Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Bjorn’s Corner: Air Transport’s route to 2050. Part 21. May 9, 2025
- Does an A220-500 need a new wing and engines? Part 2. May 8, 2025
- Embraer downplays tariff impact on 2025 results May 6, 2025
- JetZero readies effort for private equity fund raising May 5, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 20. May 2, 2025
Assessing the settlement
Update, October 30:
Seattle post-Intelligencer: Bill Virgin, an astute business columnist, opines on who won and who lost in the strike settlement.
Update, 5:00 PM: Here is a 17 minute podcast about the settlement with Richard Aboulafia, Scott Hamilton and Addison Schonland.
Update, 1:00 PM: The IAM set the vote to ratify the new contract offer for Saturday, Nov. 1. Voting will be until 6 PM PDT, with results announced later that evening.
Original Post:
Now that the dust has settled a bit and the details of the settlement between the IAM and Boeing are emerging, it’s time to assess the outcome. Inevitably, the question is asked, Who won?
On balance, it looks like the IAM did, but Boeing came away with important victories as well.
From Boeing’s perspective, spokesmen as well as the official Boeing statement hammered home the retention of outsourcing flexibility, the key stumbling block in pre- and post-strike negotiations. The only change in the contract over this issue, Boeing told us, is that the IAM gets consulted and a chance to bid on any work proposed to be shifted from the Puget Sound (Seattle area) to any other Boeing facility. None of the five strategic reasons for outsourcing was eliminated or altered. On balance, we think Boeing prevailed on this issue.
Another point of contention was Boeing’s plan to revise health care benefits for workers and institute an employee contribution plan whereby IAM members would have to pay some share of the premium costs and other costs. The IAM called this a take-away. The parties agreed to keep the present coverage in place, with no employee contribution. It’s hard to call who “won” this one; the employees don’t have to co-pay, but the coverage isn’t quite as good (according to Boeing), and we don’t know whether Boeing is saving any money or not for less coverage but no employee cost-sharing.
A four year contract was crafted in place of the standard three year deal. Both sides “win” on this one; Boeing gets longer labor stability and the union gets an additional 4% raise in the fourth year, for a total of 15% over the life of the contract. Boeing originally offered 11% over three years and the union wanted 13%. Though we dislike the over-used term, “win-win,” this one fits the description.
Boeing slightly sweetened the pension retirement payments, for a “win” for the union.
The question is when does production get back up to pre-strike levels. We addressed this in our post on the tentative settlement, citing Boeing CFO James Bell’s earnings call statement that it could take as long as two months. A Boeing spokesman we spoke with thought Bell said there would be a day-for-day delay (actually that was Boeing CEO Jim McNerney talking about the 787 development and first flight delay). We returned to the transcript of the earnings call and reproduce the relevant conversation below:
JB Groh – D.A. Davidson
But, well let’s say theoretically if it ended after 60 days, can you get up to that rate in two months’ time or –?
James Bell
I don’t know. I really don’t know and I don’t want to speculate but I think that two months is a long period of time, so I would suspect that we could get close to it, if not there, in the two-months period. Hopefully, we can do it in a lot less time.
Boeing, its employees, the customers and the suppliers can breath a sigh of relief…for the moment. With SPEEA negotiations starting tomorrow, we could be in for this all over again. The SPEEA contract expires December 1. If no agreement is reached, look for a strike for; if successful, look for a return to the bargaining table with SPEEA’s hand strengthened, armed then with a walkout planned for January or February.
JP Morgan had this to say: The end of the Boeing strike should provide a short-term boost to the commercial aerospace stocks. We also find the stocks attractive on a long-term basis. However, the plethora of bad news likely to come on the cycle, the aftermarket, margins, and further 787 delays make us more cautious on the intermediate outlook.
Details of IAM-Boeing settlement
October 28:
STATEMENT FROM DBR TOM WROBLEWSKI:
This synopsis reflects the highlights of the issues that you identified: job security, wages, pension and health care. This is just a summary of some highlights, we will be providing additional information.
“Our Union has delivered what few Americans have – economic certainty and quality benefits over the next four years.
We have secured health care benefits with no additional cost shifting. The amount members will pay in deductibles and co-pays by the end of this contract, will have remained constant since 2002.
Preserving a defined benefit pension plan for all members is becoming rare; improving the defined benefit plan is a positive move.
As the financial markets have crumbled, the Union delivered 15% guaranteed pay increases for every member over the life of the agreement. In addition, there are significant lump sum payments in the first three years.
The fight for job security is something we battle every contract, every opportunity and every day. In this round, we won the battle and made some significant gains. In the fight for job security, we won. We will fight again in every contract going forward, as long as companies like Boeing see an advantage in bolstering their bottom line by sacrificing quality for the cheapest labor. At 30,000 feet airline customers want quality.”
JOB SECURITY
Letter of Understanding #2 – Updated Letter of Understanding to protect nearly 2,200 facilities/maintenance employees currently on the payroll for life of the Agreement.
Revisions to Article 21.7 – Expanded the scope of our subcontracting review. Secured the ability to compete for work that moves from one Boeing facility to another Boeing facility.
Improved Letter of Understanding #37 with the following protections.
• Forklift Drivers, MPRF’s, Factory Consumables Handlers, Environmental Control Workers and Shipping/Distribution will not be laid off or removed from their job classification and grade as a result of Materials Delivery and Inventory Process. This revision expanded protection to 2,920 jobs for the life of the Agreement.
• Except for 787 final assembly, vendors are limited to delivering products to designated areas only. From there, bargaining unit employees will track use, disbursement, acquisition, and/or inventory of parts, materials, tools, kits and other goods or products.
• Jointly work with the Company to improve material delivery process and ensure our members grow with the new technology and innovations.
• Parties will explore options for retraining or reassigning bargaining unit employees to equal level jobs when employees are impacted by process and technology changes.
COMPENSATION
General Wage Increases
1st year – 5%
2nd year – 3%
3rd year – 3%
4th year – 4%
Lump Sum Payments
1st year – 10% (of previous year’s earnings) or $5,000, whichever is greater
2nd year – $1,500
3rd year – $1,500
In addition, the second and third year lump sum can be diverted into VIP to bolster members’ pension savings.
Rate Range Minimums – All rate range minimums increased by $2.28
Progression – Employees in progression on 9/3/08 will receive supplemental wage increase sufficient to bring them to the new rate range minimum or $1 per hour, whichever is greater.
PENSION
Effective 1/1/09 – $81 per year of service
Effective 1/1/12 – $83 per year of service
HEALTH CARE
Boeing retreated from their takeaways and cost shifting in medical and benefits and reverted to the 2005 contract levels. This means the medical cost structure and benefits remain the same through 2012.
RETIREE MEDICAL
Went back to the 2005 language – eliminating language that would have been detrimental to existing retirees currently on retiree medical.
DURATION
Four years, expiring September 8, 2012
Breaking News: Tentative Deal, IAM-Boeing
8:00 PM PDT
Seattle Post-Intelligencer: Aerospace writer James Wallace has one of the first, comprehensive reports following the tentative settlement between the IAM and Boeing.
Bloomberg News has this report.
9:00 PD PDT: So where do things go from here? On the earnings call, Boeing CFO James Bell said it could take as long as two months to ramp up to pre-strike production levels. This would be during the Christmas holidays, and just before the January timeline SPEEA likes for its own strike, should it come to that.
A strike by SPEEA doesn’t have the same hurdle to jump over that the IAM does. A two-thirds vote by IAM members is necessary to strike (reminder: the vote was 87%); for SPEEA, a strike vote only requires a simple majority.
Obviously, Boeing doesn’t need another strike, regardless of how long or short it may be. The pressure will be on Boeing to reach an accord with SPEEA and avoid a strike. Obviously Boeing wants to avoid a strike; after this IAM event, how much pressure will there be on Boeing to avoid one with SPEEA?
6:15 PM PDT:
Boeing and the IAM reached a tentative settlement after five days of talks that went well into the evening October 27 in Washington, DC. We immediately posted the IAM’s statement and by 7:10 PM, we were still waiting for the Boeing statement.
The breakthrough is good news for Boeing, the IAM and the customers. It will take 3-5 days for a vote to be taken, by which time the strike will be ending its eighth week.
No details will be immediately released, so we don’t know where the give was on either side.
Undoubtedly, this new contract will form the basis for the SPEEA negotiations, which were to start tomorrow and which were postponed for one day in order to conclude the IAM talks.
Wall Street analysts were nearly unanimous in thinking the strike could last through November and perhaps even into December.
SPEEA’s contract expires December 1 and this union’s leadership already said it would not strike while the IAM was out. The leadership also said any strike would most likely come in January or February.
With a tentative IAM settlement sooner rather than later, perhaps this bodes well for the SPEEA negotiations.
Whenever a Boeing statement is issued, we’ll add it below.
7:50 PM PDT: Here is Boeing’s short statement:
SEATTLE, Oct. 27, 2008 — Boeing [NYSE: BA] and the International Association of Machinists and Aerospace Workers today reached tentative agreement on a new four-year contract covering 27,000 employees in Washington, Oregon and Kansas. Union leadership is recommending that employees vote to ratify the contract.
The company retained the flexibility necessary to manage its business, while making changes to the contract language to address the union’s issues on job security, pay and benefits. The offer provides general wage increases every year and increases pension benefits. In addition, Boeing is proposing no changes to the cost share employees currently pay for a selection of outstanding health care plans.
“This is an outstanding offer that rewards employees for their contributions to our success while preserving our ability to compete,” said Scott Carson, president and CEO of Boeing Commercial Airplanes. “I thank both negotiating teams and the federal mediator for their hard work and commitment in reaching this agreement. We recognize the hardship a strike creates for everyone — our customers, suppliers, employees, community and our company — and we look forward to having our entire team back.”
By mutual agreement, details of the agreement will be released first by the union. If employees vote to approve the offer, it will end the strike by approximately 27,000 employees in Washington, Oregon and Kansas.
From the IAM (6:15 PM PDT):
Update October 27, 2008 – Machinists in Tentative Deal with Boeing
NOTE: Details on the agreement will be posted on the website tomorrow.
The International Association of Machinists and Aerospace Workers (IAM) announced today that it reached a tentative agreement with the Boeing Company on a contract that will provide job security for its members and limit the amount of work outside vendors can perform in the workplace.
The agreement was hammered out over a five-day period with assistance from federal mediators and participation at the bargaining table by IAM International President Tom Buffenbarger and IAM General Vice President Rich Michalski. Additional resources and technical support was provided by various departments at IAM headquarters.
Job security and the use of vendors were key issues in the strike that began on Sept. 6, 2008. Among the other issues resolved in the latest round of bargaining were wage rates, health care benefits for current and future employees, pension improvements and work rule changes designed to improve productivity.
Full details of the 4-year accord will be withheld until they can be compiled and distributed to IAM members in all Boeing locations.
The tentative agreement has the unanimous endorsement of the IAM negotiating committee and will be presented to members for a ratification vote, which will take place in 3-5 days. A simple majority is required to ratify the tentative agreement.
“After 52 days of striking, we have gained important and substantial improvements over the Company’s last, best and final offer that was rejected on September 3rd. Your solidarity brought Boeing back to the table and made this Company address your issues,” stated District 751 President Tom Wroblewski. “Each of you stood up and did your part to win this battle, which was a fight against more than just Boeing, but against corporate America. Boeing is profitable because of our members’ hard work and by standing together our members ensured they receive a bigger share of those profits.”
“This tentative agreement is the result of hard work and great sacrifice by many people,” said IAM Aerospace Coordinator Mark Blondin. “But no one deserves more credit than the workers at Boeing, who conducted themselves with dignity and determination throughout this ordeal. On behalf of the entire negotiating committee, I want to say it has been our honor to serve as their representatives.”
Obama considers dual tanker buy
The US Air Force AIM online newsletter reported October 24 that presidential candidate Barack Obama is considering a dual tanker purchase. The article is here.
The same publication has another story quoting a retired general as saying delaying the tanker purchase is unwise.
Week 8: IAM-Boeing strike
October 27:
SPEEA, the engineers union at Boeing, starts its table negotiations tomorrow. Michele Dunlop of The Everett Herald has a good summary of the issues. At the moment, things look rather bleak and a strike by SPEEA is quite possible. SPEEA’s contract expires December 1, but don’t look for a strike until either after the IAM is back to work or after the first of the year in any case. SPEEA’s statement in advance of negotiations is here.
The LA Times has a story of interest here.
October 26:
As the IAM strike against Boeing begins its eighth week, mediated talks continue in Washington (DC) against a media blackout.
Here are the latest developments:
Bloomberg News cites officials at Goodrich, a major supplier to Boeing on the entire product line, predicting that no 787s will be delivered in 2009. Boeing has yet to acknowledge this, nor has Boeing even said the first flight will be delayed until 2009–something every analyst now believes.
Boeing stock reached a low of $41.75 last week; the 52-week low is $39.99.
The IAM strike cost Boeing 35 cents a share in the third quarter financial results, the company’s CFO said in the earnings call last week; that’s $256.49 million. This is $10.3 million a day for the 25 days the IAM was on strike in September, compared to the $100 million to $110 million a day analysts projects and the $75 million to $83 million a day we estimated. Delay deliveries due to supplier issues for galleys, principally on the 777, cost the company 25 cents a share. Third quarter revenue declined $1.224 billion year-over-year (7%), or $48.96 million a day. The cash and securities position declined by $3 billion for the quarter, attributable to strike, research and development and other cash outlays.
Vought, a major 787 supplier (also on the 747, C-17 and certain Airbus programs), said it is 30 days away from closing down the 787 plant at Charleston (SC) as a strike-related impact. On other hand, Triumph Group, another major supplier, had a boffo quarter.
Boeing 3Q results, earnings call
Boeing announced its third quarter/nine month results today.
The full press release with the results may be found here.
Boeing’s 11-page PDF slide show that goes with the conference call may be found here.
The full earnings call transcript may be found here.
The call begins; key points:
- James McNerney, CEO: I want to be very clear; we worked very hard to avoid it, we want to solve it. We want an agreement that rewards a group of valuable employees and which protects out ability to compete. The linchpin remains management rights to respond to our business and market conditions, especially in today’s economic environment.
- McNerney: 5-10 deliveries for Boeing wide-body aircraft affected by supplier delays for galleys.
- McNeney: so far only two airplanes canceled, 80 deferred.
- McNerney: Despite strike, have achieved key milestones in 787 program, including assembly of fourth 787. We have used the strike period to better organize the work plan in the factory. Delivery schedule will be reassessed after strike is over; there will be a ramp-up period after strike concludes.
- McNerney: Boeing Capital is working with customers in tight credit market, but aircraft financing still available and we have no evidence that airplanes won’t be financed. We stand ready to help our customers if needed. We will do so when appropriate. 80% of our planes are ExIm Bank-eligible.
- James Bell, CFO: Revenues down in third quarter affected by strike and the galley-delayed deliveries. These accounted for 60 cents a share in the revenue loss. Boeing Commercial revenues were reduced by $600 million. (Editor: This equals $24 million a day in reduced revenue.)
- Bell: Costs for development of the 748-8F have increased. Engineering 95% complete.
- Bell: It is very likely BCC will do some financing in 2009. We will be very disciplined. We have backstop financing commitments of $9.5 billion, or 3% of BCA’s backlog for next decade. We’ve recently included additional terms and conditions to reduce BCC’s risk.
- Bell: All commercial and some defense programs affected by strike. It is important to note there will be a ramp-up period. All financial guidance suspended for duration of strike.
- McNerney: We will not sacrifice our ability to compete for short-term agreement with the strike.
Questions begin:
- McNerney: cancellations and deferrals are pretty much in line with what we’ve seen in previous years and others are interested in icking up positions. Discussions are slightly more, but backlog is still in relatively strong parts of the world. We have steadily increased production rates in a measured way in last few years to meet demand without getting beyond our headlights. We’re feeling good about our production rates over next few years but we want to understand impact of strike before adjusting rates in the future. We don’t anticipate any white tails at all next year.
- McNerney: Impact on 787 remains day-for-day. The gating item is the assembly of the early airplanes in the factory, not supply chain. (McNerney would not answer whether first flight would occur in 2008 if strike ended tomorrow.)
- Bell: We’re not overly dependent on any one financing source (for BCC to help customers). We went through and reaffirmed commitments. Pricing may be different, but not out of line. We think ExIm will do 20% of financing over next six months. We have provisioned for BCC to participate for about $1 billion.
- Bell: BCC is heavily concentrated in 717s (Editor: financially ailing Midwest Airlines is a major customer; AirTran is the other major customer). BCC has been working to reduce exposure in this type.
- Bell: Making up strike-delayed deliveries in any short period of time is impossible.
- McNerney: We’re trying to learn from 787; in retrospect we bit off more than we can chew. There is a lot to learn from how we did that, good and bad. Hopefully you’ll see that in new programs. On 747-8 we’re not particularly proud on how that’s sorted out (on processes). Learning how to manage the 787 global supply chain with IT, design responsibility, visibility through IT and design, we did not have the kind of controls in management and IT are areas we have had to fix.
- Bell: Negotiations with 787 customers over delays, we’ve settled with some and have a better than expected settlement to serve the customers and to protect the corporation. By the time we deliver the first airplane, we’ll have a better view of zero margin (financial) on program.
- McNerney: We had [previously] informally slotted American positions, so this order doesn’t affect demand [and therefore won’t affect production rate].
- Bell: A lot of financial liquidity crisis should clear up by 2010.
- Bell: Would not definitively speculate how long the ramp up will take following the strike, but depending on the length of the strike, Bell hoped two months would see the production back to normal.
- McNerney: I think there is a way forward, a compromise, on management rights issue. I think there is a way to work with the union to meet some of their goals. I think both sides are approaching negotiations tomorrow with a constructive headset.
- Bell: The strike impact is 35 cents a share and the galley issue is 25 cents. (Editor: there are 740,250,000 shares outstanding.)
- McNerney: There have been some informal discussions with the IAM which indicated some constructive headset. [And] we look forward to successful discussions with SPEEA.
We’ll make a personal note: Boeing today confirmed what we reported previously: American’s 787 delivery positions were already figured into the production chain. We also note with satisfaction that Air Transport World reported October 21 what we’ve been reporting for months: that there are no new delivery positions available for the 787 until the end of the next decade. Here’s what ATW reported:
Last month ATWOnline revealed that two airlines were quoted 2020 as the earliest delivery date for a new 787 order (ATWOnline, Sept. 8). Boeing confirmed the timeline, stating that it “has said publicly that first availability for new orders of the 787 is around the end of the next decade.”
Note that ATW quotes Boeing as confirming this.
Corporate Website updated 10/21
This week we take a look at the complaints filed against Airbus and Boeing at the WTO. Decisions were expected months ago–where are these? Check this comment out at our Corporate website.
We also talk about the shrinking availability of capital for airlines to finance airplanes next year.
Update, October 24:
The WTO announced it won’t have any decision until next year.
AA: getting early delivery positions
With Boeing’s 787 line sold out to 2017 or 2020 (depending on which aerospace analyst you believe), how did America get early positions? Here’s what we wrote for Commercial Aviation Online (paid subscription only) yesterday. We had to wait 24 hours before we could post this on a free site.
Commercial Aviation Online, October 16:
American Airlines’ previously held purchase rights for the Boeing 787 provide the airline with favourable delivery slots beginning in 2012.
American declined to comment directly on the 787 contract, but reminded CAO of its previously announced 787 purchase rights.
A CAO source says the delivery positions had been reserved for American, and with American’s reminder of its previously stated purchase rights, this is the probable explanation for the early delivery positions.
The positions do not come from another customer, either by deferral or cancellation, nor do they further delay the program deliveries.
Also, American’s early delivery positions shouldn’t come as a surprise to those familiar with the airline’s over-arching contract with Boeing, signed shortly before the 1997 merger between McDonnell Douglas and Boeing.
The contract called for Boeing to be the exclusive aircraft provider to American for 20 years. As a condition to the merger in order to gain approval from the EU, Boeing agreed not to enforce its side of this contract provision, enabling American to order from Airbus should it choose.
However, from American’s perspective, the contract provides most favored nation pricing as well as what is described as the “mechanism” to ensure American gets aircraft in the future when it wants them. This mechanism is how American gets early deliveries even though the 787 is otherwise sold out to the end of the next decade.
IAG/AirInsight has this podcast about the American order.
Since writing this piece, we confirmed that the purchase rights dating to the 1996 contract are indeed the key and that American’s delivery slots had been reserved all along. Delta and Continental have similar exclusive supplier contracts with Boeing and have similar purchase rights.
We also reconfirmed that for any other customer, 787 delivery positions are unavailable.
Airbus unshaken: WSJ
Update, October 15:
Bloomberg reports that Airbus is scaling back plans to increase production of the A320 and A330 lines. Here is the story. This prompts us to highlight an item in The Wall Street Journal piece below: Boeing won’t up production to catch up delivery delays due to the strike (though this is really no surprise).
Original Post:
With Boeing dominating the news in recent months due to delays with the 787, the 747-8, the controversy over the KC-X program and the labor difficulties, a little news about Airbus is refreshing.
As previously reported, Airbus has its own delay issues with the A400M military program. A380 delays continue to make news from time-to-time. The Wall Street Journal just published a long piece about Airbus, saying the European company is “unshaken” by economic turbulence. Unlike most WSJ articles, this one is free. It’s worth a read.
Meantime, from what we are hearing in the market, Airbus continues to make efforts to benefit at the 787’s expense by selling the A330 to disappointed 787 customers. Sales of the A330 have been more than healthy and with the anouncement that the company is designing an A330 Heavy with longer range, Airbus is making a concerted push to further expand the A330 market.
With the 787 troubles, Boeing doesn’t have delivery slots (beyond the occasional hold-back) until 2017 or 2020, depending on who you believe. Airbus has A330 delivery slots as early as 2012. The A350 is scheduled to go into service in 2013 (which, given the A380 performance and the 787 issues, draws a lot of skepticism even at this early date) but Airbus believes the A330 could be produced alongside the A350 for another decade–as a passenger airplane. While an A350 Light is being discussed that would clearly be a replacement for the A330, this plane probably would not be available until 2015 or later, if at all.
Boeing contemplates a second line for the 787, something that is required if there is any hope to catch up on program delays in a reasonable amount of time. But the question not only is when can Boeing do this but also where will a second line be established. Common sense says do it at the Everett, WA, plant where the 787 line is now. But the IAM strike and the likelihood of one by SPEEA suggests Boeing management has had enough and we think it entirely possible a second 787 line could be opened in a right-to-work state.
(For non-Americans, a right-to-work state means no unions required.)
If this happens, might an interim period be undertaken for Line 2 to cover production while Line 1 is shut down and moved alongside Line 2 in the right-to-work state? Call us conspiratorial, but we certainly see a scenario where this could happen. We believe the odds are much better than 50-50 that the replacement airplanes for the 737 and 777 won’t be built in Washington State. Why, then, keep the 787 here? The 747 and the 767 will die here, but these are both at the end of their life cycles anyway (final outcome of the KC-X program being the only variable).
Airbus, meanwhile, chugs along with the A380 (and A400M) the only hiccups (or up-chucks, as the case may be). The company is working on improvements to the A320 that will reduce fuel burn by several percentage points; Boeing is only doing minor improvements that customers hope will gain as much as 3% fuel improvements but say could be as little as 1%.
Pratt & Whitney began testing its Geared Turbo Fan on the A340-600 test bed owned by Airbus. Although Airbus cautions against reading anything into the use of the A340 as the platform, observers speculate that this could lay the groundwork for Airbus to put the GTF on the A320 as an interim step toward a full replacement airplane, not expected before 2018 or 2020. An A320 GTF theoretically could be certified by 2012 or 2013.
Boeing responds by saying the GTF could be fitted on the 737, but the problems are greater than on the taller A320. CFM International is working toward certification of its new LEAP-X powerplant, an entirely new engine, which is promised to reduce fuel burn around 12%-15%, similar to the GTF. But certification isn’t promised until 2016.
Airbus’ A330 Heavy, it says, will have more range than early models of the 787 (something Boeing disputes) because its analysis concludes that the 787 will be heavy and fuel burn promises of the GEnx and Trent 1000 engines won’t live up to promises. Meantime, Boeing works on a Product Improvement Package for the 777 which Emirates says provides a 10% operating cost improvement.
Airbus will likely finish this year with a substantial sales lead over Boeing.
Change in Boeing production?
The economic times may cause Boeing to alter production, a top executive said. Bloomberg News reports that Randy Tinseth, VP-marketing, hinted at this. The aerospace analyst at Goldman Sachs last week issued a report predicting fewer deliveries in coming years as airlines face financing difficulties. Bloomberg now reports pretty much the same thing.
Flight Global’s Laura Mueller reports that two lessors have urged production cuts.
This is the sort of “flexibility” Boeing seeks in its contract with the IAM and, upcoming, SPEEA: to alter production and jobs in bad times. Boeing says that the job guarantees sought by the IAM inhibits this flexibility. Airbus has long had handcuffs on its ability to reduce its workforce in bad times, due to European labor laws (as opposed to union contracts) that mean a huge severence pay that makes laying off people academic.
What’s interesting in Tinseth’s reported comments is the contrast with Boeing executive statements all year. Boeing’s top execs repeated told everyone who would listen (including, it seems, its own unions) that Boeing was insulated from any downturn because the backlog was so well spread out among customers around the globe in different economies and with varied business models. Some observers didn’t drink the cool aid, but certainly the labor unions took note and these chickens came home to roost in the current labor demands for reduced outsourcing and job guarantees.
So while Boeing execs were reassuring Wall Street, they in some respects set the stage for the current labor impasse.