker ( iam president ) fiasco when Tom got nailed for pocketing the difference between first class and tourist class when traveling on union funds. what was not pursued was a few ‘ free’ trips to ‘customers’ on delivery flights by Boeing, and a few other goodies
In the early 90’s , the then executive director of SPEEA was caught via room receipts during negotiations that showed his drinks and things being sent to a room paid for by Boeing, wherein he was having discussions with BA without the knowledge of the negotiation team. SPEEA simply chose to allow him to resign.
Thus started the 15 year reign of the next executive director, who eventually managed to take on a few extra pension goodies for himself courtesy of BA, which up to a point were legal and above board.
But how many people knew that ex employees working full time for the union could legally get up to 10 years of additional BOEING credited service on their Boeing pension plan ? This is because such persons can be put on union leave of absence.
It was the granting of more than the 10 years additional pension credited service that becomes a sicking point, said event happening during the 2005 negotiations.
It is a matter of record, that even after leaving SPEEA, said person continued to be shown on company payroll as being on LOA. Until early this year when he became a contractor for Boeing. !
and the game goes on. !
And after
“Washington’s elected officials have a history of waiting till the last minute to address what by then becomes a crisis. A little forward-thinking, beginning now, is the far better course.”
It’s the theory of evolution: All those who advocate addressing a problem beforehand are not elected; all those elected tell everybody not to worry, just stick it out, and we will win.