As The World Waits (or those of us in the USA, anyway) for Boeing to decide where it will assemble the 777X, it might be worth returning to a 2010 study by the Institute for Wisconsin’s Future about how Boeing looks to states as cash cows for subsidizing its airplanes.
(Wisconsin is a bidder for the 777X).
This is a 24 page report by IWF. It reads remarkably similar to Boeing’s current Request for Proposals. Boeing Cash Cow Report
Make of it what you will.
This is an author who has vociferously denounced Gov. Walker (supported the recall and claimed his economic policies contributed to huge net job losses.) To the extent Washingtonians care/know/want to know about Wisconsin politics, the short story is this left-wing ideologue has been rejected thoroughly by the Wisconsin electorate (along with the teachers unions and their pensions/healthcare kickbacks, now suffering dramatic decreases in membership/dues since it’s optional today).
There could be a lesson in there somewhere.
ad hominem.
Enough about Gov. Walker, his policies have been thoroughly discredited.
http://www.nationalmemo.com/scott-walkers-wisconsin-falls-to-49th-in-economic-outlook/
http://www.dailykos.com/story/2013/11/30/1258167/-Walker-s-Wisconsin-jobs-record-lags-behind-Democratic-neighbor-Minnesota#
The only lesson in your comment is to learn how to debate without resorting to classic fallacies.
The only lesson to be gained from Luke’s post is how to use ultra left wing sources that have no credability to support false stories. DailyKos…….really!
texl1649,
That is a very crummy little Ad Hominem argument you make. How about addressing some facts? And….as far as anyone being an “Ideologue” as you suggest, your use of political labels sure as hell seems to hint that you are the very thing you denounce!
We note that the study was completed in April 2010. Walker was elected the following November and took office in January 2011.
Geeze Scott – why bring up a few FACTS and Data? As some of the posters are digging a deeper hole re rhetoric- why take away the shovel ? :-PP
All folks have to do is go look at some of his writings over the past few years (not necessarily this one). Or go to the institute’s website and peruse their issues/leadership/links. And dailykos.com no doubt agrees/’knows’ that Minn. is doing better under Dem control, I would guess (did not read link).
Just google around if you don’t believe me. This is a left-wing think tank with a mission. It’s been funded by George Soros for goodness sakes.
http://www.politifact.com/wisconsin/statements/2011/oct/24/brett-hulsey/gop-wisconsin-gov-scott-walker-killed-15000-jobs-d/
http://mediatrackers.org/wisconsin/2011/11/10/exposed-left-wing-coalition-to-recall-walker-mobilizes
http://blog.heritage.org/2012/06/07/wisconsin-voters-agree-walkers-reforms-work/
Regardless of the wing (left, right, port, starboard), are you saying that his arguments have no basis? Would prefer to see a rational counter-argument rather than just calling people names.
If everything that Jack Norman lists is factual, no place would want to have a Boeing facility as it would be a huge ‘Loser’. But it seems that the Puget Sound region is pretty happy to have had them here and there are a few places that would love to have the 777x plant in their location.
I totally agree, John. It’s basically a laissez-faire story. You want the jobs? Well, bend over and grab your ankles! That’s how they did things in the hay-day of American ingenuity and productivity–Rockefeller, Carnegie, Mellon, and all those guys knew that workers should pretty much accept what they were offered, and any signs of unionization should be dealt with by the local gendarmes. That was also prior to that molly-coddling workers’ compensation and health benefits and retirement contributions, too. Ayn Rand is so right, John Galt…let those who can, do unto others, and let the plebes accept what they get.
Well John Galt, anytime you “Men of Productivity” want to call a
“Strike of Intellect” and skeedadle off to Galt’s Gulch, feel free to do so. The experience will no doubt teach us “Parasitic Moochers” a lesson: mainly – we’re better off without Ayn Rand and her Sociopathic ilk.
In March 2010, the WTO ruled that Airbus was receiving illegal subsidies. The verdict against Boeing is expected this spring or summer. The issue is highly technical and the proceedings are secret. But whatever the WTO verdict against Boeing, from any common sense point of view, when it comes to seducing communities into being its financial patron, Boeing is guilty… ( from the report )
The current method of political contributions to state legislators as in Wash state before the vote to ‘ assist” Boeing doesn’t fit the ‘ seduction” method at all
Nor the ‘seduction” of IAM to sign here or else !
More like VITO CORLEONE methods . . Whose bed got the Horses A**
Nothing personal just business-
‘Left-wing’ or not (and by Canadian and European standards it is anything but) I suspect that the European Union countries would take an active role in seeking to penalise Boeing for such subsidies.
I hope Boeing has learned a hard lesson from the 787 debacle that led to a 3 year delay EIS and gave airbus many orders for the A330 because it was the only size plane available in short order. Both Boeing and the workers better realize the new normal is here to stay. Defined pensions are a throw back to many years ago and are gone from most companies. Boeing also should not derail the intense interest in the 777X by diddling around looking for the best offer from other states which for sure will delay EIS, again not more 787 type screw ups.
Look how slow the South Carolina plant is turning out frames, does Boeing want the same painful process for the 777X?
Too much is at stake for both company and employees and both groups need to give and take to keep the lines running that have the experience to turn out this highly popular widebody. If executed properly, Boeing will have a line of twin engine wide bodies on two separate frames that will have the most appeal to the worlds airlines and it NEEDS TO BE DONE ON TIME, no lame excuses!. Airbus is trying to match this with one frame, too wide a swing in seat counts and added sections.
…Defined pensions are a throw back to many years ago and are gone from most companies..
The WSJ disagrees with you- down to a mere 45,000 plans in 2011 and about 1500 less than a decade ago ..
By
Gregory Zuckerman And
Michael Corkery
Updated Dec. 11, 2013 10:26 p.m. ET
A roaring stock market and rising interest rates are fueling the strongest recovery in the $2.4 trillion U.S. corporate-pension sector in more than a quarter century, giving companies new flexibility in dealing with some employee-benefit costs. . .
…Rising stocks are the most important reason pensions are recovering. That aid may not last if the market slips from its current record level, of course. Such volatility in returns and funding levels is a big reason companies are looking for an opportunity to freeze pension plans and move the risk off their books. Until 2008, corporate funds were generally funded at more than 90% of their obligations, and they reached as high as 130% of obligations in 1999. But recent low interest rates and stock-market troubles from the financial crisis have been a challenge.
The improvement in funding comes as fewer companies offer traditional pensions in favor of 401(k) programs. There were 45,258 so-called defined-benefit plans—those that provide traditional pensions—offered in 2011, the latest year data are available from the U.S. Department of Labor, down from 46,859 a decade earlier…
+++
Did you know that IF a surplus in defined benefit plans ( according to IRS and ERISA defintiions) the surplus can be put into EARNINGS ( on paper ) ?
As to the logic behind establishing a greenfield site for 777x, keep in mind we are dealing with the Boeing Bored of Directionless well staffed with Jack Welch wannabees and rejects who have this thing about unions being the spawn of hell
They may lose money on every 7 late 7, but plan to make it up on volume …
Don’t most large businesses get some sort of tax and other concessions from state and/or local governments? We can recall how Wal-Mart and Amazon, among others, get property tax “relief” for building a facility. Even sports teams squeeze all they can from local governments when relocating. Then, after narrowing potential competing sites to six finalist, Airbus got the City of Hamburg to pay over $800M just to fill in part of the Elbe River (Muhlenberger Loch wetlands). So, it’s not just Boeing looking for “cash cows.”
“Airbus A380, Super Jumbo of the 21st Century,” Guy Norris, Mark Wagner
Also,
http://www.ens-newswire.com/ens/apr2001/2001-04-25-12.html
http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds316_e.htm
Yes – but that was prior to the various WTO and other appeals. My suspicion is that a demand by Boeing for an amount some ten times that at Hamburg would trigger some interesting reactions.
Just reading this report, and the only word that comes to mind is “hubris”. Boeing management and board of directors have so much hubris, they really don’t believe people will start to live the phrase, “if it’s Boeing, I ain’t going”.
But isn’t that where all these 787 problems are leading?
Won’t that be the real problem when they move the 777 line out of Everett?
Does the Boeing board really believe they are impervious to the market forces they will create when they start down this path?
Jetblue and Virgin America are perfectly good airlines, and they don’t use a single Boeing made aircraft.
Last question for the readers: Will you let your congressmen vote in favor of the Boeing Bailout bill when it comes up in a few years?
Mark 14:7, “For ye have the poor with you always, ….”
Now we know what Jesus meant by that.
Eddie Maddox
Guess this comment is still relevant to this discussion.
The author here does go for the jugular.
It amazes me how often this conversation seems to lose track of the question of whether Boeing actually realizes any bottom line benefit whatsoever from these “cash cow” shenanigans.
It seems to me that the fiscal black hole that is the 787 program is a clear indicator that these games do not pay at all. All of the presumed payoff realized from extortion and arbitrage seems to disappear as an insignificant upward blip against the precipitous plummet of fortunes resulting from massive program failure. It seems to me sadly ironic that this report reveals that Boeing have been proudly out front of leading this charge of corporate shakedowns, when the results prove what should have been obvious to them from the outset — that they are in exactly the kind of knowledge-intensive industry that is the worst kind of candidate for labor arbitrage.
All of these siting games are illustrative of the fact that Boeing’s executive corps have come under the deadly misconception that their company’s fortunes rest principally on their execution of financial strategy, whereas that is really just a necessary precondition to the company’s success which is much more critically dependent on its maintaining its ability to design, launch, build and deliver top of the line commercial aircraft. That capability is completely tied up in the knowledge and competencies of Boeing’s rank and file engineers and technicians.
In such a company, management’s most critical task must be ensuring that the enormously challenging, expensive and risky projects that are the life blood of their actual revenue streams are executed successfully on a long term and day by day basis. A big part of doing that must be nurturing and developing the capabilities of the very workforce that these arbitrage tactics are always grinding and churning in hopes of bludgeoning some more pennies out of them.
Just to be clear, I suffer no illusions that “nurturing capabilities” will always mean catering to the rank and file. Maintaining a positive bottom line is, as I have said, a necessary precondition to success. However, no matter how many billions of tax and wage concessions Boeing are able to strong arm over the next thirty years, they will do the shareholders zero good within that time horizon if the company and its skilled workforce are not able to dependably deliver the right competitive products to market on time.
Amen!
Engineering needs to have priority over financing.
I am a boeing Machinist of 29 yrs..I am Italian-American.The tactics now being exercised by the Boeing execs. remind me of John Gotti (THE LATE) former leader of the “Gambino family..Even if all others are doing the “Get rid of pensions” deal…does that make it “right”…”argumentum ad populum..”Everyone else is doing it..so it must be o.k.!!! This is “a “Fallicy of Relivance”…..The word on the factory floor is that now Boeing can take a hold of 20-30 billion dollars worth of our 40 billion dollar pension and use it to “pay off the 30-billion dollar deficite accrued bthe 787 debacle…that makes sense
Anthony M – re the pension ripoff- while BA can make money- it is NOT as you and others seem to believe.
Simply put- BA cannot take existing funds which on an acturarial basis are VESTED( belong to YOU ) and can only be used to provide an annuity for everyone in the fund, retired, ( dead w spousal benefits) or have credited service. Federal law known as ERISA and the quasi-government insurance known as PBGA ( EBSA) are very strict and enforceable against company assets.
But what BA can do is use the ‘ surplus’ ( defined under ERISA regs ) and put it into Operating earnings, etc.
By freezing the credited service and the plan, over time significant ” surplus ‘ will be generated which can- will be put into operating earnings.
I have stated many times- DEMAND you union get outside- competent- non conflicted help from SME to do a thorough analyis and explantion of BCERP and other BA plans for which legal plan documents can be obtained. Present those finding to the membership.
DB funding under ERISA is complex, and not obvious.
Most do not bother to even look at the info available, but instead rely onphony PR on both sides.
As a start- go to my site
https://sites.google.com/site/baunionhelp/home
And take the time to read the documents linked- most from Boeing which can be found with a little searching- available to anyone.
Also – under law- one can request a detailed analyis of YOUR benefits currently vested, or estimated as of your planned retirement date. ONCE per 12 month period. Also there may be an online version available ( but without as much detail as you can get from writing the plan adminstrator.
You can also request a copy of the current legal plan documents from the union. If they do NOT have a current copy, simply write the plan adminstrator and politely request that they provide on to your local at xxxxaddress within 10 days. ( the 10 days is a legal requirement ) the plan admin address is in the most recent SPD ( summary plan document you have a copy of ) or can be looked up again on the Boeing site. And IF (hopefully WHEN) your union steps up and engages a SME on the pension issue, they will absolutely require both the Legal plan document, the SPD, and the most current contract.
And yes, BA will contiue to make money on the already existing BCERP,
This spreadsheet can be downloaded and used to compare the Freeze date versus continued to 2016. Inputs are estimated
percent increase for alternate benefit, and 5 year average as of march 2012 and credited service as of march 2012.
Age can be input but does not enter into calculation Your union should have provided this.
NOTE : Goggle docs does not allow for some reason a view of my excel files. BUT they can be downloaded. Two ways
Browser says ‘ try again later ” Look on upper left with down arrow- hover says download current version – click on it
Browser says cannot view — upper left under FILE – down arrow
http://tinyurl.com/BCERPPENSIONCOMPARE
21) BA layofffs for funm and profit
FOR those who might wonder how BA makes money on pensions when they layoff relative short term employees ( 10 yeas ) I have prepared both a pdf view plot and a spreadsheet which works for 10 years of service ending in 2016 per the IAM ‘ contract:
It is an close estimate- and is interactive for starting pay, average annual increase, interest on boeing contribution during and after 2016 and pension pay at age 60 ending at age 92 Also the estimated percent contributions by boeing as a percentage of salary.
Anyhow the pdf files which has a link to the spreadsheet which can be downloaded is below
its my version per BCERP of layoffs of newbies for fun and mostly profit – the gift that keeps on giving
http://tinyurl.com/BA-PROFIT-BY-LAYOFF for the pdf
http://tinyurl.com/BALAYOFFPROFIT for the spreadsheet which can be downloaded but not well vieswed on google
Protection to keep from inadvertant changes – NO password needed to remove
22) A COMBINATION OF 5 10 AND 20 YEAR EMPLOYEES ( GENERALLY IAM) BUT CONCEPT IS THE SAME
http://tinyurl.com/FREEZE4PROFIT
I have put together a 3 page pdf file which shows the profit involved when freezing pensions per BCERP in 2016. The alternate of course is for an Insurance company to BUY the pensions a bit after the freeze, and guarantee to provide an annuity for the values. My plots show typical values for ‘ sale ‘ in late 2016-early 2017 for three cases. A five year employee, a 10 year employee and a 20 yar employee.
The Sale price shows as BA CONT W INTEREST. This is the sum of payments to employee over the 5, 10, or 20 years based on 6 to 7 percent of contributions. I have run the numbers out to age 92 starting the pensions at age 60 and using spousal benefits. So either BA could make or breakeven at 2016-207 by selling, and dropping risk, or keep it and make even more over the years.
Please- instead of depending on PR and partial truth news articles- sometimes totally wrong- get a SME- it will cost a few $$$ for sure- but until you get such involved, you all will be subject to urban myths, etc
And for a detailed- correct explanation of just how fubar the system is and has been
Get a copy of Ellen Schultz Book ” RETIREMENT HEIST “