Boeing has been eliminating thousands of jobs–union jobs–in Washington State and moving them to other states–non-union states.
Boeing won’t say where it will assemble the 777X. Nor will it say where it will assemble the 787-10.
So, predictably, new hand-wringing has begun among local officials and state politicians that Boeing is leaving the state. An “exodus,” in the headline over an OpEd piece in The Seattle Times by State Sen. Mike Hewitt, a Republican.
There is much in Hewitt’s piece with which we agree. Just yesterday we commented that Washington leaves a lot to be desired in its competitive stance against the Southern States. In May we offered specific ideas of what needs to be done.
The State’s new Aerospace Strategy, unveiled in May, reads more like a history than a forward-looking document. And as a state aerospace strategy, it’s woefully lacking in innovation or looking beyond Boeing to the rest of the aerospace industry. Washington’s supply chain is the No. 2 supplier by company count to Airbus and No. 6 by dollar volume. Yet the Aerospace Strategy doesn’t detail how to increase this business with Airbus, nor does it address the rest of the global business opportunities except in the most general way.
Hewitt is right that there is little to really point to in Washington’s strategy. But Hewitt omits the biggest sin of his own party: the Republican budget proposal eliminates funding for the Governor’s Office on Aerospace, which was created less than a year before.
That was a dumb move, and it hardly supports Hewitt’s decrying the shortcomings of the Democratic governors he is so keen to criticize (with justification, we repeat).
Washington’s Legislature, like Congress, is divided, and we’re at a budget impasse. The Office of Aerospace funding is in the Democratic budget, and the contrasts haven’t been resolved. Hewitt needs to buck his party and put this funding back. (Maybe he’s done so, but he certainly didn’t mention it in his OpEd piece.)
But there’s more in the flaw of Washington’s aerospace strategy.
There is a group called the Washington Aerospace Partnership, a 501(c)4 non-profit in August 2012. It supersedes a previous state-sponsored aerospace group. The membership is:
Look closely at this membership. The membership is comprised of two Boeing unions, a union labor council, four economic development commissions, one chamber of commerce and other public councils charged with economic development.
There isn’t a single supplier. Boeing isn’t on it. There isn’t a trade group representing the supply chain or defense. There isn’t a single representative with a global aerospace perspective (unless you count the state employees, who certainly have an understanding of global issues but are driven by a myopic State of Washington perspective).
These are a bunch of economic development council people talking to (and competing with) each other for aerospace business, three labor unions and two state employees.
We find this pretty sad. One would think industry might have a thing or two to contribute.
To be sure, Washington has come a long way in making progress. But it still has a long way–a very long way–to go to overcome decades of complacency and to catch up with the dynamic South.
Boeing, like any other big company, always needs to cut costs. Labor is usually the highest single cost for most companies. It is not difficult to see cutting labor costs, especially union labor costs, improves efficiency, and lowers the costs of products to customers. After all, selling products to customers is why companies are in business, so they can make money. But the business will fail if the company prices itself out of the market. If Boeing needs to move out of Washington to help it survive, then that is what they will do.
Cutting hourly rate and/or gutting employee protections does not necessarily result in lower costs. This is especially true of complex processes involving highly skilled labor. For example, lower unit cost of labor may result in greater employee turnover, lower quality recruits, etc. This can negatively impact quality and or productivity and the result may well be higher costs to produce the same product.
I used to work around the auto industry as a project manager installing stacker cranes. I did a project in a GM plant in Saginaw, then the same job in Athens, AL a non-UAW plant. It was shocking to see the difference. For example, in Athens when the press operator finished a pallet of parts he would take the shared electric pallet jack and shuttle nearby to exchange pallets and back to work he went, happy for the change of pace. In Saginaw, he would stop, go wake up the forklift driver, wait and watch him do the same job, then go back to work. The plant used about 2/3 the labor hours of Saginaw with the exact same tooling and produced higher quality parts. The 1/3 was feather bedding work rules.
In construction, Union Pipefitters have a daily quota of welds. He can be done on a good day after 5 hours. The non-union firms would have him there 8 hours. One job I had three unions claimed the work. I had 3 foreman (Ironworkers, Millwrights, and Riggers) and 3 shop stewards, all for a 6 man crew.
Smart companies pay their skilled trade workers basically union scale but without the work rules. The workers have no desire to join the union then as the net after dues is a loss.
I find all this American emphasis on seeking cheap labour non-union sites exceedingly baffling. Were Boeing a maker of shirts it would make sense, but elsewhere in the world high engineering companies are very aware of the unquestioned importance of ‘precision labour’. Even in Britain, a fellow Anglo-Saxon country with the same ancient antagonism between boards and unions, re-location to cheaper labour would be rare.
Simply being a union member does not make anyone a “precision labour”. Remember, many job positions held by union members are really UNSKILLED positions. They may have years of experience at bending a tube on a machine, but almost anyone can operate that machine once they are taught to do so. Unions are a membership that you pay for in your union dues, and occasionally lost wages due to a strike. A union member is no more skilled at anything as a non-union member with the same work experience. In many cases, they are less competent than a non-union member.
The story about union members in the US that John Galt wrote is the rule, not the exception. Perhaps that is why Airbus choose to open their new US plant in the right-to-work state of Alabama?
To many “union senior leadership” enjoy many benefits and huge salaries for being a president, VP, or other senior position. These perks are directly paid for by the ‘membership’.
“”Remember, many job positions held by union members are really UNSKILLED positions.””
That of course is patently obvious, but it is equally obvious that the actions in this case are directed at (forgive me for matching emphasis) SKILLED positions. And the, perhaps, unintended consequence is that the effect on high skill companies is that the impact of scientific advise is lessened.
I have no knowledge of, and even less interest in the parochial politics of Washington State. But still remain fascinated by the impact this mutual management/union discord is having on a company which was based on, and which owed its success to a highly trained, educated and enthusiastic labour force. It seems somehow counter-intuitive at a time when its main competitor and its future ones are laying major stress on improving the quality (as opposed to the cheapness) of their labour forces.
As for Alabama – choosing it had of course everything to do with the deranged politics of competing with Boeing for the USAF tanker contract. Since the investment was already made for that it was the obvious place to make a political statement – matching that for the Chinese sub assembly line. It will be interesting to see if Airbus feels that it can also be made an engineering center.
It would be less likely to happen in Britain because of employee attitudes (I’ve always found people in North America far more willing to relocate for work than people in Europe), housing stock (there is, or at least was, a much larger stock of private rental accom there), and a more homogeneous environment compared with federal U.S.A.
As for availability of ‘precision labour’, I would have thought that the prize of supplying to Boeing is sufficient incentive for many of their suppliers to set up close to the new plant if they need to and costs are costs, regardless of industry. Maybe they also get incentives at State level, as Boeing did.
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“Boeing has been eliminating thousands of jobs–union jobs–in Washington State and moving them to other states–non-union states.”
Boeing’s Washington state employee count increased by over 30,000 since 2004 (with normal fluctuations within that range). Overall Boeing employment decreased in 2013 (South Carolina decreased a greater percentage than WA). Source: http://www.boeing.com/boeing/aboutus/employment/employment_table.page
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