Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Hopes for 1Q financial progress turns into bumpy ride for Boeing April 21, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 18. April 18, 2025
- Natilus: Composite BWB, entry-into-service by 2029, 570 on order April 17, 2025
- China bans Boeing, US parts imports in tariff war April 15, 2025
- Boeing welcomes COMAC competition as Asia-Pacific demand soars April 15, 2025
Odds and Ends: Boeing’s bonus to Charleston workers; E-Jet E2 EIS; IAM and Airbus; Fending off A330neo
Boeing’s bonus to Charleston workers: We’ve ignored the continuing workmanship stories of Boeing’s Charleston plant on the 787 for the past months as Norwegian Air Shuttle, LOT and Air India continue to have problems with the airplane. We figured there has been more than enough written about the program difficulties, so we moved on.
But the stories that Boeing is offering bonuses to Charleston workers to get the job right is something we feel compelled to comment on. The Seattle Times has this story.
It’s a bit of wonderment that Boeing finds it necessary to incentivize workers to do their jobs correctly, providing a bonus that is greater than those given to the Everett workers who have to fix the poor workmanship of Charleston. Typically, bonuses are given to workers for going above-and-beyond, not for merely doing what they are supposed to do in the first place.
The continuing issues with Charleston are waved away as “things are going according to plan,” and “traveled work is expected.” If this is “according to plan,” then the planner should be canned. Of course, we know this is merely corporate rhetoric dodging the question and strains credibility.
And back at Everett, those early 787s, known as the “Terrible Teens,” are still problem children, according to this report on public radio station KUOW.
EMB E2 timeline: Embraer has clarified its entry-into-service for the E-Jet E2. Flight Global reports that an official said the E-195 E2’s EIS will be the first half of 2018 (which was previously specified) and the E-190 E2 and E-175 E2 will follow in the first half of 2019 and 2020 respectively. Previously, EMB hadn’t been this specific about the EIS of the sibling models, saying only EIS would be in 2019 and 2020.
Union attempt at Airbus: To absolutely no surprise, the International Association of Machinists will attempt to unionize the new Airbus Mobile (AL) plant, reports The Street. IAM will also attempt to re-organize Boeing’s Charleston plant, which was once an IAM shop but de-certified in advance of the second 787 assembly line being located there. The Charleston Post and Courier has this story about the union plans there.
Conspiracy theorists in the IAM 751 suggested a quid-pro-quo between the International IAM: Boeing neutrality of re-organizing Charleston in exchange for the 777X contract vote.
Fending off A330neo: Aspire Aviation has a long piece about the prospective Airbus A330neo and how Boeing can fend off this potential competition.
Icing Up: This isn’t aviation (unless you consider this a satellite photo), but we are just fascinated by this picture of the Great Lakes in the US Midwest. The Great Lakes are 80% iced over.
Boeing’s Partnering for Success strains supplier relationship
Boeing officials reaffirmed the company’s drive for Partnership for Success, or PFS, during two appearances at conferences this month, adding that its supply chain was mostly on board, though some companies are now on a “no-fly list.”
.CEO James McNerney spoke at a Cowen Co. conference and in subsequent interviews, noting that some suppliers have greater margins than Boeing, which he termed “out of kilter.”
.Stan Deal, VP and GM for Supply Chain Management and Operations for Boeing Commercial Airplanes, told the Pacific Northwest Aerospace Alliance conference in Seattle last week that PFS is proceeding well, with cooperation of most suppliers.
Odds and Ends: A330neo; The 12th Man; Boeing’s earnings
Clearing the air on the A330neo, again: Bloomberg News has an extensive story on the prospective development of the A330neo. Following a report from Reuters, these two news articles basically confirm everything we reported in December.
The 12th Man: The Seattle Seahawks, which plays in the Super Bowl Sunday against the Denver Broncos, is well known within the National Football League for its “12th Man.” This is the fan base which has set records for being the loudest fans in football, at a record 137db. They’ve also been recorded on the Richter Scale for their stomping at the Seahawks’ Century Link Field (that’s a local phone company, and the name is routinely shortened to “the Clink”).
Boeing is a corp0rate sponsor of the Seahawks and rolled out its 747-8F house test plane in a new Seahawks livery.
Boeing’s earnings: Boeing reported its 2013 earnings and while they were a record profit, the forecast disappointed and the stock took a major hit Wednesday. The Seattle Times has the recap.
Charleston plant continues to give Boeing headaches for 787
Boeing is adding hundreds of workers to its Charleston (SC) 787 plant top deal with continued quality problems, reports The Wall Street Journal.
The details in the article are at odds with statements from Boeing throughout the last year that all was well at the plant, including that plans to produce three 787s a month by the end of last year were on track. When the Charleston Post-and-Courier prepared to report that the Charleston plant would fail to meet this goal, Boeing’s Charleston spokeswoman issued a rather snarky response that proved to be at odds with statements from Boeing’s own officials.
We heard all year that there were continued quality control issues at Charleston and production was slower than expected. Further, we had heard of traveled work that required IAM 751 members at the Everett (WA) plant to fix this work–which the WSJ reports has been climbing and now exceeds the 2011 level.
IAM 751’s president Tom Wroblewski steps down
Tom Wroblewski, president of IAM 751–the Boeing touch labor union in Puget Sound (WA)–announced last night he is retiring on January 31.
The Seattle Times has the full story. In a nutshell, Wroblewski’s health blew up alongside the labor relations with Boeing over the 777X site selection and the relationship within the District 751 and between 751 and the International.
We’ve casually known Wroblewski for many years. We like Wroblewski and knew he had the welfare of his members at heart. We disagreed with him and 751’s positions on many occasions, just as we did with Boeing’s position toward labor, but we always respected Wroblewski.
More to the point, we also believe Wroblewski was more in tune with his membership and more concerned for 751’s welfare than the International. We felt so strongly about this that in February 2010, at the Pacific Northwest Aerospace Alliance conference, we suggested that it would be in 751’s interest to “divorce” itself from International.
Wroblewski, who shies away from the press, called us protesting our suggestion. We later learned that he got into hot water with International over our opinion that he knew better what was important for 751 than the International leadership.
Wroblewski was further cranked with us a few years later when we advocated that Washington State needed to become Right To Work to make it more competitive with other states competing for our aerospace business. And he didn’t like our recollection that it was the IAM (though a different District) that lead to the shutdown of Eastern Airlines rather than grant concessions to save 10,000 jobs. (International president Tom Buffenbarger had a hand in that one.)
Readers know well what we think of how International handled the 777X contract negotiations and ran roughshod over 751. We opined that International was more concerned with retaining 751’s membership dues than it was about what was best for the members.
Under Wroblewski, 751 engaged in several philanthropic activities, most notably raising money for guide dog training and related needs. These activities got little press (including from this venue), who instead focused on the “sexier” stories of labor contract negotiations and strife with Boeing management.
A new leader for 751 may well be more militant than Wroblewski. While there now is a contract in place well into 2024, a militant leader for 751 can nonetheless make things difficult in an already tense situation for years to come. We think this has the potential to be a negative development for Boeing.
We’re sorry to see Wroblewski leave under these circumstances but not surprised. We wish Wroblewski a speedy recovery.
Would delayed IAM vote had made a difference? We don’t think so
We really hoped we were done with this story, but the saga of the IAM 751 Boeing 777X contract vote lives on.
- Several complaints about the timing of the January 3 vote have been filed with the National Labor Relations Board.The NLRB says it will take three months to investigate the matter.
- More than 1,000 members of 751 local units have called for a recount or a new election; the International rejected these demands. (Note: in government elections, recounts are generally not undertaken unless the margin is less than 100 or the percentage difference is less than 0.5%.) The margin in the January 3 vote was 51%-49% and some 600 votes.
- A local 751 member declared his candidacy for general vice president of the International IAM, in an election to be rerun from a year ago because of procedural irregularities. This is, of course, part of the irony of the entire matter: the International hijacked the election process from 751, which has never been accused of voting irregularities (that we know of). We’ve observed a couple of vote counts by 751 and found them to be scrupulous.
The critics of the election’s timing note that several thousand members of 751 were on vacation on January 3. Absentee voting was allowed for the first time in IAM history, but according to media reports, about 2,700 members did not vote in this election who voted in the November 13 election. The 777X contract was rejected then by a 67%-33% margin.
If these 2,700 members voted in the January 3 election, about 72% of these would have had to vote “Reject” to overcome the 51% “Accept” result. This is 5 percentage points greater than the November 13 Reject vote. We’re not persuaded this would have occurred.
We were involved in local suburban and state legislative elections from 1998 through 2011. In the suburb where we live, voter turnout in presidential years routinely was 85%. We analyzed voting results and voting trends in all but the 2011 election. In no case did absentee votes alter the initial reported outcome by more than 1%. Those on the losing end hoped that absentee ballots would make up the difference. We always calculated what percentage of votes would be required to overcome a deficit. Super-majority percentages were beyond reach.
It is based on this experience, and the percentages achieved in the November 13 and January 3 votes, that leads us to conclude that even if the “missing” 2,700 members had cast votes, the required percentage to win–72%–was impossible to achieve.
We believe the contract still would have been accepted.
IAM 751, in dramatic reversal, accepts Boeing 777X contract
The members of the International Association of Machinists District 751, in a dramatic reversal of its November 13 landslide contract rejection, today approved a revised contract offer from Boeing by a vote of 51% to 49%.
http://www.youtube.com/watch?v=0TCWIIs9P2c
Approval means Boeing will produce the new composite wings for the 777X and undertake final assembly of the airplane right here in Puget Sound (Seattle). The 777 Classic is assembled at Boeing’s Everett factory, home to all wide body assembly since it was built specifically for the 747. The 777 Classic’s wings fuselage panels are produced in Japan and shipped to Everett for assembly to the fuselage.
The outcome was in doubt as 751 members began voting at 5am today. Rallies leading up to the vote were largely anti-acceptance. Pro-acceptance rallies were lightly attended.
Sentiment on blogs and in Comment sections of the Seattle papers overwhelmed positive comments. Reports from the field polling places suggested the contract would be rejected.
The vote secures jobs for the IAM members at the expense of ending the defined pension plan in 2016 in favor of a 401(k) approach to retirement benefits. It also extends of Letter of Understanding (#42) providing that 737 MAX and KC-46A tanker production remains in Puget Sound through 2024, to which is when the 2016 contract has now been extended.
The controversial contract may bring mixed feelings to union members, but it brings unfettered job to elected officials, the Puget Sound supply chain and other interested parties who feared Boeing would take all the 777X production elsewhere at the cost of nearly 30,000 direct and indirect jobs and huge hits to the local economy.
But make no mistake: when Boeing proceeds with a new airplane design to replace the 757, followed by one to replace the 737, we’re going to see another round of efforts to browbeat the union and the state into more concessions or give-backs in exchange for production to be located here.
The timeline for decisions for a 757 replacement should begin around 2017. Decisions for a 737 replacement should begin around 2020.
Tonight’s IAM 751-Boeing 777X contract vote (Update, 9p)
Vote results and IAM 751 statement are here.
We’ll be at IAM 751’s headquarters tonight for the vote results. Follow us on Twitter @leehamnews for news throughout the evening from around 7pm. We’ll post results here when announced, which is estimated between 8-9pm PST. Depending on how things are going, we may also update this post during the evening before the results are in. Update, 7:30pm: We’re at IAM 751 HQ awaiting the vote. Vote counting is done here and is either underway or done at the other locations except Everett, where high turnout and slow process delayed counting, which was estimated to begin at 7:30. IAM officials don’t know yet how long it will take to complete the counting and call in the results. We’re still standing by for result announcements around 9pm until advised otherwise. Unlike the November 13 vote, it’s very quiet here. The prediction is for a “no” vote. We shall see.
Update 8:30pm: Nothing new, still in holding pattern.
Update 9pm: Everett done counting, results in about 20 min, now said to be too close to call.