Jan. 18, 2016, © Leeham Co. The surprise announcement last week of a tentative contract agreement between Boeing and its engineers union, SPEEA, was the best news coming out of the company that I’ve heard in years.
New airplane and derivative programs and stock buybacks and dividend payments are important, of course. But this labor agreement has all the appearances of a sea change from the 10-year rule of former CEO Jim McNerney, whose destructive policies toward the unionized workforce were damaging to the long-term culture of Boeing.
First, let me hastily add that my entire professional career has been in management and I’ve never had to deal with unions, though I’ve worked for companies that have them. Having said that, my positions about the labor relations between Boeing and its unions have been very clear. SPEEA and IAM 751 members saved Boeing’s ass during the 787 and 747-8 production and design debacles and Chicago repaid them by cutting wages and benefits and moving jobs out of Washington State.
At the same time, the union members failed to face up to reality that the defined pension benefit plan had to give way to defined contributions and members had to face up to market realities to share medical costs.
Still, McNerney’s war on unions failed to appreciate the contributions made by their members in bringing Boeing through those rough times during the 787 and 747-8 problems. This principal ignored the fundamental truth: unhappy workers don’t make for a cohesive work environment.
As a time when Boeing wants to boost production of the 737 and 787 and it faces development of the 787-10, 737 MAX, 777X and KC-46A, it needs a happy and productive work force now more than ever.
When Dennis Muilenburg was elevated last summer from president and COO to CEO, many wondered what his approach toward labor would be. He was an enigma to the unions at Boeing Commercial Airplanes. (He still is, largely.) Would Muilenburg follow the McNerney path or set his own?
It now looks like he is setting his own path. (Through a Boeing spokesman in Chicago, Muilenburg declined a request for a statement or an interview.)
SPEEA officials were somewhat circumspect in commenting on the appearance of a new tone. Still, it was clear from our interview with Ray Goforth, the executive director, that Muilenburg’s approach made a deal possible that would not have happened under McNerney.
The new SPEEA contract is for six years from the amendable date in September, or well into 2022. This means labor peace through the development and entry into service of the airplanes mentioned above. (The 777-8, the last of these airplanes, has a planned EIS in 2022.)
It also means labor peace with the engineers as they design the new Middle of the Market airplane, a program that is widely believe will be launched in 2017 or 2018.
Muilenburg still has to deal with the lingering resentments at IAM 751 for the blackmailed concessions demanded under the McNerney rule in exchange for 777X work remaining in Everett (WA) instead of some other location.