Transition from McNerney to Muilenburg complete

Dennis Muilenburg

Dennis Muilenburg, Chairman and CEO of The Boeing Co. Boeing photo.

Feb. 22, 2016, (c) Leeham Co.: The transition from the controversial and divisive Jim McNerney to the leadership of Dennis Muilenburg at The Boeing Co. is now complete.

Boeing announced today that McNerney stepped down as chairman and also stepped off the Board of Directors. Muilenburg, who succeeded McNerney as CEO last summer, now also assumes the chairman’s title.

It’s a welcome change.

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Pontifications: Tax breaks in Washington State

Hamilton KING5_2

By Scott Hamilton

Feb. 22, 2016, © Leeham Co.: A group of Democratic legislators in Washington State will introduce five bills aimed at repealing some tax breaks and also taking yet another run at holding Boeing’s feet to the fire by tying jobs and tax breaks. The latest effort died in committee this year. This is the second year in a row by Boeing’s two key Washington unions, SPEEA (engineers) and the IAM 751 (touch labor) to get a bill out of committee to tie jobs to tax breaks. Boeing opposes the effort.

Most of the bills relate to non-aerospace industries. Two, however do:

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Dissecting Boeing cost-cutting

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Introduction

Feb. 11, 2016, © Leeham Co. The news yesterday that Boeing is undertaking a new roundBoeing Logo of cost-cutting has been buzzing around management and labor circles for months.

LNC last year began hearing management at Boeing Commercial Airplanes would likely face personnel cuts of 10% to 15%. Cuts were expected within the marketing/sales departments, in part due to struggling sales of the 7-Series airplanes, sources told LNC.

The leading labor unions, SPEEA (engineers) and IAM 751 (touch labor), each told LNC last year they expected workforce layoffs were in the future.

More ominously, a consultant who occasionally worked with Boeing, told LNC that the elevation of Dennis Muilenburg from president and chief operating office to president and CEO (and, eventually, chairman) would make former CEO Jim McNerney’s cost- cutting efforts pale by comparison.

Summary

  • Major layoffs predicted at Boeing’s Share Services Group.
  • Work continues to be shifted out of Washington State.
  • Large number of retirements at IAM and SPEEA expected by year end.
  • Airbus pricing pressure, 787 deferred production costs, commitments to shareholders and 777X squeeze cash flow.
  • “Mac the knife.”

 

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Muilenburg’s blessing on process cleared way for SPEEA contract

Dennis Muilenburg

Dennis Muilenburg, CEO, The Boeing Co.

Jan. 14, 2016: (c) Leeham Co. Blessing a new process in contract negotiations made an agreement possible between Boeing and its engineers’ union, SPEEA, its executive director told LNC in an interview after the surprise deal was announced yesterday.

“This process would not have happened if Muilenburg hadn’t blessed it,” said  Ray Goforth, executive director of SPEEA. “This process would not have happened without Muilenburg.”

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Pontifications: Boeing to focus on “long-term liabilities” in 2016’s SPEEA contract negotiations

Hamilton KING5_2

By Scott Hamilton

Nov. 16, 2015, © Leeham Co. Boeing will target “long term liabilities” in its contract negotiations with SPEEA, the engineers union, its president quoted CEO Dennis Muilenburg as telling him in September.

Ryan Rule, president of the local SPEEA union, met for an hour with Muilenburg when he was here for a visit by China’s president Xi Jinping. Rule termed the meeting cordial. He told Leeham News last week that Muilenburg wasn’t specific about the “asks” Boeing will seek in contract negotiations next year, citing only “long term liabilities,” which Rule took to mean health care and pension benefits.

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Boeing unions gird for new jobs-for-tax breaks push

Nov. 11, 2015, © Leeham Co. Boeing’s two leading unions, the IAM District 751 and SPEEA, are girding for a second try in the Washington State Legislature to retroactivity tie job retention to $8.7bn in tax breaks given by the state in 2013 in exchange for the 777X final assembly line and the airplane’s wing production factory being located in Everett (WA).

IAM 751 is Boeing’s “touch labor” union that assembles all the 7 Series airplanes in Washington State. The District also represents some Boeing employees outside Washington. SPEEA is the engineers union that represents all in-state engineers and technicians under contract to Boeing.

The 787 assembly site in Charleston (SC) is not represented at this time by any union.

Leaders of 751 and SPEEA Monday said they will renew their efforts to tie jobs-for-tax breaks when the next session of the state Legislature convenes in January. Efforts in last January’s session came up short, largely overshadowed by the bi-annual budget session that required special sessions extending into the summer recess because no agreements could be reached.

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Pontifications: Boeing moves in China only the beginning

By Scott Hamiltn

By Scott Hamilton

Sept. 28, 2015, (c) Leeham Co.:The move by Boeing to establish a 737 Completion Center in China is only one step in a series of moves to increase its footprint there.

Boeing also said it will join with China’s National Development Reform Commission to develop:

  •  Industrial cooperation;
  • A “world-class” aviation transportation system through deliveries to China of Boeing airplanes and services;
  • Technologies to reduce aviation’s environmental impact and enhance sustainability;
  • Leadership and training for the next generation of leaders in China’s aviation industry;
  • Continued cooperation to support the safety, efficiency and capacity of China’s air transport system
  • Further cooperation in biofuels.

“Boeing and Aviation Industry Corp. of China (AVIC) will broaden their long-term collaboration to support Boeing’s commercial airplane programs,” the company announced last week in connection with the visit to Seattle by the president of China. “In a framework agreement, the companies said they intend to further advance AVIC’s manufacturing capabilities by adding major component and assembly work packages; strengthening leadership; and developing AVIC’s broad aviation infrastructure and business practices, including supply chain management.”

I believe this is only the beginning of a new push of Boeing’s expansion outside Washington State, elsewhere in the US and overseas.

Separately, last week it was also announced that a key supplier is done expanding in Washington State. Future expansion will be elsewhere.

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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.

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Chinese 737 Completion Center makes tactical, strategic sense

Sept. 22, 2015, © Leeham Co. The expected announcement by Boeing and Chinese President Xi during

President Xi of China. Photo via Google images.

his state visit to Seattle this week that Boeing will develop a Completion Center for the 737 in China is a significant event that may one day lead to an assembly line there.

Boeing’s touch labor union, the IAM 751, was predictably critical. In a post on the 751 website last week, the union said, “In a previous meeting with Renton’s 737 leadership we saw a brief presentation outlining Boeing’s perceived market conditions regarding sales of single aisle aircraft and the company’s desire to collaborate with China. We have asked the Company for details of what is intended with “collaboration” and have not received ANY information on “collaboration” or confirming or disputing the media reports. While we don’t know specifics of any such proposal, ANY shift of aerospace jobs from our bargaining unit or Washington State causes grave concern.”

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Pontifications: Steady as she goes at Boeing–for now

By Scott Hamiltn

By Scott Hamilton

July 27, 2015, © Leeham Co. Dennis Muilenburg, who became the chief executive officer at The Boeing Co. the Tuesday after the Paris Air Show ended (and at which Jim McNerney was front-and-center in his role as CEO), was on the company earnings call for the first time in this role last Wednesday.

If anyone was expecting, or hoping for, dramatic announcements or policy changes, they were disappointed.

With this Muilenburg’s first earning call, it was McNerney’s last. Predictably, it was a love fest between the out-going and the incoming. Muilenburg and McNerney swooned over how well they worked together and praised each other’s work, accomplishments and vision. The discussion wouldn’t be any other way, absent a scandal of some kind (remember Phil Condit resigning over the air force tanker lease deal, Harry Stonecipher over zippergate). Despite the buzz on Wall Street and elsewhere of the relationship strains between the two men, those days really don’t matter now. What does matter is what comes next under Muilenburg.

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