Leeham News and Analysis
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Leeham News and Analysis
- Boeing, IAM reach tentative agreement on new contract September 8, 2024
- Bjorn’s Corner: New engine development. Part 23. Development risks. September 6, 2024
- If a strike occurs, here’s what Boeing can do September 5, 2024
- China banks on C919, but numbers say it still needs Boeing September 2, 2024
- Bjorn’s Corner: New engine development. Part 22. High Turbine technologies. August 30, 2024
Spirit AeroSystems and Machinists Union return to negotiations Saturday
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By Bryan Corliss
June 23, 2023, © Leeham News — Negotiators for Spirit AerosSystems and International Association of Machinists Local Lodge 839 will resume negotiations Saturday, in hopes of reaching an agreement that would resolve a strike set to begin just after midnight tonight.
A Wichita Eagle photo of orange security fencing up around the Spirit AeroSystems plant in Wichita, Kan.
The meetings, which will include a federal mediator, will start about 10 hours after the walkout begins.
The strike, involving some 6,000 union-represented hourly workers at Spirit’s Wichita plant, threatens significant disruption to the wider aerospace industry — particularly at Boeing. The Wichita plant produces 70% of 737 aerostructures, along with the forward sections of all Boeing commercial jets.
It comes after workers rejected a proposed four-year deal on Wednesday, with 79% voting no and 85% voting to strike.
- Company: Two sides have been talking
- Worker: ‘Feathers on a dog don’t make it a chicken’
Paris Day Four: Air show winds down as Spirit strike looms over industry
By Bryan Corliss
June 22, 2023, © Leeham News – The business portion of the Paris Air Show wound down today, with no new orders and news of a looming strike in Kansas that will soon grind Boeing aircraft production to a halt.
It was a stark contrast to the high pre-show expectations. Some analysts were projecting we’d see between 2,000 and 3,000 new aircraft ordered this week in Paris. By our count, there were 1,084 – a sizable haul no doubt. However, 970 of those came from IndiGo and Air India, who had telegraphed their plans to place those orders before the show, and used Le Bourget as a backdrop for signing the papers. Read more
Update: Spirit shuts down 737 lines after Machinists Union votes to strike
By Bryan Corliss
June 21, 2023, © Leeham News – Machinists Union members at Spirit AeroSystems in Wichita have overwhelmingly rejected a proposed four-year contract, setting the stage for a strike.
The contract between Spirit and IAM Local 839 expires at 12:01 a.m. Saturday. However, Spirit said Wednesday night that it would shut down production starting with Thursday’s first shift.
IAM members were not to report to work Thursday, the company said. They will get paid for their regular shifts, but all overtime is canceled.
Local 839 said that 79% of union members who cast ballots voted to reject Spirit’s offer, and 85% voted to authorize a strike.
“Most of our members have concluded the company’s offer is unacceptable,” union officers said.
Spirit leadership said it was “disappointed” by the outcome.
“We know that no one wins in a work stoppage; however, we respect the rights of our represented employees,” it said in a statement. “Despite this setback, we are not distracted from the task at hand. We look forward to continued meetings with IAM leadership.”
In a statement to Wichita-area news outlets, union officers said they would “regroup and begin planning the following steps to bring the company back to the table.”
There was no word Wednesday night whether the two sides had plans to meet.
A strike at Spirit would have significant ramifications throughout the aerospace industry. The company supplies Boeing with 70% of the aerostructures for the 737, and without those fuselages coming by train from Kansas, work at Boeing’s Renton factory will eventually come to a halt, impacting airlines who are expecting jets, as well as other suppliers who provide parts, components and subassemblies for Boeing’s best-selling commercial aircraft. Spirit also builds the nose sections for the 787, 767 and 777.
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The union’s negotiating committee had recommended approval on the Spirit offer, which it received on Friday.
However, the contract seemed in trouble during a Wednesday morning union meeting, prior to the vote. The Wichita Eagle reported that workers made paper airplanes out of the pages of the contract summary, and covered the floor of the arena where they were meeting with them. In addition, Wichita station KWCH-TV published a photo of its website of workers wearing t-shirts emblazoned with the message “That’s a Big No.”
- Contract offered 34% more pay over four years
- Workers had gone 13 years without a new contract
Machinists Union members at Spirit to vote on four-year contract this week
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By Bryan Corliss
June 19, 2023, © Leeham News – Roughly 6,000 Machinists Union members at Spirit AeroSystems in Wichita will vote Wednesday on a proposed four-year contract that would significantly increase pay for hourly workers.
The bargaining committee for IAM Local 839 is recommending that its members accept the deal.
“This is not an easy decision, but it is one that we believe is a good one,” the committee wrote in a letter to members on Friday.
It noted, however, that “the decision to accept or reject this offer is up to the membership,” and added that however the vote goes, the leadership “stands 100%” behind what the members decide.
At least some of those members are vocally urging the deal be rejected.
“How on earth did you think this is an offer we should accept?” one worker wrote on Local 839’s Facebook page. “You have betrayed us.”
The current contract expires just after midnight Friday, June 23.
- Offer on its face is generous
- Comes after 13 years without a new contract
- Industry-wide ramifications should a strike occur
UPDATE: Spirit says 737 manufacturing errors will disrupt deliveries through July
By Bryan Corliss
March 3, 2023 © Leeham News – The manufacturing errors its team made on Boeing 737 MAX fuselages will cost Spirit AeroSystems at least $31 million to fix, with work on the units still at the Wichita factory going on until the end of July, the company reported this morning.
But that’s just the start, Spirit executives warned.
“Additional costs are expected, including costs Boeing may assert to repair certain models of previously delivered units in their factory and warranty costs related to affected 737 units in service,” the company said in its quarterly earnings release.
The time and cost to make those repairs will have to be determined on “a unit-by-unit analysis,” Spirit said, adding that it “cannot reasonably estimate the remaining potential costs at this time.”
Repairs to the fuselages on hand in Wichita will cost $100,000 to $150,000 each, the company estimates. Spirit has revised its manufacturing process and implemented new quality controls, the company said.
Overall, Spirit reported an operating loss of $95 million for the quarter, which more than doubled its losses in the first quarter of 2022. The growing losses came even though Spirit increased revenues by 22% year-over-year, to $1.4 billion.
Spirit said that since the close of the quarter on March 30, it has received $230 million in cash advances from customers, of which $180 million has come from Boeing. It will receive another $50 million in advances later this year. Spirit is to repay those advances in 2024 and 2025.
- Some 750 737s to be inspected, may need rework
- Spirit to increase 737 rates in August, October
- Deliveries to Airbus to be down this year
- ‘Fragile’ supply chain remains an issue
- ‘Primary object is to reward our IAM colleagues’
UPDATED: Boeing says it still will deliver up to 450 737s this year
Boeing Co. photo
By Bryan Corliss
April 26, 2023, © Leeham News — Boeing says it will increase rates on the 737 line in Renton to 38 a month to maintain its plan to deliver between 400 and 450 737 MAX jets to airlines this year.
That was the first line of the company’s first-quarter earnings release, which showed Boeing lost $149 million on the quarter, on revenues of $17.9 billion.
Boeing had optimistically aimed for jumping MAX rates from the current 31 a month, as soon as June. However plans for the 737 line had been in question, after recent revelations that manufacturing problems and a software issue would cause delays in deliveries.
- ‘Gnarly’ 737 defect to take weeks to fix
- Boeing commits to MAX increases
- Improving numbers at BCA
- Supply chain issues continue, Boeing says
Boeing avoids strike as St. Louis Machinists OK contract
By Bryan Corliss
Aug. 3, 2022, © Leeham News: Machinists Union members working for Boeing’s St. Louis-area defense plants today ratified a three-year contract with the company.
The vote means that Boeing will avoid a strike that would have shut down production of new T-7 trainers for the U.S. Air Force and MQ-25 Stingray refueling drones for the U.S. Navy.
Members of International Association of Machinists District Lodge 837 on July 24 had rejected an earlier offer from Boeing with a 91% no vote, with 94% of members voting to go on strike Aug. 1.
That prompted Boeing to go back to the table over the weekend. It came up with a new offer that added an $8,000 ratification bonus, with the option for workers to take that in cash or as a contribution to their 401(k) retirement funds.
That, apparently, made all the difference.
Update 8-3: Contract Approved (St. Louis Machinists vote Wednesday on latest Boeing contract tweaks)
Update, Aug. 3, 2022: The IAM 837 approved the revised Boeing offer for a three year contract. No strike tonight.
By Bryan Corliss
Aug. 2, 2022, © Leeham News: Machinists Union workers at Boeing’s St. Louis-area defense plants will vote on a revised three-year contract offer from the company Wednesday.
Workers on July 24 had rejected a previous offer from the company with a 91% no vote. In addition, 94% of workers voted to strike. The strike was scheduled to start at 12:01 a.m. Monday, but after a marathon weekend bargaining session, the union side agreed to take Boeing’s latest offer to its members in today’s vote.
Negotiators from International Association of Machinists District Lodge 837 had urged their members to reject the company’s previous proposal, saying it did “not equate to a fair and equitable offer.”
As of mid-day Tuesday, the IAM 837 negotiating committee hadn’t issued a public recommendation on the latest offer. However, our read is that it’s doubtful that Boeing has improved its package enough to satisfy Machinists, who are looking for significant improvements in pay and retirement benefits after giving up major concessions in their last contract.
Update 2: (Boeing modifies offer, strike called off for now) After upbeat air show and 2Q financial report, Boeing faces strike Sunday
Update, 2:45PM (PDT) July 30: Overnight negotiating resulted in a modified offer from Boeing to IAM 837, resulting in postponing the strike set to begin at 12:01 AM CDT Aug. 1. A new vote has been set for Aug. 3.
By Bryan Corliss
Analysis
UPDATE: 4 p.m. (Pacific), July 29: On Friday afternoon, a St. Louis television station reported that Boeing and Machinists Union District Lodge 837 were heading to mediation. The station quoted an IAM 837 spokesman who said a federal mediator would lead the talks. The station said Boeing has not confirmed this.
Meanwhile, the St. Louis Business Journal reported that negotiators on both sides had met with a mediator but made no progress.
Neither side has issued a statement on potential mediation.
We will update if developments warrant.
July 30, 2022, © Leeham News: Boeing’s Wednesday earnings call had some pretty big news in it: After years of red ink, Boeing now anticipates generating free cash flow.
But there’s a big potential blocker on the Defense side of the house, in the form of a looming strike with the Machinists Union workers in St. Louis.
Workers rejected a contract on July 24. Leaders of International Association of Machinists District Lodge 837 said 91% of those voting rejected Boeing’s “best and final” offer, and 94% of voters authorized a strike, which could begin at 12:01 AM Monday. The leadership did not release the vote totals.
Three plants in and near St. Louis would be affected by a walk out.
Boeing didn’t mention it in its earnings press release, and CEO Dave Calhoun didn’t mention it on the earnings call and downplayed the significance of the labor strife during a live interview with CNBC the same day.
“They do have high expectations,” Calhoun said. “We feel we have made a very strong offer.”
The union workers, however, disagree, and that could very well mean another stumble for Boeing, as it moves to bring the key new programs – the T-7A trainer for the U.S. Air Force and the MQ-25 Stingray UAV for the U.S. Navy – into full production.
Basking in Farnborough rebound, Boeing faces contract rejection at Defense unit
By Scott Hamilton
July 20, 2022, © Leeham News: While Boeing is basking in an upbeat Farnborough Air Show with sizable orders for the 737 MAX, it faces the prospect of losing a key contract vote on July 24 with the International Association of Machinists Local 837.
Local 837 represents Boeing workers in St. Louis (MO), where the Defense unit is headquartered. Union leadership recommended rejecting the contract, opening the door to a potential strike. Nearly 2,500 union members are eligible to vote on the contract offer from Boeing. The current contract expires at 12:01 AM St. Louis time on July 25.