The Boeing Co. seems to be at never-ending crossroads.
The development of the 787 was to be a game-changer with an entry-into-service planned for May 2008. If this had happened on time, this innovative airplane would have set Airbus back five years and positioned Boeing to proceed with a new 737 and/or 777 years ahead of Airbus.
The 787 is a game-changing airplane, all right. But the strategic game changed in the wrong direction because of the outsourcing screw ups and mismanagement of the program. The 747-8 suffered from the trickle-down effect of diverted resources to the 787, and new airplane programs ground to a halt.
In the meantime, the messy warfare between management and the IAM 751 continues to play out in public. IAM 751, and the SPEEA engineers union, never miss a chance to say “I told you so,” pointing out that they warned management of the potential problems of outsourcing.
Management has already acknowledged this point and while it continues to believe outsourcing at some level is necessary (which the unions privately concede), more work for the 787-9 is being brought back to Puget Sound and other work is being located here. Continuing to say “I told you so” isn’t necessary and it only irritates an already testy situation. (Just ask your spouse about this, if there is any doubt.)
As for Management, the statements from Chicago–from CEO Jim McNerney specifically–that the IAM has to “earn” the right to build future airplanes is especially insulting. (Boeing Commercial Airplanes CEO Jim Albaugh puts it differently: there is no “entitlement” to build future airplanes, which we know says the same thing but which we believe has an entirely different meaning and which we think is less inflammatory.)
IAM 751 has, quite frankly, been saving Boeing’s bacon. The efficiency of the IAM workforce in producing 31.5 737s and up to seven 777s a month speaks for itself. Boeing plans to go to 38 737s and has considered (and may still be considering) taking this rate to 40-42 a month. A new, Lean production line for the 767 is in transition for an effective date in January, another IAM effort.
And it is the IAM (and SPEEA) that have found and fixed the problems on the 787 originating with the outsourcing, including the ever-lasting problems from Alenia; and on the 747-8, where outsourced engineering has been a particularly vexing issue.
To suggest that the IAM has to “earn” the right to build future airplanes is an insult of stratospheric proportions.
But Albaugh is also right: there is no “entitlement” to do so. Boeing, and its customers, cannot stand the prospect of strikes over three or four years. Production stability is paramount for a successful company.
We well know the position of the IAM: don’t ask for “take-aways” and there will be no strike. Well, sorry, the changing realities in the world competitive market and in the US and global economies means Boeing cannot afford to see costs continue to go up and up. Health care and pension costs are two particularly dangerous issues for Boeing, or any company.
We see no reason why employees should not share the health cost premium. (We foot 100% of our policy costs and are being killed by Regence Blue Shield’s annual hikes of 20%.) Boeing cannot be counted on to bear the burden of these costs.
The same is true for pensions. We see no reason why new-hires can’t go on a 401(k) program.
We know the IAM’s retort on these issues, and their pointing to how executives don’t share the pain (a point with which we believe has merit). But we think Boeing has a point on health care and pensions. And the production stability.
As for wages, Boeing from time-to-time says wages have to be carefully controlled. This is broadly true. Wages in China, India, Russia and elsewhere are a fraction of those in the US. But the IAM (and SPEEA) have amply demonstrated that quality and efficiency have a value that outweighs by far the cheap labor obtained elsewhere.
The IAM 751 and SPEEA contracts become amendable in the fall of 2012. Management and labor need to begin now to tone down the rhetoric, informally meet to repair the relationships and perhaps come to some meeting of the minds even before contract negotiations formally begin. It’s in the best interests of all parties to do so.