Boeing Sweats On IAM Strike Vote
September 1st, 2008
In rejecting the best and final offer contract from Boeing, the IAM is now counting down towards the vote that it hopes will swing in its favour for strike action.
Feelings on both sides are running high and yet the divide between employer and employee remains.
A spokesman at one Middle East airline had this to say:
“We’re already seeing our 777 deliveries slip because installation of galley and cabin equipment is delayed by our chosen suppliers who cant keep up pace with production. We need extra capacity to boost services to the US and other key gateways. Any factory shut down at Boeing will mean we are going to have to endure more delays until we get our hands on these jets,”.
Critically, this potential industrial action will be a “stake through the heart” of the already delayed 787 Dreamliner, which races towards completion in preparation for ground tests prior to its first flight. Having battled for over a year to iron out the travelled work, launch customer All Nippon Airways will likely lead a chorus of complaints if the 787 is delayed for a fourth time.
In the absence of any other suitable substitute, it is unlikely Boeing will see defections or cancellations for the 787. That said, the likelihood of more 777’s or 767’s at discounted prices will feature more prominently. However, that too would be dependant on production rates and slot availability.
Images courtesy of Boeing
First tier suppliers like Spirit Aerosystems, Alenia, Global Aeronautica and Mitsubishi Heavy Industries would have to be compensated if they are forced to slow or even temporarily production as the Everett factory won’t be doing any assembly work. Further, these suppliers only have finite factory floor space to continue fabricating major sections of the 787 – at some point, they’d have to be shipped to Boeing for final assembly, and Boeing already has the first 4 787’s in the factory now.
Parts for the fifth flight test 787, such as wings, horizontal and vertical stabilisers have already started to arrive in Everett and now run the risk of laying idle for weeks unless a strike is averted or concluded quickly.
Other airplanes too are at risk.
The 747-8F has already been pushed back three months for a February 2009 debut, with delivery scheduled the fourth quarter of 2009. The key focus on flight tests will mean that Boeing will want it flying sooner rather than later and will rely on the airplane being on target for both assembly and certification to ensure it meets its service entry date. Much of the flight test information and data will be critical as without it, the 747-8I due to enter service in 2010 could also slip. With only Lufthansa as its key customer, Boeing can ill afford to risk a cancellation threat by the German airline.
Equally, the ongoing flight tests of the 777F run the risk of a late delivery if strike action is, as widely expected to be of a prolonged nature.
After three years of record orders and an impending outlook based on a lower order intake, the biggest impact is going to be recovery of the delivery regime. Boeing has been rumoured to be examining an increase in 777 production to around 7 a month and continues to study ramping up the 737 line. With the 737, the industry-wide consensus that narrowbody jets run the risk of cancellation and deferrals, Boeing may yet elect to hold off on raising production of the 737 family.
Penalties will vary, and more likely than not, on the 787, these will be substantial and will damage EPS for 2009 earnings considerably, although its hard to quantify just what that precise figure could be given Boeing is offering compensation by way of discounted 777’s (like British Airways recent 777-300ER order).
Macquarie Bank analysts estimate that a 30-day strike would result in an EPS loss of around $0.30 per share, based on first half revenues of $16.7bn.
The IAM has strike action within its sights. For Boeing, damage limitation is what it will now have to battle with coupled with an unhappy workforce. All customers can do is watch, wait and hope that the two sides meet on common ground to ensure the company presses forward and does what it’s renowned for - building airplanes.
———
Update: September 4, 2008
IAM votes to strike. Boeing and the IAM union are holding further talks for 48 hours, delaying strike action.
“It virtually guarantees that Boeing is going to have to pay more, and feel some pain,” says analyst Richard Aboulafia.
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20 Comments Add your own
1. Chris Wallace | September 1st, 2008 at 3:12 pm
I can only assume that Boeing is hoping that by appealing to the oldest and youngest IAM workers, they can get at least 34% of them to vote in favor of the contract which would prevent a strike and invoke the current contract offer.
Frankly, they’re playing with fire. The 787 program needs to get into flight test *now* because if it is delayed too long, it could affect their ability to obtain some required environmental tests (like the “cold soak”) which could mean they would not be able to certify the plane for revenue service for a long duration. And with the 747 FAL needing to be changed over, every day delay in getting the last 747-400 freighters out the door is a delay in getting the first 747-8 freighters out the door.
I know it’s not just about the money over three years for Boeing (they could happily absorb an across-the-board 25% raise, much less the current targeted 11%) if that is what it would take. They really don’t want to agree to more job security terms and less outsourcing, but 2008 is not 1992 - this time the unions hold all the cards. And every time the IAM has struck, Boeing has eventually given in on the most contentious issues, so pretty much all a one month strike is going to do is defer $4-5 billion in revenue and make Boeing’s life harder…
2. Mike | September 1st, 2008 at 10:11 pm
I see nothing much has changed in a week. I agree that Boeing is very vulnerable here and I believe they need to nip this in the bud ASAP before the trouble really starts. Playing hardball with what’s at stake may be a trifle reckless right now.
As Chris (above) says, it may be better to deal with it now and conceed some so save a lot and make life easier. The outsourcing issue is going to be especially tough though.
3. mike j a 777QA | September 1st, 2008 at 10:20 pm
I bet Boeing really isn’t “sweating the strike vote” so much, I’ll bet they had this planned from a year ago… they are behind at least two weeks on parts for 777 where I work and 787 is behind many parts… and a strike is a convenient way to pass blame to the hourly (IAM)… If Boeing didn’t want a strike they very easily would have made offers they know we would accept… in fact, the contract offers (when we accepted and didn’t strike) were slightly better than we asked for, and we couldn’t pass-up… this 2008 Best and Final Offer is less than half of what we said was minimum, AND the whole (2008 Contract) their offers started out way too low since mid August… which means Boeing really wants a strke…
In their radio ads, Boeing says “thank-you, thank-you, thank-you” very sincerely too… well, Boeing need to pay it, not say it, talk is cheap… their Final Offer really says “we hate you, we hate you, we hate you”… and their strategy says they like to con and intimidate and lie…
4. Angelena | September 2nd, 2008 at 2:46 am
Chris,
I will have one year come Nov. 7th and I am having mixed feelings on which way to vote.
Although I fully believe we can earn a better “offer” by striking (we all know Boeing can afford it), what worries me and causes my mixed feelings are, if the strike does severe damage to Boeing in regards of the 787-program and strains customer relations in general, would they be more apt to follow the strike up with a massive layoff??
In other words, I would prefer acceptance of the BAFO over losing my job.
Your input on this would be mostly appreciated.
Thanks.
5. Cathi | September 2nd, 2008 at 4:21 am
As the spouse of a Machinist, I would like to give my perspective of the last 10 years being part of the Boeing “team”. I feel as I read a lot of comments about the contract that you, as the worker sometimes forget what has actually transpired over the last 10 years. My husband is a perfect example of a great employee.
About 6 years ago he was moved to a new area. At that time he was told he needed to produce 18 parts a day plus 4-6 misc. parts. THAT was what Boeing defined as a full days work. My husband, being the intelligent worker that he is, developed a whole different process in making the parts which gave him time to keep up on all the computer classes and mandatory training (which is not counted toward production goals). That was 6 years ago, today he is being asked to produce 40 a day. FORTY!!! Now they are talking about going to 50 a day to keep up with demand!!! He is the only one who does his job. If he is on vacation others fill in but no one else can keep up. My husband is 55, he is being asked by Boeing to do over twice as much work as he used to, soon to be almost 3x’s as much. FOR THE SAME PAY! Yes, Boeing is making record profits. Does this connect? Are you producing at least twice as much today as you were 10 years ago? Do you get pushed for overtime?? What are your rewards??
You haven’t seen a raise in six years! Right now, at his pay level, we will probably have to sell our home when we retire. It isn’t all that much but retirement pay after taxes will just cover it. He hasn’t made enough money to push a lot of money into his VIP, though we have made some. His health isn’t all that good, he comes home wiped out every day because of the unbelievable demands of Boeing. Will we be able to enjoy our retirement after working another 7 years at Boeing? Isn’t Boeing talking about raising the daily output to 50 a day? I will bet that they don’t hire another person to do my hubby’s job. He will just continue to extend himself until it kills him, because that is the type of honorable, hard working person he is. I know there are a lot more of him at Boeing.
I don’t think it is greedy to want more money. Boeing has made it so you are doing more than twice the work and reaping those profits. When you work hard and make good, who gets rewarded?? Managers, supervisors, generals.
The contract this time around has so many little take aways throughout it that even if we strike and get some of what we are asking for, Boeing will win quite a few concessions which will gain them more power over our lives and more money in their pockets. I believe that money isn’t the only thing this contract is about. Boeing is no longer a company that you are proud to work for, though you are proud of the work you do.
It is about the fact that Boeing doesn’t recognize how much you do to make it the company it is. It is about the fact that they have put you in a pressure cooker due to “lean manufacturing”. It is about the daily feeling that you have to push, push, push to produce what Boeing used to pay at least 2 other people to produce. It is not getting recognition from your managers and supervisors for the job that has been well done. It is about Boeing taking away your work space, sometimes to the point where people are having “fights” over imaginary lines on the floor for where their space is. It is about lousy managers who think they know how the process should go when they don’t have a clue. It is about dreading going to work because there is too much work, too little space, too little acknowledgment of what you have accomplished, and too little pay for a job well done.
And it is about our future…
If you don’t ask now…..knowing they are making this kind of profit, knowing the tremendous amount of labor that you are outputting compared to a few years ago, knowing that every time they up their demands you have met them, knowing that is the reason they make and will continue to make that kind of profit. ….when will that time come?
You don’t need to compare your salary with anyone else’s outside the company. They say they are leaders, so how do they compare. There are other companies that pay better and work their employees less. There are other companies that don’t pay better but work their employees less. There are other companies that provide great benefits and work their employees a normal work week. Why do you think that so much of the outsource parts get behind? Other companies don’t seem to work their people into the ground quite like Boeing. There are always examples. One company I know of gives their employees 5 weeks of vacation after 10 years. And yes, it is an American company working in America. What industry is Boeing talking about and does it matter? Boeing is its’ own entity with it’s own job description.
My husband and I believe that what happens in this contract will effect our lives through retirement. We feel that if we don’t push this time, there won’t be another time like this. If Boeing is able to give us less in our VIP then everyone else, we have lost dignity. It is their expression of what they think of the laborer. If Boeing doesn’t give us even a quarter of what others get in their retirement packages, we have lost dignity and we have lost years of well earned enjoyment when we retire. The raises are needed, remember that you’ve worked 6 years without a raise What is that worth?. Maybe more than the real raise they are offering. $1.68. How much is gas and how much will it cost in the next three years?? So is a few grand now going to pacify you into signing a contract worth $1.68 an hour? And don’t forget that free medical that will cost you more than if you went with the one you have to pay for. Read the small print. There are so many little issues that are in this contract.
Have respect for yourself and the job you do. Tell Boeing you should be treated as if you are more than a serf to their princely kingdom. Keep your self-respect!! You have earned it.
6. dave robinson | September 2nd, 2008 at 2:25 pm
Having read elsewhere the comments by the chief negotiator for Boeing it does seem that this firm has a pretty lousy worker employer relattonship and you can,t expect loyalty when you haven,t earned it. Just reading the woman aboves comments $1.68 an hour doesn,t seem to be particularly generous. Outsourcing seems to have caused all sorts of problems especially of being a reliable firm that produces products when it says it will. I am sure the money they saved on outsourcing has been more than lost on the compenssation they will have to pay out for late delivery. The worker is worthy of his wage so if Boeing can afford to pay their workers better wages then they should.
7. Cindy | September 2nd, 2008 at 6:17 pm
Just some food for thought. If the retired Boeing worker didn’t have to work a job after retirement there would be more jobs available for others who must have work to take care of their families. Boeing and other companies like it are creating a huge employment problem for the younger workers in our country. What we have now is a lot of people who should be retiring and cannot afford to.
8. Carole Johnson | September 2nd, 2008 at 9:01 pm
People like me would like to retire but we can’t because even though we are the largest airplane makers our pension is not world class and so we cannot go out and let the new generation in….So hope this gets to the greedy people on top that we are people and it would be nice to see a good retirement and get our kids working with good medical benefits. We have not been asking for the world but listen to some of our needs. 13 billion in the last 5 years has not been gettting into our pockets. I think the top people have there pocket full. The Boeing Company had been alot fairer in the olden days. Have you forgotten that we did not have computers when my father worked here I am sure he and alot of his co-workers made this Company big….We are family… please treat us that way.
Carole
9. gary | September 3rd, 2008 at 12:50 am
chris, with only one year senority ,,a yes vote will insure you dont have to many more anniversarys with the Boeing company.,,,the JOB SECURITY issue is a huge part of this contract,,,say NO FOR A BETTER FUTURE ,,,
10. Chris Wallace | September 3rd, 2008 at 2:02 am
Angelina,
Personally, I see the calls for a strike as an attempt to improve - or at least maintain - the current standard of living IAM rank and file enjoy rather then accept a contract that could put both at future risk.
I do not believe it is just about the money over three years. Boeing can afford that, easy, thanks to the past few years of record sales which will help drive record stable deliveries for many years ahead.
It is the cost of doing business a decade or more down the road that I believe is what worries Boeing. And it is not just the straight wages they pay the machinists. It is the cost of covering their constantly increasing medical costs. And pension costs. And new competitors with cheaper production costs (Brazil and China) or perhaps more efficient production processes (Japan and maybe Canada).
Boeing can sell a 787 for the price of a 767 in no small part because so much of it is not being produced by IAM members. And the IAM leadership and membership knows that. So within the IAM - leadership and members - there must be some worry about how many of their people will be building the 737RS and 777RS in years to come compared to the 737 and 777.
Comparing the 2008 offer to the contracts accepted in 2005 and 2002, the current one strikes me as relatively similar, to be honest. If Boeing does believe they can get a 34%+ ratification vote, this may very well be why.
In 2005, the union accepted just lump sum payouts (8% of their gross pay for the preceding year at ratification and $3000 at the end of both 2006 and 2007), a $70 pension multiplier (from $60 under the 2002 contract) and no increase in health care plan costs.
For 2008, in addition the average 9% pay raise, the ratification bonus is 5% of gross pay. The pay raise is worth well more per year then the $3000 lump sum payment and the pension multiplier goes to $80 (so the same $10 bump it did in 2002 and 2005) and Boeing maintains one health care plan with no cost, lowers the premiums on another, and raises the premiums of a third by 55%. They also withdrew their original proposal to put all IAM members hired from 2009 on a 401k program, instead of the existing pension.
In 2002, the Company agreed to no additional outsourcing. In 2005, additional outsourcing was allowed and Boeing invoked it at least for some (floor?) parts delivery for the 787 program, which is now handled by a North Carolina company. Boeing wanted to be able to outsource even more parts deliveries under the original 2008 proposal, but subsequently pulled them. However, the IAM wants a say in any decision to outsource future parts deliveries.
11. REDGINGER | September 3rd, 2008 at 2:47 am
It seems that the BIG $ has gone to the top of the Boeing management chain. Massive stock options, much time off for vacation, huge salaries, gigantic retirement packages, and other great perks….. You’d hope that people who have been GIVEN SO MUCH (because really, NO one actually earns that much money) would be a little more sympathetic, compassinate and generous to other hard working Boeing employees. Instead NOT SHARING is their mode of living. Selfish and greedy. Typical of top management.
I say STRIKE .Maybe then, the upper tier might step out of their sheltered world, take real look at the people on the line. …….(Ha, never will happen.)
12. Chris Wallace | September 3rd, 2008 at 4:25 am
I understand it is common rhetoric to claim senior management is compensated wildly out of proportion to their functionality, but really, they are ultimately responsible for tens of thousands of people in scores of facilities all over the world building hundreds of different products.
You can be a great designer of wing flaps or a darn good installer of those flaps but, in the end, that is all you are responsible for. You are not responsible for any other part of that plane’s design or assembly.
You deserve to be compensated well for that function you are responsible for, but so does senior management deserve to be well-compensated for the function they are responsible for. And when their function is so significantly larger then yours, that level of compensation should be larger, as well.
13. De De | September 3rd, 2008 at 4:16 pm
And might I add to the BIG $, if the public could see how these higher up’s waste / spend Boeing money, for example we use to be able to buy a dozen black sharpie’s at one price from bosie cascade, but to save money Boeing contracted with office max, so now to get one black sharpie we have to order a red, blue and green getting 4 colors in which 3 we don’t use times 12 to get our dozen we need, (trash) costing 10 times the cost as the dozen we use to get from bosie. I wonder who’s getting the kick back on this one? This is only one small example that adds up to BIG$ over the year, think maybe the guys that hired on a year ago making $10 hr could get some of this for building Airplanes?
14. Cathi | September 3rd, 2008 at 5:10 pm
I am sorry but that sounds like management trying to sound like labor. Yes, we all know they are going to get more money than the machinists but is it wrong for “lowly” machinists to think that they could get a VIP match that the rest of the company is getting. Is it wrong to expect Boeing to give us a “no cost” insurance plan that is actually not cost, instead of hidden costs? Is it wrong to want at least $100 a month per year of retirement so that we can continue to live in our homes? No one expects or really believes they should recieve what the “big boys” get. But when they get bonuses everytime we save them money and then turn around and say you aren’t worthy to receive these things, it tends to make us angry. It won’t kill the company to offer us something that will let us retain our dignity. And that something is not a pig-in-a-poke profit share program!
15. Richard | September 4th, 2008 at 12:01 am
I have worked for Boeing for jsut over one year. In that time I have seen only the structure mechanics working hard. I do not want to say anything too risky, but I haven’t had to work even 20% as hard as I did before I came to Boeing. I make 40% less then I did before. I came to Boeing for the opportunites like college, differant work hours so I could spend time with my children, and advancement. Since anyone who has been here more than 5 years makes 3 times what I do, DOING THE SAME THING I DO, I have no sympathy. It seems like people think they have the right to more money. If you need more money than 100k a year, let Boeing buy you a college education (and give you Boeing stock after you complete it) and then get a better job. IF you cannot earn 100k a year for 5 years and retire then maybe you need to stop spending so much money, or maybe you should have planned better the previous 40 years of your life. Don’t blame your financial situation on Boeing, take responsibility for actions. If you really want to eliminate waste at Boeing try making it easier to get rid of the dead weight. I work (I use this term very loosely) with employees who have not done 8 hours of solid work in 6 months. They walk over here, walk over there, sit down for a while, look at the job, walk around some more, go the restroom for another hour, come back and sit down for while, then dissappear for another hour, and this goes on and on. It drives me crazy. If everyone worked half as hard I do production would take off. Its great that they worked hard ten years ago, but wake up. Try and get a job anywhere else doing what these guys do-they couldn’t get a job at McDonalds. The worst part is they are teaching this attitude to the new guys that really need to see a solid work ethic, instead of a Tullies breaktime. I am sorry if I have offended anyone, if you are one of the hard working employees then disregard this.
16. Pam | September 4th, 2008 at 7:35 am
Richard…
Sounds like you should step up and take the steps to have those around you that arn’t working talked to and documented by the supervisors. That’s a whole other issue with the BIG BOEING company. The management can’t do their job. They are scared to stand up to those people. There are departments created just for these issue’s. Turn them in annonymously… It might be uncomfortable.. but it’s the right thing to do!!
17. Don | September 4th, 2008 at 4:19 pm
How sad it is that the working class people… the ones that built this country ( and Boeing) have been protrayed as greedy…
when the fact of the matter is that almost every major manufacturing company in the USA has taken jobs away from the workers, sold them over seas and yet a handful of CEO’s and CFO’s are making record amounts of money while the company’s they lead are failing…
Look at GM the record number job losses, stock failings, factory closes and yet their CEO make more money than any other CEO in their history… and Now Boeing wants to do the same.
Working class people need to stand together and if means unions and strikes so be it.
We can’t do it alone but if more working class people joined in these fights against corperate greed the better off the american people would be.
18. Brad | September 4th, 2008 at 7:17 pm
Wow, these conversations are more and more ridiculous. If you are all unhappy with how Boeing treats its IAM members why don’t you seek a new job? There are plenty of jobs out there that would gladly pay better if you are as qualified as you claim.
Please humor me by naming a company that has a better benefits package than Boeing? The only company that comes to mind is Anheuser Busch… Aren’t they selling out and moving over seas?
This constant uncontrollable workforce will drive assembly out of the northwest into a right to work
state or even worse, a foreign country. Just look at the auto industry. Please explain to me how you justify making max rate within 5 years?
Raises should be earned not handed on a sliver platter every six months. There are Boeing employees that deserve a raise and those who don’t. Courtesy of your Union, every one is equal! How does that influence work ethic? Also, please stop comparing your salaries to Executive, no offense meant here, but they are not executives because they got lucky. They are generally higher educated individuals from Ivy league universities.
They have more responsibility than many of you can comprehend. Their decisions affect programs not just specific airplanes. Stop whining, do your job, and convince the union to award raises based on personal job performance not company performance.
19. Cathi | September 5th, 2008 at 5:19 pm
This is just a by they way…. If Boeing raised it’s retirement contribution to the Union by $25 a month, it would only cost the company 675,000 a month. And considering Boeing had to contribute nothing to the pension fund this year, I doubt they would even notice it. But it seems that it is soooo very important to Boeing. For someone who has worked for 30 years that would equal 750 dollars more a month to each worker. That may ot seem like much to a manager but to us it could be the difference between eating or not.
I know that every manager on up will recieve a lot more than we will. Fine, but for us to be made out to be greedy B***because we want to eat when we retire. EXCUSE ME!!
20. Cathi | September 6th, 2008 at 2:33 am
Imade amistake in my last comment. It is actually 675,000$ ayear. Now isn’t that the cheapest thing you’ve ever heard of from a comany who’s white collar workers start at 400 a month in their retirement.
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