Strike bound at Boeing?

Note: scroll down to see Updates as events unfold.

As we expected, the IAM leadership recommended a No vote on the “best and final” offer from Boeing, setting the stage for a contract vote and a companion strike vote September 3.

Boeing expressed disappointment with the recommendation.

By IAM by-laws, two-thirds of the membership has to vote against the contract, so Boeing could prevail with only a one-third+one “yes” vote. This happened in 2002. Boeing hopes for a majority yes vote rather than a technical win.

Here is the IAM response to Boeing’s offer.

Here is an IAM summary response to the line-by-line Boeing proposal.

Here is the link to Boeing’s full contract offer.

Here is Boeing’s YouTube video about the offer, under 3 minutes:

Here is the first of what will be many local (Seattle) newspaper stories:

Seattle Times, August 29.

Seattle Post-Intelligencer, August 29.

Update, Aug. 30:

Here is a 7:25 minute video from the IAM dissecting its view of the Boeing offer.

Here is an IAM information sheet to its members of they vote to strike.

Here is Boeing’s message to its managers and a Q&A sheet.

Update, Aug. 31:

This might be bad news for the IAM leadership or it might be nothing. In an unscientific poll underway by The Everett Herald, those voting on whether the IAM will get its 66 2/3rds vote needed to reject the Boeing contract offer have now falled to–66%. When we first saw the poll Saturday morning, 70% believed the IAM would reach the two-thirds mark required by the IAM by-laws to reject the contract. By the time we talked with Herald reporter Michelle Dunlop for her story published today, the vote had dropped to 687%, with more than 500 people voting in the poll.

Neither we–nor Michelle–knows how to take the poll. It’s not scientific and there is no way to prevent anyone from voting multiple times and it’s possible for Boeing management to vote, rather than restricting the vote to the IAM membership. The general public can vote as well. But having done some polling ourselves many moons ago, on the street corner in political season, we know that the greater the numbers, even in an unscientific the poll, the more accurate it is. Thus, we think the trend for the IAM leaders is not only discouraging but also now that the Herald’s poll has dropped below the 67% level this isn’t good news for the union leadership.

More news:

Seattle Times. Strike has big risks for Boeing.

Everett Herald. Some union members welcome strike.

Back to the tanker

A few interesting stories today on the USAF tanker saga:

Business Week: Boeing’s tanker challenge.

Reuters: US arms buyer faults Boeing. This story quotes a Jacques Gansler of the University of Maryland who now sits on the Defense Science Board. If memory serves correctly, Northrop Grumman partially funded a study at the U of M Gansler oversaw on the tanker. No mention of this is in the story.

Note: Be sure and check out updates to posts below on the 787 and the best-and-final offer.

Update, August 31:

The Tacoma News Tribune has this long analysis on the tanker and whether Boeing should press on.

And now about Airbus

Boeing has dominated the news in recent weeks because of the tanker and the IAM contract negotiations. At long last, here’s some news about Airbus.

The company is actively talking about stretching the A380-800 to a -900, 1,000 passenger version. A new intereview with Louis Gallois, CEO of Airbus parent EADS, looks at 2010 as when this program might be launched. The story is here. Meanwhile, delivery of Emirates Airlines’ second A380 is delayed.

For all those Airbus-Northrop critics who whine about the prospect Northrop (the prime contractor, let’s remember) won’t protect and honor US restrictions on selling the KC-30 or its components to nations hostile to US interests, here’s a Reuter’s story about how Airbus won’t sell airliners to Syria as long as sanctions are in place.

Pratt & Whitney shipped its P1000G Geared Turbo Fan engine to Airbus for installation on an A340 test bed, according to this Flight International story. Airbus is considering offering the GTF on its A320 family.

Update 8:40 AM PDT, Aug. 29: EADS says there are no current discussions underway with Syria for a large Airbus order. The operative word in the statement is “currently.”

787 first flight: up in the air, so to speak, suggests IAM

During a podcast conducted Wedesday with the IAM by Innovation Analysis Group about the contract negotiations between Boeing and the IAM, an IAM official ended the 16 minute podcast with the suggestion that Boeing may have to reevaluate its schedule for the first flight of the 787.

At the Farnborough Air Show, 787 program chief Pat Shanahan told Bloomberg News that the first flight was expected for November; schedules provided suppliers still currently list the first flight for the end of October.

The IAM official, when asked if November (Shanahan’s Farnborough prediction) was still likely, the official responded that he believes Boeing will have to reevaluate this timetable. Off-line, the official confirmed that this was exclusive of any potential strike.

We queried Boeing today about the IAM prediction, and the response from corporate communications was that the schedule for “the fourth quarter” has not changed. The spokesman on the 787 program declined to respond specifically to the November date referred to by Bloomberg (this spokesman was not at the Farnborough Air Show and did not hear Shanahan’s comments).

Chatter is becoming increasingly frequent that first flight may be in December toward year-end–which is still the “fourth quarter” published by Boeing.

Update, 6:50 AM PDT, Aug. 29: Business Week has this piece about the cost of the Dreamliner being $2bn more than expected due to the delays. See also today’s updates under Boeing’s best-and-final offer posting below.

Final Offer Issued; Boeing to bypass IAM leadership

Boeing just posted its Best and Final Offer to the IAM in the contract negotiations, and it’s going to bypass the IAM leadership and take the offer directly to the IAM membership for approval. The vote is September 3.

Here is the 7-page offer.

Here is a 14-minute podcast with the aerospace reporter from The Seattle Times, Dominic Gates, completed just before noon PDT today, immediately prior to the Boeing offer being posted. His insights are particularly noteworthy.

Update, 06:40 AM PDT, Aug. 29: Here are early news stories, with some IAM reaction to Boeing’s “best-and-final” offer.”

First, from the local Puget Sound area press:

Seattle Times: Early reaction negative.

Seatt Post-Intelligencer: A good piece with an overview of the situation.

The Everett Herald, also with a recap.

From national media:

Business Week: 787 cost overruns of $2bn may have influenced Boeing’s offer to IAM.

Bloomberg News: IAM reviewing offer line-by-line.

The IAM’s first reaction–posted at 2 in the morning August 29–may be found on the IAM website here. A full IAM recap and recommendation appears to be coming Saturday. A summary is expected late Friday (today).

Boeing’s final offer today (8/28)

Boeing submitted a new proposal to the IAM union, taking two of three “deal-breakers” off the table, according to this report from Dominic Gates at The Seattle Times. Here is the Boeing offer.

Update, 2:20 PM: The IAM response is here. They are less than impressed.

Update, 3:45PM: Here is a 13 minute podcast with Addison Schonland, Scott Hamilton and Michele Dunlop, the aerospace reporter for The Everett Herald, discussing the Boeing-IAM contract issues.

Update, 12:15 PDT, Aug. 27: We found this IAM video response to Boeing’s Tuesday offer.

Update, 135 PD PDT, Aug. 27: Innovation Analysis Group/AirInsight has a 16 minute podcast with an official of Boeing’s union, the International Association of Machinists. There is an open invitation to Boeing to participate in a podcast, which so far has been declined. Separately, Boeing plans to commence a radio and print advertising campaign beginning after submitting its “best and final” offer to the IAM either Thursday or Friday, for the period running up to a possible strike vote on September 3. If the IAM rejects the contract proposal by at least a 66.1% vote on the 3rd, the strike could begin at 12:01 am September.

Update, 8:00 PM PDT, Aug. 27: Columnist Bill Virgin of The Seattle Post-Intelligencer takes a serious if slightly irreverent look at the negotiations in this column. The IAM gives its own take on its counter-offer at its negotiation website. Boeing’s response will likely be forthcoming Thursday (the 28th) or Friday (the 29th).

Update, 6:15 AM PDT, Aug. 28: The Seattle Times reports that Boeing’s final offer will be made today.

The IAM negotiation website is here.

Boeing’s negotiation website is here.

Predictable and disappointing

Northrop Grumman’s opposition to granting Boeing’s request for a six month response time instead of 45-60 days for the re-bid on the KC-X competition is predictable and disappointing.

Boeing also threatened to no-bid the contract if it doesn’t get its way on the request.

As readers know, we have always felt the KC-30 was the more capable airplane for the KC-X than the KC-767 offered by Boeing. We’ve sided with Northrop on any number of issues during the competition. But not this one, as we opined on August 22.

Northrop believes that Boeing is stalling on the bet that the Democrats will increase their majorities in the House and the Senate in the November election, and that this will increase Boeing’s sympathy in Congress. We have no doubt this is part of the Boeing calculus. So what? EADS decided to locate the KC-30 production facility in Republican Alabama at a time when the Republicans controlled Congress. That was hardly a coincidence. Politics have permeated this process from the start and while there is plenty of reason to stop now, that’s not going to happen.

Boeing, in its political gambit, is taking a risk that falls into the “be careful what you ask for category,” however. While it seems certain Democrats will increase their majority in Congress, it’s hardly a sure bet today that they will win the White House. Sen. John McCain is giving Barak Obama a run for his money and if McCain wins, this won’t be good news for Boeing.

We see no harm in giving Boeing the six months. We think both sides will produce a better bid, and that’s good for taxpayers.

Meantime, Steve Trimble at Flight International has an interesting take on his blog about how the re-bid can flip-flop some of the suppliers.

Update, 09:15 AM PDT Aug. 26: Innovation Analysis Group does a six minute podcoast with an Israeli reporter discussing Israel’s plan to update its aerial tanker fleet. The air force could use the KC-135/707 for another 20 years if necessary, but it really wants to buy the same aircraft used by the USAF.

Update, 2:30 PM PDT Aug. 26: So far, no final RFP has emerged from DOD; it was thought that it might be issued yesterday. We’re picking up rumblings that it may not come out this week.

Update, 350 PM PDT Aug. 26: Reuters now reports the final RFP may be issued next week.

Update, 12:00 PDT, Aug. 27: The St. Louis Post Dispatch has this piece looking at the strategic implications of the tanker competition.

6 more months makes sense

(Updated 0730 AM PDT with references to EADS North America COO John Young and the “KC-35.”)

Giving Boeing six more months to come up with a revised bid is a prudent and reasonable thing to do. Here’s why.

  1. Why not? It gives the appearance of fairness and the fact of fairness. Besides, at the EADS media day immediately preceding Farnborough, EADS North American COO John Young predicted the process would take to March anyway. What’s three more months after that?
  2. Boeing and Northrop will have to “sharpen their pencils,” as DOD procurement chief John Young (no relation to the EADS-NA John Young) put it, and come up with a better price, benefiting taxpayers.
  3. Northrop and Boeing may sharpen the technical characteristics of the airplanes, providing a better product for the Air Force. We think a KC-777 is a non-starter–it’s just too big for the KC-X (it’s better suited for the KC-Y or KC-Z, as our chart on our Corporate Website this week shows). The 767-400 is the only logical alternative Boeing has to offer for the KC-X competition, even if it still falls short compared with the KC-30 (also see the chart). But what if Northrop responds with a KC-30 powered by the fuel-sipping GEnx engine? This cuts the KC-30 fuel consumption by 15%, providing a better life-cycle cost and thus benefiting the taxpayer. Airbus already did the analysis of an A330-powered GEnx airplane when it first proposed Version 1 of the A350. The GEnx is now certified for the 787, so certifying it for the A330 should be of little concern. We’ll call a GEnx-powered KC-30 the “KC-35.”
  4. Northrop could propose a “KC-33,” a tanker based on the larger A330-300, though we don’t think that’s necessary.
  5. Boeing’s “KC-764” could be proposed with the GEnx, which would improve the performance of the 767-400 as well as the fuel economy. NA KOA (remember them?) proposed such an airframe-engine combination as part of its response to the Request for Information from the Air Force at the start of Round Two of the competition, and it had been in touch with Boeing to partner with Boeing on such a project, so there is already some research completed on this. (NA KOA really wanted to offer a tanker based on the 747-400, readers will recall, and filed a protest with the GAO when Boeing refused to go along. The GAO dismissed that protest and last month dismissed NA KOA’s request for reconsideration.)
  6. Adding six months to the process won’t make any difference in the operation of the KC-135 fleet.

Giving Boeing another six months will likely produce better pricing, perhaps a better plane and perhaps better life cycle costs. DOD should grant Boeing’s request.

Update, 2:00PM PDT: IAG has a new podcast with Boeing IDS spokesman Dan Beck on the Boeing request for six more months.

Playing the Northrop card

The Wall Street Journal just posted a story with a definitive statement from Boeing saying it may no-bid the tanker contract if it doesn’t get six months to prepare a new bid.

The Department of Defense is thinking about adding 15 days, for a total of 60, to its revised Request for Proposals, expected to be issued as early as Monday.

Northrop Grumman threatened to no-bid the original Round Two RFP if certain language was not changed that it considered favored Boeing and disadvantaged Northrop. The language was changed, Northrop remained in the bidding process and to the surprise of everyone–including Northrop–it won the contract, announced February 29.

The WSJ story confirms what was first reported by Amy Butler of Aviation Week magazine, and downplayed at the time by Boeing. Reuters earlier today had a reference to the possibility of a no-bid. The WSJ story quotes Boeing IDS president Jim Albaugh, as a solid a source as possible.

We think Boeing’s request for six months is prudent and reasonable.

Remarkable luck, piloting

We were one of many to receive an email about a near crash of a Lockheed P-3 Orion stationed at Whidbey Naval Air Station, north of Seattle. The text describes the in-flight incident; the photos illustrate the text.

There was a remarkable bit of piloting and luck on this one.

Text of email:

Tuesday, 22 Jul 2008, a P-3 Orion from VP-1 was flying an approach to NAS Whidbey Island with the #1 engine in a simulated failure mode. At 160 KIAS, the #2 engine started to surge, so they had to chop power to it. As all this was happening, they were still decelerating, so by the time they added power to #3 and #4, they were at 122 knots, and in the dry terms of investigators, “departed controlled flight.” The P-3 did FIVE rotations in a flat spin, dropping 5500 feet, finally recovering between 50 and 200 feet AGL (above ground level), pulling a whopping 7 positive G’s on the airframe after sustaining 2.4 negative G’s in the spin. The rolling pullout burst 45 rivets on one wing, physically RIPPED the main spar, and bent the entire airframe… the crew could see INSIDE the fuel tanks of the wing.

The P-3C that almost went into Puget Sound waters was from NAS Whidbey. It was a CPW-10 aircraft being operated by VP-1. Squadrons don’t own aircraft any more. The P-3 fleet has so deteriorated because of under-funding and over-use that there are less than 100 still flyable*. The P-3s belong to the wing and are “lent to the squadrons on an as-needed” basis.

The mission was a NATOPS pilot check, with a CPW-10 pilot (LT) aboard, a VP-1 LT and LTJG, plus VP-1 aircrewmen that included two flight engineers. The bird was landed back at NASW. Max damage was sustained by the aircraft, including almost tearing off a wing. Aircraft BuNo 161331.

At Whidbey, P-3C 161331 was doing a Functional Check Flight. They could see the inside of the fuel tanks when they landed. SDRS recorded the flaps being raised and the landing gear being cycled down and then back up. Aircraft released all the fuel in tank #3 when it appears that the seam between planks 3 and 4 split. Tank #4 also lost its fuel load when plank #1 separated from rest of the aircraft wing.