Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Boeing defends 787, 777 against whistleblower charges April 17, 2024
- 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
IAM 777X vote: the day after
The IAM 751 membership last night handed Boeing and the IAM International a major defeat, rejecting the proposed 777X contract with a 67% vote.
What happened?
This was the classic cluster-fuck* from the get-go. IAM International, for reasons we have yet to figure out, drove this train. IAM 751 local leadership was largely a by-stander in the negotiations, and it got mugged in the process. International sprung this package on the 751 membership by surprise and Boeing gave the membership one week to make a decision. The contract terms and conditions called for huge take-aways (as the membership sees it), little time to absorb the data, or to communicate to the membership from the IAM’s own leadership.
The governing council of 751 voted not to even present the package to the members, reportedly by an 18-10 vote (a 64% margin, which as it ultimately turned out, wasn’t far off from the 67% membership rejection of the contract). The Local was overruled by International.
Local leadership, and its media team, were put on ice, with all communications being handled by International. 751’s leader, Tom Wroblewski, was sidelined but his pique hit the public domain a week ago when at a meeting he called the contract proposal “crap,” tore it up and vowed to see if he could cancel the vote and return to the bargaining table. International overruled him on all counts.
Boeing management, as it has in the past, completely misread the mood of the union, thinking jobs would trump dismay over the give-backs. Instead, the members were pissed at Boeing for what they perceived as a take it-or-leave it ultimatum; they were pissed at the IAM International; they were pissed at the Local leadership (whom they understandably believed were complicit); they were pissed at the time line; they were pissed at the terms and conditions and they were pissed at the surprise.
If Boeing management should have learned anything through the years, it should have been you don’t want to piss off the IAM membership.
*This language violates our own standards for this blog, but sometimes there simply is no other way to put it.
Failure to Communicate
In a classic Paul Newman movie, there is the well-quoted line, “What we’ve got here is a failure to communicate.”
There was that in spades in this fiasco.
IAM International didn’t communicate well with the 751 members, and having failed to rely on the 751 leadership in negotiations—who know their members better than International—they shouldn’t have been surprised by the negative reaction from members.
Compounding the situation, by putting the 751 leadership and media teams on ice, International compounded its errors.
This short clip from Cool Hand Luke pretty well sums up the situation on so many levels.
[youtube=http://www.youtube.com/watch?v=SnO9Jyz82Ps&w=420&h=315]
Amateur Hour by IAM for the Media
The International media relations team handled the media poorly. Calls and emails went unreturned. In past elections, media was allowed into the counting room by 751 to observe the vote. Not this time. Media was initially told by International it would be confined to the parking lot on the night of the vote, with a five minute photo op to take pictures and B-roll (TV tape) of the counting. Then the media was banned from the counting room entirely. The explanation: privacy concerns. This was greeted skeptically because media had been allowed into polling places all day, it took pictures of and filmed members and conducted interviews.
Then, at the last minute, some pool photography was allowed. Finally those of us in the parking lot were allowed into the hallway outside the counting room.
Word that the media would be banned from observing the counting quickly got around to members, and suspicion was fueled that the IAM International would rig the vote to pass the contract. This is indicative of how International’s bungling allowed the atmosphere to get darker and darker as time passed.
The IAM International flak unintentionally revealed International’s naïveté several times about the local dynamics. The flak told media waiting for 751’s Wroblewski that the International didn’t understand the deep emotion (on both sides). She kept promising Wroblewski, who was to make the results announcement to the membership and then face the media, but after making a very delayed announcement to his members, the press conference was cancelled. Wroblewski and an International official scurried upstairs with The Seattle Times’ Dominic Gates in full pursuit, who was bruskly told to turn around. The International flak acknowledged little understanding (and seemed somewhat in awe) of the intensity of the events swirling around her head, and of the media crush. Handling of the media and cooperating for coverage was amateurish compared with the professionalism of 751’s media representatives who had been put on ice (or, in the words of one 751 member, put under “house arrest”) by International.
Disgruntled Members within an angry union
Having become angry with the IAM International and 751 Local leadership, there is talk of members throwing out Wroblewski and installing a more militant leader who will stand up to Boeing and the International more than they perceive of Wroblewski. There is also talk of decertifying IAM and joining another union. Either action would probably be challenging. But in February 2010, a few months after Boeing elected to place 787 Line 2 in Charleston (and after the IAM International meddled in those negotiations that were involving 751), we suggested 751 needed to divorce from International. That caused quite the stir within the IAM. Maybe that time is now.
The State of Washington
Gov. Jay Inslee stepped up and quickly announced an incentive package for Boeing, calling the Legislature into Special Session to approve the plan. Included were millions of dollars for training and some other stuff, but the centerpieces were extending 787 tax breaks granted in 2003 to 2040 for the 777X, amounting to $8.7bn—the largest in US corporate history—and a $10bn transportation plan so Boeing and its suppliers could move stuff around Washington (and notably, highly congested Puget Sound) more easily. The Legislature approved everything but the transportation plan. The transportation plan calls for raising the gas tax 11 cents over 10 years, and Republicans balked. All parties agreed to take this part of the incentive plan up later this month (this was before the IAM vote).
Following the vote, Inslee said Washington will compete for the 777X anyway, but on the surface an $8.7bn tax incentive and (if approved) a $10bn transportation plan will be tough to match or beat. Except for one thing.
The tax incentives, an extension of the 787 tax deal, were found to be illegal by the World Trade Organization in the long-running international trade dispute between the US and the European Union. This finding is under appeal, and as a result Inslee waves this detail away.
There are two problems with doing so. The first is obvious: what if the US appeal is denied and the finding stands? Then the basis of the proposed 777X tax breaks becomes null and void. Then what?
The second is Inslee’s own prior approach to findings by the WTO that were appealed. When he was a Congressman, Inslee carried Boeing’s water on the KC-X tanker competition by the US Air Force. The WTO found that EADS’ entry, the Airbus A330-200, was subject to illegal subsidies. The EU appealed this finding, but in contrast to Inslee’s blithely dismissing this today with respect to the 787, he vociferously demanded that the USAF take the WTO findings into account despite the pending appeal, going so far as to introduce a bill in Congress to this effect. Even the US Trade Representative’s office said this couldn’t be done, so Inslee dropped that call. Aside from the duplicity exhibited here, his hand-waving dismissal of the presence of the WTO finding presents a risk to Washington should the 777X be sited here, and it gives an advantage to states who will now compete for the project who weren’t subject to the WTO trade dispute and who can offer incentives that aren’t subject to this huge overhang.
Inslee’s 777X package hasn’t gone unnoticed by the EU, which was already beginning a review before the IAM vote.
What’s Next?
Where does every go from here?
- Boeing is doing what it said it would do (and which some union members believed was a bluff): it will bid the airplane out.
- Boeing and the IAM will be under great political pressure to return to the bargain table. Boeing says there “are no plans to re-engage” the IAM before the current contract expires in 2016, but this is a far cry from “we will not engage” and Boeing is very careful about parsing its words. We don’t rule this out.
- IAM International
shutshould butt out and let the 751 local handle any new negotiations. International’s meddling in 2009 didn’t help then and it totally screwed up now. - The State can now take the time and craft tax incentives that comply with WTO findings.
In “where to go from here” note 3, change ‘shut’ to ‘should’ and I agree Scott. Difficult time for the area. With such an important decision you would think things would have been handled more professionally all around.
Great info on the International Union aspect, I don’t think the membership knew of this as a whole. My husband all of the others that have pride in being Machinist at Boeing, as it takes years of skill building to create a product of such complexity. The FAA shut down production in South Carolina and the fact that Everett has finished production on a large amount of the “product built in South Carolina plant” should be public knowledge, Our media has not talked about this…Boeing is panicing i believe.
Also it would be wise to take interest in strong negotiation skills and a high standard of professionalism and trust management style. Can we have Alan Mulley back?..I heard he is being head hunted by Microsoft…lets get him back to Seattle with us at Boeing and have a Man who knows how to work with people and has the respect of all that know him.
Federal shutdown halts 787 deliveries from South Carolina — but …
http://www.bizjournals.com/…/10/…/federal-shutdown-stops-787-deliveries.ht…
Oct 7, 2013 – The federal government shutdown is halting Boeing 787 Dreamliner … but the facility can deliver more until the federal shutdown ends, or the FAA makes … Sound plants to continue, but not those from South Carolina, Boeing …
Here is the full link.
http://www.bizjournals.com/seattle/news/2013/10/07/federal-shutdown-stops-787-deliveries.html
The full story is far different than the implications inferred.
Three words.
BEST. ANALYSIS. EVER.
(and here i was, trying to describe the event in eloquent prose.)
And what if Boeing does move production? Evidence from the 787 is that it will be late and of poor quality. If EIS comes in 2024, will the world be the same? The Mid-east airlines that want the 777X are riding the wealth of high oil prices. What if oil prices drop as production increases and less is consumed? Mid-east wealth may disappear and the 777X becomes a very expensive white elephant. Etihad didn’t even exist before the Iraq war, just over 10 years ago. Will it exist in 10 years? It might well be better for Everett to let Boeing leave gradually instead of a build-up and collapse later. I still remember “will the last person leaving Seattle turn out the lights.” That was a gift from Boeing 40 years ago. I had enough common sense to leave Boeing a few years before that and get on with life. Everett should do the same.
Or…what if an accord is reached with the Iranians and the Middle East suddenly becomes stable and not risky? What if environmental regs in North America and Asia curtail energy extraction there…What if China and the west “divorce” and Boeing and Airbus are shut out of that market? What if the Indian government collapses? What if there’s a global influenza pandemic? Nobody can predict the future, but that’s always the case. 😛
You mostly describe war scenarios. IMHO the US won’t go down silently like the SU did. ( And the current US oil”rush” will be a short lived mirage with escalating costs anyway.)
None of those are “war scenarios” Uwe.
The US has a low scale but increasing undeclared war running on the rest of the world for some time now. It falls further back in the “productive produce” arena I foresee a step change.
I guess just keep hopin’ and prayin’ for rain then, chief.
I don’t understand the fascination with the local leadership. What, exactly, has been won, or stood up for? “Workers Rights” is an over-used, ubiquitous term. I respectfully really don’t know, from Texas admittedly, what this “win” represents to the 67%. I am glad there is an opposing view which sees this as a win for Washington/NW workers, but what is it?
„Worker Rights“?
I doubt this is about “rights”. The whole thing is about a “fair” share of Boeing’s profit produced by the workers for the workers.
Life isn’t fair. Ask all those people who will loose their health care. Why do you think the FAL employees deserve a part of the profit Boeing makes. It seems to me it is the shareholders who are taking the risk, not the employees. If the B-777X program fails, the shareholders who put up the money for development loose their shirts. The FAL employees may loose their job through a lay-off, but they still collect unemployment and other benefits.
No, the employees have no rightful claim on the profits. They get a day’s pay, and benefits, for a day’s work.
@kc, is loose health care worse than tight health care?
In any case, the decision was made by a clear majority of workers; they voted for what they believe is the right choice.
The individual shareholders don’t normally even get such a choice, the board of directors is decided well in advance of the shareholders’ meeting and all they can do is approve it.
KC, you better be kidding.
Shareholders usually have a surplus of money compared to the Regular Joe; that’s why they buy shares. If they lose some of that money, they usually aren’t impoverished.
How can you even compare that to a worker losing his job and having to live from unemployment benefits?
To me, that’s plain cynicism.
Boeing employees are paid very handsomely. They are some of the highest paid workers in any production facility in the world. Many make $35 per hour or more. They are well above the average paid production employees. $35 per hour is $72,800 dollars per work year (2080 hours per year), not counting benefits or any overtime, mandatory or not. Most employees in the US make just $35K-$40K per year, about half of what a senior Boeing employee makes. So, I would not call them the “average Joe”.
“Why do you think the FAL employees deserve a part of the profit Boeing makes. […] the employees have no rightful claim on the profits. They get a day’s pay, and benefits, for a day’s work.”
@KC
Why do you think just the board of directors deserves a fair part of the profit? It’s not about “right”, this is about ethics.
“If the B-777X program fails, the shareholders who put up the money for development loose their shirts.”
A shareholder can split his money among all aircraft companies. An employee can’t split his workforce to different employers. So the risk for an employee to loose his home due to unpaid credits is far bigger.
“Life isn’t fair.”
So what is your problem when some people get together to change it?
That’s a very easy way out of an argument.
The institutional shareholders with the de-risked portfolios, you mean?
Generally a very interesting perspective, anyway. If the next plane flops and the company has to lay of thousands, the risk to most of the employees is more significant and arguably more real than that to most of the shareholders.
Also, without the workforce, there is no company to buy shares in, never mind a company that’s hugely profitable thanks to the premium product built by the employees.
I’m not sure you really want to go down the road of talking about salaries and profit-based bonuses, because then you’d have to talk about the salaries and bonuses of everybody in the company.
Oh, I get it. The union members deserve all they can get, and much, much more because the BOD sets up a highly profitable product line.
Your argument is nothing more than class warfare. Except in this case, you pit the haves against the have mores.
According to the US Census the average wage in the US is $51,000 per year (2012 numbers). Boeing employees are well above that average. McDonalds employees work for a very successful company, too. But their wages are well below the average. Why can’t Boeing workers share with McDonalds workers?
Now with a PO’d workforce, Boeing had better crank up its QA/QC program for airplanes in production and/or about to be delivered.
About SC issues- FWIW
http://www.fitsnews.com/2013/11/12/boeing-blues-in-north-charleston/
The beatings will continue until morale improves- sounds like management recycled from the defunct Auto lines in Deeee- troit
althugh years ago, I witnesses the same management style at some locations in Boeig – but that was 30 years ago.
Perhaps SC has even further to go than most realize . . .
There is no need to apologize for your language, Scott. They were the right words for this messed up situation.
Great explanation of the situation Scott. For us at Boeing the bitterness is that CEO will still get another mutilmilion dollar bonus for his “excellent” qualifications.
Spot on analysis re: International vs. 751 / rank and file.
Regardless of the merit of the deal, simply the way the local was sidelined
is reason enough to reject the result of such a process which sidelines worker’s representatives, which is the entire raison d’être of an industrial union.
751 taking control of the process from this point (displacing International) is the minimum viable path forward, if not decertifying IAM as mentioned. There really doesn’t seem to be much reason why 751 would remain within IAM at this point.
And 751 is hardly in the weakest of positions at this point. Boeing can look at the cost/benefit of their options, but they will have to factor in the repurcussions for their entire operation, not just the 777X line. If they want to hand the 777X line to South Carolina/et al, they can certainly expect a hell of a time managing ongoing production in Puget Sound, and that is exactly what they will need to be going smoothly when trying to introduce a new 777X line. 751 on strike across all product lines and refusing to enable bringing South Carolina up to speed would be disaster. Somehow the plans to shortly announce 777X’s industrialization in at least broad terms seem a lot less credible with such question marks hanging over things.
Food for thought.
Now that BA has p***** off the majority of the members, and at the same time announced a significant increase in production rate(s), especially on the cash cow 737 line, one should not be surprised if a significant number of IAM types go to the ” work to rule” mode. As anyone with a smattering of experience in a production line knows, a fair amount of leeway as to what gets done in what order, and by who and in accordance with the rules and the ‘ bar chart ” – if ALL the picky a** regs are followed to the letter ( not talking about significant quality items here ) – things slow down. Normally, teamwork and responsible support people know whom to trust to timely report and fill out paperwork and get buyoff. But if the regs say item B cannot proceed until Item A is signed off, and the authorized sign off person will not be available for say 20 minutes, the mech is perfectly within rights to post ‘ ready for inspection’ and wait until the paperwork is signed off before proceeding- even though he/she has been doing that job for two years and never had a reject. ( note I’m using a simplified example here, since a lot of paperwork is now computerized , etc ) .
The net result IF BA is lucky that current rate will decrease slightly- and improved rates will take MUCH longer to happen.
Especially if some SPEEA types who got rolled early this year are also somewhat p***ed.
IF that happens – then what price ” glory” Mr mcNerney ??
What happens now Mr. Unionista is that the whiners go the way of Twinkie Unionistas. In the short term, Boeing maybe screwed, but hopefully they will think long term and move all of their facilities away from union thug territory.
Unions ruined the automobile industry. Now they are trying the same with the aerospace industry.
Riiight- the comparison with Twinkies v AeroMechanics and Engineers indicates a total unfamilarity with the differences in people and facilites to produce and deliver the product. Forgetting of course the long standing management practices involved in both cases. Why not pick up a copy of ” Turbulence” and read it before making such comparisons ?
I noticed that you neglected to add that by the time the Hostess Union got to the point that it would not back down, it had already compromised a lot of benefits away while management had run the company into the ground. So…had the Union agreed to the last set of “compromises”, then they would have been needlessly cutting their own throat.
Let’s get the facts straight and within context.
Great analysis Scott. It’s no secret that Chicago dislikes unions (and by extension, Puget Sound). At first I felt like this was something Chicago never wanted to do, but were persuaded to do by BCA leadership. But the more this drags on, it feels like Chicago wanted this vote, and they wanted it to fail. Now they have freedom to move 777X elsewhere and have a clear scapegoat for the airlines and others.
*This language violates our own standards for this blog, but sometimes there simply is no other way to put it.
Clearly a highly emotive subject many will consider there was another way, seemingly (as often occurs) the heart took over, some as we were will be surprised, many disappointed.
The plus point is that you acknowledged this lapse of your usual highly impartial journalistic standards, please no repeat.
It’s “flack” [a public relations person] not “flak” [an acronym for a multi-syllabic German word for anti-aircraft fire]
That aside Scott, you have indeed written a very insightful analysis of a huge cluster___ . Both the IAM and Boeing have inflicted wounds on themselves and each other which will take a very long time to heal, if ever.
Scott, you compared this to “Cool Hand Luke”. Luke got killed. Is that what Boeing is trying to do to the IAM? That’s how the Machinists see it. These are tens of thousands of workers who proudly build the best damn airliners in the world better than anyone else can. They do not appreciate being publicly kicked in the teeth and bludgeoned into submission. No one would. “Flogging will continue until morale improves” is really not a very good long-term business plan
Let’s hope it’s not too late to fix what is now lose-lose for all concerned. Could everyone just go to their corner and sit quietly? Let the Boeing and IAM Local 751 negotiating teams get themselves a floor or two in an out-of-the-way hotel that has conference rooms and 24-hour room service. Let these experts do their thing away from all the media. Perhaps reason and sanity can prevail and settle this.
Perhaps.
If not, it won’t be “Cool Hand Luke”. It will be “On The Beach”:
http://www.youtube.com/watch?v=JSkbNq3XCFg
“It’s “flack” [a public relations person] not “flak” [an acronym for a multi-syllabic German word for anti-aircraft fire]”
Freudian slip, perhaps.
Scott, maybe you were right the first time.
Can an anti-aircraft weapon be used on feet? Especially on one’s own feet?
You said …” Let the Boeing and IAM Local 751 negotiating teams get themselves a floor or two in an out-of-the-way hotel that has conference rooms and 24-hour room service ”
Well, what you described is very close to the ‘ normal’ way final or ‘ main table’ negotiations are/were often done between Boeing and IAM and at times SPEEA.
And then the ” result ” is detailed out as proposed changes ( redlined ) in the then current documents, along with a summary. Then about two to three weeks later, depending, an orderly vote is taken.
Even that scenario has flaws with meetings between a few negotiators on both sides outside of ‘ main table ‘ sometimes happening.
But in this case, it was a FUBAR rush to judgement more like a sign here NOW sham – wow advertisement on steroids with major penalties if you do not .
Boeing should be ashamed – as also the International IAM
But you cannot shame the shameless ..
Nothing personal- just business
Don, is this the clip?
http://www.youtube.com/watch?v=FUh3TZpMCY4
You have described a typical labor-management negotiation. It’s a process that takes a lot of time and hard work to succeed. It can only succeed if both sides are playing the same game.
Instead, Boeing tried to play “Global Thermonuclear War”. Everybody lost. That game’s “only winning move is not to play” (War Games, 1983)
For now we can only hope that reason will soon prevail. If so perhaps those who talk won’t know and those who know won’t talk.
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Great perspective, Lee.
I will disagree with you on one point. I don’t think Boeing misread the union. I think they played a very calculated hand:
1) A No vote on a contract not about to end means no strike. No strike means no retalitory actions such as the NLRB fiasco.
2) Boeing can say they gave Puget Sound first choice.
3) Boeing can say the politicians and the International Union were on board, and actually did things like the tax incentives and presenting the contract.
4) Boeing can say the workers “passed” on the opportunity for secure work.
With 1-4, Boeing can easily make the case they gave their existing workforce and location every chance to secure the job and the workers chose to pass on it. Approaching other sites for the work is now the logical approach for any company in this position. If the vote had approved the contract, Boeing would have had the conditions it wanted, plus the image of the company taking care of its’ base first.
I think Boeing played it exactly the way they wanted to, right down to the result. I’m not saying it was right or wrong — just played smart.
Now the WTO: Would be possible Boeing (if gets a lawsuit) will end, similar to a case outside the aviation, like the 4 Kids Entertainment, that ended up with impossible payment debt after a Yu-Gi-Oh! related lawsuit. Or, in other words, bankrupt?
Boeing per say would not be penalized. Its products could have tariffs levied against them in Europe, worse case. But it will never come to that.
Well, in U.S., bankruptcies can be of various forms, and the case of 4Kids entertainment was an Chapter 11 type (reorganization). In aviation, other companies passed the same point (of Ch. 11 bankruptcy) in U.S., like American Airlines, United Airlines, Delta, Northwest, and defunct Continental. Would be an Chapter 11 bankruptcy, the last way to put back Boeing into reality?
Ok. I only referred to Worst of worst-case scenario, which is unlikely.
TOYUTHS SAID
Don, is this the clip?
http://www.youtube.com/watch?v=FUh3TZpMCY4
Yep – thats one
But I think a better clip- clips would be from godfather original
http://www.youtube.com/watch?v=VC1_tdnZq1A
or more likely
http://movie-sounds.org/gangster-movie-sound-clips/the-godfather-1972/and-my-father-assured-him-that-either-his-brains
FlAK – Flug Abwehr Kannon, literally “flight defense cannon”
Hate to say it but this is a pretty smart manoeuver by Boeing. It is a cynical moce and they aren’t going to win many friends with it, but strategically it is quite good.
The big question is what were IAM thinking by playing along? Are they really that incompetent and so unaware of the situation in Seattle? Or does IAM for some strange reason want to be decertified?
To blame Boeing for this is like blaming a shark for eating meat. They merely tireed to negotiate a deal, like they always have, with the union. In my eyes, the biggest single entity at fault in this is the IAM and their interference followed by their handling of said interference. Boeings biggest issue would be that they allowed IAM to interfere but then again, having IAM and 751 at each others throats should be to Boeing’s advantage.
Perhaps 751 and Boeing can still work out some sort of deal, without IAM meddling. Would IAM be astute enough to allow this or do they want to continue to meddle for their own reasons?
I do agree with others that Boeing is not holding all of the high cards. If moving work were so cheap, easy and cost effective, it would have been done long ago. The 777x will be a much smoother program if it is done in Seattle and most people with knowledge if the situation, including the customers, should know this.
For those who believe joining together major subassemblies in a final line is the same as putting together a modern wing, I have a bridge in the northeastern states for sale.
“To blame Boeing for this is like blaming a shark for eating meat.”
A concise point, though probably not the way you thought it out.
A shark makes crap and not airplanes. His single objective is replicating.
Transfer that to Boeing and note that management objective is more money for more managers. What we think of as real products is just digestion waste.;-)
IMHO the gigantic trap in the profit maximisation and shareholder value philosophic model.
( tunes of Mac the Knife in my head )
I’m sure Boeing would love an IAM compensation package based on profit sharing. A basic benefits package plus a share of earnings. Share would be plenty in boom times and nothing in bad times. But the defined benefits packages that IAM demands go forever – good times and bad. And those fixed benefit packages reinforce the bad times.
More like socialism than sharing the earnings.
Sorry but I don’t think you are not looking at this whole situation from a management standpoint, Boeing wants either get out of the Northwest or out with the unions. The move of Headquarters to Chicago was one of the first indicators that Boeing needs to reduce overhead and production cost, lower wages on the floor, so to do so means relocate. Boeing also needs to get into a better environment for this will never happen in Washington State or the West Coast. Cheaper cost of living and lower wages is the goal so they can lower prices and make better deals while still making a profit. This is not Rocket Sciences folks because that is a lot easier. As the man said before, Boeing workers are paid a crap load on money compared to the rest of the country. Boeing needs better aircraft at a much lower price, now what do you want to give up for your jobs or does Detroit look good?
a) Latest profits didn’t look too bad, so the main incentive seems to be to drive shareholder profits up and employee participation in profits down. Which is a legitimate desire – whether you agree with it or not – but let’s call a spade a spade.
b) I’ve yet to see an example of a less-qualified, cheaper workforce producing better quality than the experienced and thus more expensive workforce. General rule of thumb: If numbers (e.g. same quality, but 70% cheaper) look to be good, they are. I’m open to being convinced otherwise, but I’m not holding my breath.
Typo… Last two sentences should have read:
General rule of thumb: If numbers (e.g. same quality, but 70% cheaper) look too good to be true, they are. I’m open to being convinced otherwise, but I’m not holding my breath.
Mercedes Benz relocated its headquarter from Stuttgart-Möhringen back to Stuttgart-Untertürkheim where productions takes place. It’s just a difference of less than 5 miles or 15 minutes by car but the management thought they need to do it to stay in contact with the rest of the company.
Boeing workers are paid a crap load on money? Guess what one worker at Daimler earns? Far more than most employees at Dacia. Lower wages are just a red herring for Wall Street and are just one part of production costs.
According to labor costs Boeing should move the 7L7-X production to Bangladesh.
A few weeks ago I posted that the worst thing in labour relations is a union that can’t deliver the agreed deal. Now you see what I mean. The deal should have been done with the local, because it might have passed. Local will know best what matters and what doesn’t to its members.
If Boeing is really feeling the pinch because of labour prices it is because of lack of investment in modern production, I understand Airbus are a lot more automated?? Does anybody know what a machinist is paid in Toulouse?
hey folks – lets not forget that boeing margins on most of the commercial line lumped together are in the 8 to 9 percent bracket according to the last annual report.
Boeing Touch labor percentages are **probalby**on the order of 5 to 10 percent of the ‘ cost ‘ of the airplane ( excluding engines, etc ) ready to fly.
For many who do not know the subtle difference – IAM751 is the LOCAL union, IAM inbternational is just that. Normally, the National ( to which the local sends some per capita dues )*** supports**** the local, and rarely does the National step in a play Don Corleone or Scarpia to Tosca ( the local.) IAM751 pays to various orgs about $ 13 Million/year in per capita tax- a good part of it to ” national” for support.
This whole mess was well orchastrated by Boeing – National IAM for some purpose.
Consider the leverage IAM will have in 2016 as BA is trying to ramp up production on 737,777, 767 ( tanker), and initial work on 787 with an equally peeved SPEEA workforce. Its not clear who had the largest caliber foot bullet and the best ( worst) aim.
My guess mism that in about 6 months or so another round of ‘ negotiations” will ensue if for no other ” obvious” reason than Obamacare. Actually, the BA offer for medical is about as good as it gets under the guidelines.
I do hear rumblings about SC types perhaps thinking that unions are not really that evil. Boeings bigger whip until morale improves is leaving welts..
ooops — I said …. and initial work on 787… meant 777x .. and not forgetting 737-P8 ..
I have to disagree that The Chicago Mafia mis-read the union
In order to mis-read you actually have to pick the book up.
When one man or a board has a personal vendetta as opposed to actually running the company in the best interests of both the shareholders and the employees (who make the profits), then profits and loss is meaningless.
I continue to contend that if you compare the 10s of billions that Chicago has cost Boeing vs the union wages and benefits cost (and the strike) Chicago is ahead by leaps and bounds (a litany of missed sales, slow launch of the 737max and 777 not to mention the 787 program that won’t make a profit until you sell over 1000 Aircraft)
Boeing Everett is ramping up to 8.5 787s a month and Boeing Charlotte is at 1.5. Basically the amortization of the Charlotte costs are incredibly high and Everett has cost nothing as those facilities are reused. ROI anyone? The second line at Charleston can’t even be used as they are barely at 50% for the first line as well as the quality control issues that are dogging them.
We saw it in the Wall Street crash, CEOs will not only take their company doing the toilet (and boards grease the skids) they will take the country down the toilet as well.
So for those free market capitalists that think that any company is not capable of going completely out of control, they are delusional at best.
Much like the Chicago mafia they ignore reality. The reality is that people make up a company and its success as well as GOOD management, capital and organization.
The Chicago Mafia thinks they are Boeing, they are not. What they can and are doing is taking a fine company and making it a laughing stock and they have insured Airbus has at least 50% (and probably better). Who would you buy airplanes form, a stable company or one lurching along with a train wreck immanent?
One of the conditions that orders on the Max entailed was a stable production guarantee.
The Chicago Mafia also thinks you can ignore what your customers are telling you. Actually you can, its also accompanied by that big swooshing sound as you go spiraling down the toilet.
With this insanity there is not stable 777x guaranteed. Like Charleston it all has to be invented from scratch. The Chicago Mafia is ignoring that reality as well. Good management does not force fact to suit their vendetta. Boeing Seattle has a history going back 100 years. You don’t just create that from nothing.
And how long will the customers put up with late deliveries, broken airplanes? Yep, there is more to a company than suits.
Lufthansa knowing this beforehand would has secured more options for A350. Lufthansa ordered 35 777-9X and also has 30 options for A350.
So Airbus should hurry to put out as many aircraft until 777-X arrives.
A second line for A350 in Finkenwerder Airbus also appease German government.
Maybe this is the reason for some higher costs according to A350: http://www.ft.com/intl/cms/s/0/cd79e766-4cf7-11e3-bf32-00144feabdc0.html
COMMENTS on Herald Board today. UNION leadership Change, It’s not maybe, it’s a done deal or else. BUT…….The real battle is not the economics, the current offer (relationship) is a symptom of a deeper root cause and effect that drive the economics to extreme levels. When OUR values are Right, the economics will be right for the corporation, the employee and customer. We’ve adopted NWO Globalist ethics, there are no traditional values, just deception, extortion, bribery, leverage, cunning and trickery. WE can never build any worthwhile relations on a foundation of selfishness and mistrust. That is the root cause of the Boeing Corporation. I say our (Machinists) ICON issue is to restore the WORD CHRISTMAS back into the Collective Bargaining agreement under holidays. During the past 36 years I’ve seen a lot non-sense. Today we have Gov officials pandering to Corporate elites and all workers just trying to survive the fray. In days gone by, when we sell our values for money, which we have, have we not become prostitutes? Reclaim our American values while we still maybe able too. Christmas is the ICON of all that is truly good. Claim it and restore it. We the public will understand our battle on values, what is right good and true, they will not understand the details of the contract as the company takes out full page propaganda adds. People will die for their values, not so for 1%GWI.
Don Grinde
American has adopted the Politically Correct Cultural Marxist design, that’s a fact, whether by ignorance or choice its undeniable.
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