Update, 10:30 AM PDT, Sept. 3: IAM members are voting today. There is a last-minute flurry of activity by Boeing, IAM and the media.
KIRO Radio news: Boeing machinists voting.
KIRO Radio News: To broadcast the vote results live at 8:30pm PDT. See the URL at the top of the page.
IAM’s last minute appeal: At the main website.
Voting continues to 6 PM PDT; the first vote tallies are expected between 6:30 and 7 PM, and a trend may be evident with these initial results.
Big Week for Boeing
This is a big week for Boeing. Wednesday executives will find out if members of the International Association of Machinists will strike. This week the Department of Defense is expected to issue its Final Request for Proposals in Round Three of the KC-X aerial tanker competition for the USAF, and Boeing will learn whether DOD is going to give the company six months to propose a bigger airplane than the KC-767AT.
First, the IAM
The IAM votes tomorrow (Sept. 3) on whether to accept the “best and final” contract offered last Thursday by Boeing. We have been posting the Boeing and IAM positions and statements on this site, so we won’t re-link any of that information here.
Boeing took a big gamble by releasing information throughout the process. On the one hand, these trial balloons enabled Boeing to gauge reaction. On the other, some of the so-called take-aways inflamed the IAM membership and may have had the opposite effect Boeing had hoped for.
The IAM leadership recommended that the membership reject the contract and strike. Union by-laws require a two-thirds of the membership to reject the contract. Thus, if 33.34% of the membership votes to accept the contract, Boeing wins. This is what happened in 2002 when Boeing received 34% of the vote and imposed the contract then that froze salaries and had other take-aways. Some Boeing officials believe this set the stage for the 2005 strike that lasted a month. Boeing wants a majority vote this time, however, and one of the sweeteners in the contract is a bonus if 50% of the membership votes to accept the deal.
An unscientific poll conducted by The Everett (WA) Herald, the newspaper covering Boeing’s wide-body production plant, Monday (Sept. 1) showed just 66% of the respondents supporting rejecting the contract. This was down from 70% on Saturday. Since there are no controls on the on-line poll—people can vote multiple times and anyone can vote, not just Machinists–it’s unclear how much veracity the poll has. But it certainly suggests rejection is no sure thing.
So what is the impact if the contract is rejected and the union strikes at 12:01 am Thursday, Sept. 4? It all depends on how long the strike is. If the strike is over in a matter of days or a week, the impact will be minimal. But if it lasts a month, like the 2005 strike, Boeing will be challenged in many areas.
The intangible impact will be the relationship between Boeing and the IAM, long-strained over out-sourcing, take-aways and loads of other issues. If the IAM leadership succeeds in getting a contract rejection, the sour relationship between them and management will get worse. If Boeing wins by less than a majority vote, or very close to it, union membership and leadership resentment will almost certainly be aggravated.
Boeing needs a clear, solid win, but our prediction is that a majority will vote to reject the contract. Whether the IAM reaches the two-thirds required to make it official remains to be seen.
The Department of Defense is already overdue in issuing the Final RFP (FRFP) in Round Three for the KC-X competition. Expectations are that the FRFP will be issued this week. The big question is not whether DOD will back off on any technical specifications or scoring methodology but whether it will accede to Boeing’s request for an additional 4 ½ months—for a total of six—to give it time to prepare a bid using a platform larger than the 767-200LRF design that lost to Northrop Grumman’s KC-30 offering and which Boeing now concedes is inferior to the KC-30 within the context of the DOD Draft RFP.
Northrop and its supporters are apoplectic over the request for more time, charging Boeing is only playing politics and hoping for a friendly Democratic White House and Congress. This is undoubtedly part of Boeing’s motive, but we think the request is reasonable, as we previously outlined on our companion website. Not only is there a fairness issue, both real and perceived (and with this competition already wallowing in politics, perception is more important than reality), we think this new competition will encourage Boeing and Northrop to sharpen their bidding prices and also provide better airplanes. Here are the options: