Leeham News and Analysis
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Analysis: Spirit strike likely a sign of changing aerospace labor market
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By Bryan Corliss
Striking Spirit AeroSystems workers blow whistles in front of one of the factory gates./Wichita Business Journal photo
July 10, 2023, © Leeham News – In case anyone had slept through all the earlier alarms going off, the whistles and airhorns that sounded during the mercifully short-lived Machinists Union strike at Spirit AeroSystems should have been a wake-up call:
This ain’t the 2010s aerospace labor market anymore.
In the labor market of 2023, hourly workers don’t want to come in on weekends. They want raises, and they’re not interested in getting paid in stock. And don’t you dare think of cutting off payments for the prescription drugs their kids need to take to stay healthy.
All this is going to create a challenge for the aerospace industry. For the past two decades, executives have focused on growing profit margins by holding down marginal costs – especially labor costs.
A decade ago, aerospace companies were able to win labor concessions by threatening to take work away.
Today, it’s the workers who seem to have leverage, and OEMs are going to have to figure out how to keep them happy and productive, or explain to the Kirbys, O’Learys and Al-Baker’s of the airline industry why their planes aren’t getting out of the factories on time.
- Tide of outsourcing seems to have turned
- Baby Bust: Fewer workers in the workforce
- St. Louis, Wichita: Red state Machinists vote to strike
- What’s next: SPEEA at Spirit, IAM at Boeing
Bjorn’s Corner: New aircraft technologies. Part 20. Efficient flying
By Bjorn Fehrm
July 7, 2023, ©. Leeham News: We explore different technologies in the series that can make our next-generation airliners more efficient and, thus, less polluting.
We have discussed developments of engine and airframe technologies, such as Turbofans versus Open Rotors and different airframe configurations to minimize drag and, thus, energy consumption.
When utilizing these developments to increase efficiency we must fly the aircraft in a different way depending on the technology.
And how we fly the aircraft is not only influenced by the factors we have discussed. We must consider factors at the airplane level, at the airliner operational level, and finally, at the airline fleet level.
Figure 1. The NMA concepts included dual aisle airliners. Source: Leeham Co.
The Small Airliner Problem, Part 10. Cash costs for a battery-based airliner
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By Bjorn Fehrm
July 6, 2023, © Leeham News: In our series on costs factors that make up Cash Operating Cost for a battery-based airliner with range extenders, we now add Crew costs and Airport/Airway fees.
We then have all the components of the Cash Operating Cost (COC) for the ES-30 and can compare it to a normal propulsion 30-seat turboprop.
Figure 1. The Heart Aerospace ES-30 hybrid 30-seat airliner. Source: Heart Aerospace.
Summary:
- The high operating weight and slow speed of a battery airliner increase the Airport/Airway fees and Crew costs for the ES-30.
- In summary, only one Cash cost remains competitive, and the COC total exceeds the cost of a 30-seater turboprop.
Pontifications will return July 18
Scott Hamilton is taking some time off. Pontifications will return July 18.
P2F conversion constrained by feedstock, certification issues
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By Judson Rollins
July 3, 2023, © Leeham News: As the supply chain chaos of the past two years finally winds down, the air cargo industry is trying to prepare for future growth.
IAI’s first 777 converted freighter, intended for Kalitta Air, has not flown since its initial testing flight on March 24. Source: IAI.
However, in an ironic twist, the industry’s near-to-intermediate term runway is constrained by some forces that propelled its supernormal profitability during the pandemic and recovery.
Thanks to growth in e-commerce, many industry observers revised their long-term growth forecasts upward. Cargo traffic growth estimates vary widely, from Cirium’s conservative 20-year expectation of 3.0% per year to Boeing’s optimistic call for 4.1% annually through 2042.
This year’s demand environment is less rosy as global trade falters, seaport backlogs have mostly cleared, shippers of high-value industrial goods suffer from microchip and other key commodity shortages, and recovering passenger airline service drives a glut of lower-deck “belly” capacity on most trade lanes.
The International Air Transport Association (IATA) recently said it expects air cargo demand to fall by 3.8% and revenues to contract by one-third for the full year. Cargo volumes were already down 5.3% year-over-year through April, said IATA.
Summary
- Express carriers are most exposed to short-term pain, but long-run prospects are brighter.
- Non-express carriers continue to be hard hit by excess capacity.
- Freighter conversion feedstock supply is tight.
- 777 P2F conversion slowed by possible certification issues; Boeing poised to sell more 777Fs?
Machinists at Spirit vote to end strike; will return to work on July 5
Machinists Union members in Wichita, KS, wait in line to vote on a second contract offer from Spirit AeroSystems Thursday. The offer was approved with a 63% yes vote. Spirit will resume production of critical Boeing aircraft components on July 5./International Association of Machinists photo
By Bryan Corliss
June 30, 2023, © Leeham News – Machinists Union members working for Spirit AeroSystems in Wichita, KS, will return to work on July 5, after ratifying a new four-year contract with the company.
Some 63% of Local 839 members voted in favor of the contract on Thursday, union officials said. Spirit’s first offer was rejected by 79% of union members voting.
“This membership vote by the majority of 63% is a move in the right direction for our local,” said Cornell Beard, the president of IAM District 70, the parent organization of Local 839. “Let’s work hard to set ourselves up for the big win in four years too.”
In a statement, Spirit leadership welcomed the yes vote, and said they would “closely coordinate” with suppliers and customers as the company restarts production.
Workers will start today preparing for the production restart after the Fourth of July holiday, the company said. The plant has been closed since June 22, the day after Local 839 members rejected the first offer.
- Strike closes plant for less than two weeks
- Workers get 9.5% raise this year, plus bonus
- Second offer ‘what we worked for’
Bjorn’s Corner: New aircraft technologies. Part 19. Supersonic drag
By Bjorn Fehrm
June 30, 2023, ©. Leeham News: In our discussions about the drag of an airliner, we now cover the most complex drag type, Wave drag, or the drag created when the air goes from subsonic to supersonic flow.
We will focus on the physical understanding of what’s happening as the math behind the drag calculation is complex.
Figure 1. The Concord is designed for low Wave drag. Source: BAC and Aerospatiale.
The Small Airliner Problem, Part 9. Maintenance costs for battery airliners with range extenders
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By Bjorn Fehrm
June 29, 2023, © Leeham News: In our series on fundamental costs factors that make up Cash Operating Cost, COC (Fuel, Maintenance, Airway/Airport fees, Crew costs) for new Green airliners, we have analyzed the energy costs and now move on to the maintenance costs.
For a battery-based airliner with range extenders, it’s a complex mix of battery and gas turbine costs.
Figure 1. The Heart Aerospace ES-30 hybrid 30-seat airliner. Source: Heart Aerospace.
Summary:
- The maintenance costs for a battery-based airliner are high. It’s the batteries that cost, not the electric motors.
- Adding range extenders complicates the propulsion system and adds further costs.
Striking Machinists to vote Thursday on revised contract offer from Spirit
Striking Machinists Union members outside the Spirit AeroSystems plant in Wichita, KS./ Wichita Business Journal photo
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By Bryan Corliss
June 27, 2023, © Leeham News – Striking Machinists Union members at Spirit AeroSystems in Wichita will vote Thursday on a new contract offer from the company.
“The parties have reached a tentative agreement with the unanimous support of the entire Local 839 bargaining committee,” the union said Tuesday.
The tentative deal, which comes after three days of meetings between Spirit and union negotiators with a federal mediator, replaces the original offer rejected on June 21. Spirit shut down production at the Wichita plant the next day, and the union began picketing outside the factory on Saturday.
Spirit CEO Tom Gentile said his team “listened closely and worked hard in our talks over the last several days to further understand and address the priorities of our IAM-represented employees.”
Senior regional leaders of the International Association of Machinists are strongly recommending the deal.
“The contract is an industry-leading agreement that should make our members extremely proud,” IAM Southern Territory General Vice President Rickey Wallace and his chief of staff, Craig Martin, said in a statement released by the union.
A quick resolution to the walk-out would benefit Boeing. The Spirit plant in Wichita provides 70% of Boeing 737 aerostructures, along with nose sections for all other Boeing aircraft. It also provides components for the Airbus A220.
Thursday’s vote would require a simple majority for ratification. If it fails to get majority support, the strike would continue.
- Deal walks back unpopular health plan changes
- Bigger raises, reduced signing bonus
- Contract would end mandatory weekend overtime
- Union announced vote after meeting with stewards
Update: Spirit presents revised contract offer to striking Wichita Machinists
Striking workers outside the Spirit AeroSystems plant in Wichita, KS./Wichita Business Journal photo
By Bryan Corliss
June 21, 2023, © Leeham News – Spirit AeroSystems has presented a revised contract offer to striking members of the International Association of Machinists.
“We have delivered a revised offer to the IAM following days of positive discussions with IAM representatives, along with the assistance of the federal mediator,” the company confirmed to LNA. “We remain committed to reaching a timely and fair resolution.”
IAM District Lodge 70 in Wichita, which is the parent organization for striking members of Local 839, announced Monday night that it would hold a mandatory meeting for union stewards today to discuss a contract offer. However, from the statement, it wasn’t clear whether the meeting would be to cover a new offer, or review the one that workers rejected with a 79% no vote June 21.
This morning, however, Spirit confirmed to Wichita station KSN-TV, as well as the Wichita Business Journal, that it had presented a revised offer to the IAM. Any details would be released later in coordination with the union, Spirit said.
Spirit and IAM negotiators have been meeting with a federal mediator since Saturday.
If Spirit has presented a revised offer, it would not be surprising that the union’s negotiating team would want to review it with union stewards before deciding whether to take it to the entire membership for a vote. The union stewards are full-time employees of Spirit who volunteer as union representatives to assist their coworkers in resolving questions surrounding pay, benefits and other contract questions. As such, they will have the best sense of how their coworkers would respond to the new offer.
Picket lines went up around the factory just after midnight Saturday morning. Today, with thunderstorms in the forecast, Spirit invited strikers to take cover in the shacks manned by security guards at the factory’s various gates. “Our primary concern is for their safety,” the company said.