By Bryan Corliss
Feb. 12, 2019, © Leeham News: While Boeing is enjoying “labor peace” in its Northwest facilities, a couple of aerospace industry suppliers are in the midst of contract negotiations with the largest union representing aerospace industry workers in the region.
At one of the new Collins Aerospace plants in Everett, those talks are contentious. Workers there staged a one-day walk-out on Jan. 17 after (according to union officials) Collins representatives refused to bargain with them.
The workers were back on the job the next day. However, the union representing them – International Association of Machinists District 751–filed a stack of Unfair Labor Practice complaints with the National Labor Relations Board’s Seattle office, accusing the company of, among other things, bad-faith bargaining.
Since the January walk-out, the two sides continued talks with the help of a federal mediator.
“The workers who generate the profits should share in the prosperity we create,” said Joshua Whitcomb, a mechanic at the landing gear shop, in a statement provided by the union. “This is very skilled labor, and not just anyone can perform our work.”
For its part, a Collins spokesperson in Iowa gave LNA a statement saying the company is “committed to continue negotiating with the union in good faith, and hopes to reach a mutually beneficial agreement.”
This is one to keep an eye on. The plant in question is the smaller of the new Collins’ two Everett operations – there are only 18 people in the union’s bargaining unit–but it’s the final assembly plant for landing gear for Boeing’s 737, 747 and 767 (including the KC-46). That makes it an important nexus in the Boeing supply chain.
It would not be the least bit surprising if there is more union organizing in the supply chain in the years ahead. In fact, it may be a perfectly rational response on the part of aerospace workers to the wave of mergers and buyouts that have swept through the industry.
It shouldn’t be a surprise. When two publicly traded companies merge, executives and shareholders all have lawyers looking out for their interests. Vendors and customers all have legally binding contract guarantees. Affected communities (through their elected officials) can bring at least some pressure to bear to ensure their interests are at least considered.
Non-union workers are key stakeholders who don’t have a voice in the process. This leads some to seek union representation.
That seems to be exactly what happened at the Collins landing gear plant, where workers voted in March 2018 to join IAM 751.
According to information from the union, the catalyst was news of the pending Rockwell Collins and UTC – and word that executives had change-in-control clauses in their contracts that provided personal financial guarantees in case they were laid off as a result of that merger. Shop-floor workers had nothing.
“With all the billions spent on buyouts, no one is looking out for us,” said Adrian Perez, a 14-year worker at the plant, in the statement from the union.
“We knew we had to unionize now,” he said. “It is an investment in ourselves for a better future.”
Something similar happened in 2015 when workers at Cadence Aerospace-Giddens voted to join the union.
Giddens Industries was a long-time locally owned aerostructures machine shop in Everett (WA). Boeing was and still is the main customer – today the shop provides machined structures, formed sheet metal pieces, subassemblies and parts kits for most Boeing programs.
In 2008, Giddens was acquired by Platte River Equity, a Denver private-equity firm that was putting together a string of six formerly independent aerostructures shops (five in the United States, one in Mexico) that it branded as Cadence Aerospace.
As supply-chain watchers know, there has been a tremendous amount of this kind of activity over the past decade. The increasing pressure that OEMs are putting on suppliers to deliver more for less has forced a lot of the family-owned stand-alone shops to either invest heavily to get bigger – or get out.
At the same time, the investor community has seen the kinds of margins that aerospace suppliers can deliver, and it’s been happy to step in to buy out the smaller shops that can’t or don’t want to compete in the new environment.
What usually happens, in these cases, is that the new owners will seek to lean out the operation as much as possible. This, typically, if not always, will include wage freezes and benefit cuts for the workforce. In extreme cases, the highest-skilled and most-experienced workers (ie., the best-paid ones) may be fired and replaced by entry-level hires.
Just like in the case of a merger, a lot of workers caught up in a private equity buy-out will seek out union representation.
Cadence-Giddens workers voted in 2015 to join the Machinists Union, and they approved their first contract in 2016. One worker said that the 85-cent-an-hour raise he got when that new contract took affect was the biggest pay increase he’d received since Platte River took over the company.
In 2017, Platte River Equity executed on its exit strategy for Cadence, selling it to another private equity firm, D.C.-based Arlington Capital Partners. Arlington brought in its own management team since the acquisition. (It has also added a seventh business unit, a machining and forging shop in Kansas.)
Talks between IAM 751 and the new Cadence management team are going into their second week. In a report to its Cadence-Giddens members on Monday, the union said that the two sides have made progress on non-economic issues while continuing to talk on pay, time off and benefits. The union said it plans on talks continuing through the end of the week.
Is there a new age of universal aerospace unionization? Probably not. While unions win about half the time when they file for union elections, most organizing drives never even get to that point. The laws of the United States may say everyone has the right to join a union, but the rules for actually forming one make it very difficult to accomplish. It’s hard to see the Trump administration doing anything to lower that bar in the next two to six years.
Still, the recent vote by Boeing flight line workers in Charleston to form their own bargaining unit suggests there’s some momentum. So do survey results that show a majority of Americans support unions – younger people in particular. (A 2018 Pew survey found 68% of adults under 29 have favorable views of unions; only 46% have favorable views of corporations.)