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

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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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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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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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Muilenburg becomes Boeing CEO, McNerney non-executive chairman and leaves a mixed legacy

June 23, 2015, c. Leeham Co: Dennis Muilenburg has been named chief executive officer of The Boeing Co., elevating him from president and chief operating officer, the company announced today. Jim McNerney, chairman and chief executive officer of The Boeing Co. since 2005, was named chairman of the board. He will leave the company next February.

McNerney leaves a legacy of bitter fights with Boeing’s biggest labor unions, a runaway cost overrun on the 787 and 747-8, sour relations with the supply chain and settling to be second fiddle in the single-aisle sector to Airbus.
He also leaves a legacy of attacking costs that had to be cut, increasing production rates to record levels and restoring Boeing’s stock price from a low of 2009 during the depths of the 787 program difficulties to more than $150.

Last January we posted a think piece about the challenges facing Muilenburg on the assumption he would become CEO.

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IAM vote delay at Boeing SC shows weakness

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Introduction

April 19, 2015, c. Leeham Co. The withdrawal by the International Association of Machinists of the planned April 22 unionization vote at the Boeing 787 plant in Charleston (SC) appears to answer a question that was lingering ever since the January 2014 IAM 751 vote at Boeing’s Puget Sound operations:

Was there a quid-pro-quo between IAM International headquarters and Boeing for Boeing to stand by and allow unionization of BSC is exchange for the International to “sell out” for a Boeing contract package at Puget Sound?

It seems the answer is “no.”

The vote withdrawal also seems to answer another question: Has the IAM become increasingly impotent?

The answer to this seems to be “yes.”

Summary

  • Obviously the IAM didn’t have enough votes to pass unionization.
  • Vote delay shows weakness and continued SC predilection against unions.
  • McNerney’s legacy includes largely busting the IAM.

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Muilenburg’s challenges as Boeing CEO

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Introduction
Jan. 27, 2015: Dennis Muilenburg has been the No. 2 at The Boeing Co. for a little more than a year. He was named vice chairman, president and COO in December 2013.

Jim McNerney

His boss, Chairman and CEO Jim McNerney, turned 65 last August. Sixty-five is the mandatory retirement age, but this has been waived before and McNerney is widely understood to want to stick around through Boeing’s 100th Anniversary in 2016.

The industry is buzzing with reports that McNerney might move up soon to

Dennis Muilenburg

non-executive chairman, with Muilenburg assuming the CEO title.

If and when Muilenburg becomes CEO, he faces a laundry list of challenges.

Summary

  • Strong competition from Airbus that is getting stronger;
  • Continued cost cutting;
  • Learning the Commercial Airplanes business;
  • Declining defense business and revenues, putting pressure on profits and cash flow;
  • Flight testing and development of the KC-46A;
  • Development of the 737 MAX and 777X and proving that delivering new airplane programs on time and on budget can be achieved again;
  • Selling enough 777 Classics to maintain production rates to the 2020 EIS of the 777X;
  • Dealing with labor unrest with its Seattle area unions and a new attempt to organize the Charleston 787 plant; and
  • Deciding whether to take that “moonshot” and launch new airplanes earlier than the 2030 EIS McNerney set as policy.

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Muilenburg remains an enigma for unions, commercial development

Jan. 21, 2015. c. Leeham Co. Dennis Muilenburg, vice chairman, president and chief operating officer of The

Dennis Muilenburg, vice chairman, president and chief operating officer of The Boeing Co. Reuters photo via Google.

Boeing Co., remains an enigma to Boeing’s largest unions a year after he was elevated to this position from his slot as CEO of Boeing’s defense unit.

Muilenburg assumed his current position Dec. 13, 2013. Boeing’s “touch labor” union, the IAM 751 here in the Seattle area, didn’t know much about Muilenburg then. It still doesn’t.

Neither does Boeing’s second largest union, SPEEA, which represents engineers.

Nor is there any understanding what Muilenburg’s view of future commercial airplane development is.

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Odds and Ends: More from Airbus annual press conference; IAM focuses on wages

Jan. 13, 2015: More from Airbus: Airbus held its annual press conference today in Toulouse, reporting its full year 2014 orders and deliveries results. Our Bjorn Fehrm was there and filed a report from the event. He will have more this week. Here are some stories from other media.

Reuters: Airbus to juggle production, defense A380. Airbus says it will likely take A320 production about 50/mo. We reported months ago the supply chain has been notified to prepare for rate 54 in 2018. Airbus also said it will bring A330ceo production down after 2015. We predict 5-6. Decisions are to be made in the coming months.

Bloomberg: Airbus to add 20 passengers to A350-1000.

Aviation Week: Airbus formally launches the A321neoLR. You read this plan here first last October.

Seattle Times: Boeing is No. 1 by some metrics. Dominic Gates takes his usual thorough look at the bragging rights of Airbus and Boeing.

IAM on wages: Boeing’s touch-labor union, the IAM 751, says a Washington State study about aerospace jobs shows 58% of non-Boeing aerospace jobs in the state are paying less than $15 per hour.

Top 10 Leeham News stories of 2014

Dec. 30, 2014: This was a highly active news year. Airbus launched the A330neo and A321neoLR. Boeing firmed up more than 200 orders for the 777X. Emirates canceled 70 A350 orders, a record cancellation when no customer collapse was involved. Boeing and its principal union, the IAM 751, faced off in a bitter contract vote. And on the truly dark side, Malaysian Airlines lost MH370 and MH17.

The Top 10 stories read on Leeham News included all of the above but MH17. Others made the Top 10 list. Here it is:

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