Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
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Muilenburg’s opportunity with Boeing unions
Dennis Muilenburg, president and CEO of The Boeing Co. Seattle Times photo via Google images.
Sept. 23, 2015, © Leeham Co. The plan to open a 737 Completion Center in China is an opportunity for Boeing Commercial Airplanes (BCA). It’s also an opportunity for Dennis Muilenburg, who was named chief executive officer of The Boeing Co. only last June.
Ray Conner, CEO of BCA, wrote employees in Washington State, where the 747 is assembled, that no jobs will be lost to the Completion Center.
Leadership and members of Boeing’s touch labor under, IAM 751, are understandably skeptical. As noted in yesterday’s post on this, 751 leadership expressed its concern even before Chinese President Xi landed at Paine Field in Everett, where Boeing’s wide-bodies are produced.
During the 10 years Jim McNerney was chairman and CEO of The Boeing Co., he battled the unions, demanding give backs and threatening to move work out of Washington if he didn’t get them. McNerney sent the second 787 assembly line to Charleston (SC) and used threats to put the 737 MAX and 777X lines elsewhere in a blatant game of labor blackmail (which also extended to the State for economic concessions). The blackmail worked.
Still, victory didn’t prevent Boeing from moving jobs out of state even after the largest tax breaks in US history were granted by the State in return for locating the 777X assembly site and wing factory in Everett. The ink was barely dry on the state tax breaks and the IAM 751 labor concession contract when Boeing began shifting engineering and other jobs to non-union locations in other States. The 751 leadership, along with the engineers’ union, SPEEA, cried foul and charged Washington taxpayers had been flimflammed.
Thus, with the 737 Completion Center plan, labor’s paranoia is not wholly without merit.
Now to Muilenburg’s opportunity.
The new CEO, who came from Boeing’s defense side, remains an enigma to BCA employees. While Conner’s letter to the employees obviously recognizes the sensitivities, but the letter might better have come from Muilenburg.
There is no trust left between the unions and management thanks to McNerney’s decade-long war on labor. If Conner’s letter speaks the truth (something the unions remain skeptical of), Muilenburg has the opportunity now to reach out directly, rather than indirectly, to begin repairing the relationship that was fractured by McNerney.
“This isn’t about China as much as it is about Boeing’s on-going transfer of jobs out of Washington state. Our members have paid for that work by giving up our pensions, and our state’s taxpayers have paid for it with $8.7 billion in tax breaks. This illustrates why we need our Legislature to create tax incentive accountability,” said IAM 751 President Jon Holden.
On his first quarterly earnings call, Muilenburg said all the right things about valuing and working with employees. He needs to now follow this up with action.
Membership in a union is a basic democratic right guaranteeing a balanced and sustainable industry over the long term. Satisfied employees who have a secure and well-paid job are creative and productive. We can not compete with China by paying workers less and whip them harder than they do.
I am very glad that I am not an employee in the US and I am glad that our elected union representatives have seats on the company board. I am pleased that we have laws and regulations that protect workers’ interests against greedy speculators.
Workers of the world, unite! You have nothing to lose but your chains!
I certainly agree that the ability to join a union should be and generally is a basic right, however being a member of a union is no assurance that you will work for a sustainable industry or company. Indeed there are plenty of examples where union-management decisions have led to the downfall of industries when one party gets too greedy.
FAL is about 10% of total cost … completion center as Boeing is projecting is even much smaller
Components come from US, Europe, Japan and even China + many other countries
Do you believe that well qualified workers are much cheaper in China ??
I know from experience that Indian qualified engineers are expensive otherwise they find good Jobs in Europe or in the US !!
Finally do you think that an A320 assembled in China is cheaper than in Mobile or german factory ??
It is all about market shares in the fastest growing market !!!
“Membership in a union is a basic democratic right guaranteeing a balanced and sustainable industry over the long term.”
Should union membership be a basic requirement for a workplace?
having a monopoly on access to a workplace gives unions the power to be unreasonable till self destruction ( union, industry ) happens.
No balancing forces present imho.
Similar problems arise from the way health care and pensions are handled
Case and point, Triumph Aerostructures
Workers of the world, unite … this is a Lenine saying … as you know it works well in USSR and the same communist style of behaviour helped kill french industry … as you know frenchcommunist party is now only about 3% of democratic votes … France is one of the very few countries still entertaining a communist party !!
China is a communist country – just saying. The airlines are state run, the aerospace companies are state run.
You could find many parts of US economy with state regulation, especially agriculture, with its subsidies ( compares well to French agriculture). Crop insurance is where the tax payers pay the premiums. dairy farming has the state setting the prices.
Then there is the banks, where losses are carried by the state, but profits go to owners. Dont forget ExIm which was essentially a federally subsidized bank for very big companies ( with a special laws to make it use accounting methods that no other business could get away with).
Most of US homeowner mortgages are carried by federally backed institutions such as Freddie Mac and Fanny Mae. Cheap home loans !