Convergence Is Key In Boeing/IAM Dispute
September 15th, 2008
As the IAM strike enters its second week, BCA President and CEO Scott Carson gave an in-depth interview to the Seattle-PI’s James Wallace.
Carson highlighted the areas of concern, both for the union and the company and hoped that the two sides would be able to resolve their differences amicably.
(Prior articles on the Boeing/IAM strike can be found by clicking these links here, here, here, here and here. )
Aside from the dispute about the contract on offer itself, the IAM is concerned that future models, covering the 737 and 777 replacements would follow along the lines of the 787 where much of the work would be farmed out to other suppliers around the world, leaving Boeing to focus on final assembly of airplanes as fabricated components are shipped into Everett.
Image copyright of FleetBuzz Editorial.com
“We would very much like to have this strike end peacefully soon. We think we put an outstanding package on the table and we think there was a fair amount of misunderstanding in terms of what the package included,” he said.
“It takes time for people to calm down and to be ready to talk again.“
In a possible twist of fate, the IAM runs the risk of further pushing Boeing’s hands towards greater participation of partner companies to take ownership of the design and manufacture of critical sub-assemblies and components on new airplanes like the 737 and 777 replacements if the strike drags on.
At the same time, Boeing has its hands full with ironing out the kinks in the 787 distribution and supply chain, as well as contending with the start of 747-8F production while eating through a record backlog across its portfolio on the back of three highly successful years or sales and requires “all hands on deck” to accomplish this.
“For us to guarantee jobs really ties your hands in the long term to manage this business and make it profitable,” says Carson.
“By attempting to hold the company to ransom and using the order book strength as a tool, the workforce could be digging its own long term grave,” says Howard Wheeldon, senior strategist at BGC Partners.
Getting the two sides to converge is what will ultimately bring this strike to an end.
While the talking certainly helps, the longer the two sides continue to avoid sitting down at the table to thrash out some common ground, the risk of customer dissatisfaction and trust may be damaged for years to come.
Image courtesy of Boeing
It is unlikely that there will be any short term knee-jerk reactions by airlines cancelling [existing Boeing orders] or ordering from Airbus, whose own production lines are full, but the fallout of both reinstating the production and working through the added backlog incurs extra cost the company could well do without. Money, the IAM, may argue that could be better spent on employees.
As December 2008 rolls round, the Society of Professional Engineering Employees in Aerospace’s (SPEEA) contract also comes up for renewal.
In hindsight, Boeing should be aiming to avert another successive strike and study the SPEEA’s detailed summary proposal with more vigour than it did with the IAM.
Boeing CFO James Bell, speaking at the Morgan Stanley 2008 Global Industrials CEOs Unplugged conference already acknowledged that “every day we slip is a day slip in the [787] schedule“. Bell also noted that a 30-day strike would set back the 787 program “by a month” - it is therefore conceivable that service entry that was projected for the third quarter of 2009 will slip to the fourth quarter, jeopardising the target of delivering 25 787’s before the end of next year. This site estimates that deliveries of the 787 by the end of 2009 will slip to between 5 and 10 airframes based on a 30-day strike.
“Boeing loses more on machinist-induced delays to the 787 than it gains from having time to work on the 787 supply line,” says Richard Aboulafia.
Critically, as each day passes where no talks between the union and Boeing take place, that’s one extra day wasted in getting an agreement reached and bringing the strike to an end.
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11 Comments Add your own
1. Larry | September 15th, 2008 at 5:18 am
Like any labour conflict both sides suspect the other of barking at the moon, but the reality is the company must control it’s cost’s and more or less be in line with industry averages, and one must not forget the shareholders are the one’s who the suits must answer to.
The union’s of course want to share in the profits the company enjoys, somehow forgetting the shareholders are the investors who pumped the money in.
Sometimes employees forget that they are just that, employees not owners.
So here we have a situation where the employees are withholding their services, thereby shutting down the company and depriving the shareholders ( the owners ) of dividends and share value.
The company does not have the option to hire new employees to replace those that do not wish to work.
So where is the fairness? there isn’t, it’s one sided.
So the union cries fowl over outsourcing, and really what did they expect, the company can’t just roll over and stop building aircraft, if they can’t build them in the U.S. then guess what! they build them somewhere else.
Does Airbus building A320’s in China bring anything to mind? why you ask, union militants go on strike over any stupid thing in France.
Or have a look at the union situation in Detroit, assembly line workers sitting at home being paid full hourly rates, think thats good business? it’s not, and the auto workers union is very quickly disappearing along with their jobs.
And what possibly could the union gain by going on strike? pride? more money? really what ?
All they are doing is pushing Boeing to outsource more and more jobs outside the country.
Co-operation will bring labour harmony at Boeing, not confrontation.
Boeing must be competitive in the market, and don’t think for a second that Airbus won’t be selling Chinese built A320’s in the U.S. vastly undercutting the Boeing 737.
Everybody in all the Boeing unions need to give their heads a shake, get in touch with reality, and get back to building the best aircraft in the world.
Larry
Boeing Shareholder
2. Roland | September 15th, 2008 at 6:24 am
I think the union needs to clarify what it wants regarding outsourcing. Since so many present contracts and sales are connected to the outsourcing issue.
I for one; just don’t know enough about this subject.
3. Mike | September 15th, 2008 at 6:26 am
all union wages and benefits are 4-5 % of the cost of the airplane 20 years ago it was 7-8% I think the company has leaned that part of it to the exteme.
4. TPE | September 15th, 2008 at 3:55 pm
I am a machinist IAM member, I think we are digging our own grave right now. Keep up being a fighting machinist and see that you will be fighting for nothing. Everything will go away we are after pretty soon and we are forcing the issue sooner by striking on a good contract. I feel that Boeing gave a very good contract considering the hard times, companies and mills closing across America. People that are IAM need to look around, outside those walls at the factory and realize how good they have it. We need to be back at work, not on “VACATIONS” as some of the dumbest machinist have put it. Think again!
5. Roland | September 15th, 2008 at 5:47 pm
TPE, Obviously you don’t speak for all machinists. THis wasn’t a good contract and you know it. The Boeing lawyers had put so much poison language in the contract, that we would be reeling for years to come. My belief is they wanted a strike because of failures by vendors to keep up with the 787 program; why else give such a bad contract? I for one am being tired of being used as a political escape goat for the company!
6. John | September 15th, 2008 at 7:22 pm
I too am a iam member and I feel its sad that the company should have not had any take aways and we would not be out on strike! After all our numbers are down to only 27000 members and the company can well aford to give us a good contract! The company and there spin doctors tried to go after that 1/3 vote but we saw right through it! Rumors were that the company wanted to slide the schedule again on the 787 and let the vendors catch up on their shortages and are using us as a scape goat! Come on Boeing get back to the table!!!
7. Grace | September 16th, 2008 at 4:38 am
i know Carson isn’t nice and the contract was bad but where is the negotiator? He is not arbitrating this difference into a resolution. Now the whole market is down and the secondary vendors are laying off tell me this was good for all!
8. mike j | September 16th, 2008 at 7:33 am
I agree with Roland and John, and I too am an IAM member on strike….
TPE, you sound like the Carson’s (Boeing’s) scare-tactics got to you, my advice is don’t listen to Boeing’s PR Public Relations spins, because it is all lies.
Boeing uses the same PR tactics as alqeda on this issue.
Boeing was about to anounce yet one more 787 delay, and this contract time was a handy way to make it look like the IAM caused the delay, not Boeing-Management’s failures.
Not to mention 777 and 737 and 747 and even 767 were at least a month behind on suppliers.
I will maintain this statement: that Boeing WANTED a strike to let suppliers catch-up. They could’ve easily made this contract-offer “same as last time” yet they chose to NOT EVEN DO THAT, and they then chose to take-away things in very clear language in the fine-print, because they KNEW from all our surveys that we would strike on ANY take-aways…
Also all nay-sayers to the IAM need to clam it.
You would not be saying such things if it was your job on the line.
I feel bad for Larry and all shareholders, but how come the shareholders didn’t tell Boeing to not have a strike ?
And it has only been one week, like I said Boeing needs a month or so to let key suppliers catch-up.
Outsourcing every components of 787 is the ONLY reason 787 got behind in the first place, which directly means Boeing-Management (Carson, Bell, Kight, and all the rest) haven’t got a clue how to run things.
ps: I sell all my Boeing-stocks as soon as I get them.
9. Cathi | September 17th, 2008 at 9:46 pm
boeing knows exactly what they are doing. They know that if they would offer us more on retirement, a $100 per year vested.(by the way, that would affect Beoing to the tune of $9000. a year if my husband were to retire in five years. He makes the average wage. That would mean we could afford to buy food) and not take away any MORE on medical and then keep the contract the way it is. They would have had a good chance of getting it passed. BUT they chose not to address any concerns that were really important to the laborers. It isn’t the shareholders that are building this company, by the way, the shareholders just make bucks off our backs! In the last 10 years Boeing has downsized and made the workers work 2 to 3 times harder than they were. And they aren’t making more money, they are just seeing what they have being reduced. The machinists have CHOSEN in nthe last 2 contracts to give Boeing the edge by not demanding more to keep up with inflation. Now that the market has upturned and looks good for the next 3-6 years would like to have somethings back. Boeing wouldn’t even discuss giving them a little more vacation or sick leave. wHY??? They work them so hard and continue to squeeze their workspace down and these people are miserable, a little more of each of those could make a tremendous amount of difference in the attitude and work output. IT just doesn’t make sense unless Boeing wanted this strike. And they have managed to have a media blitz to make it look like it is all the laborers fault. This is bad for everyone. But the company will pay for this in terms of people attitudes and output. It isn’t right. I don’t know anyone who wants to be treated the way Boeing treats their slaves.
10. TPE | September 18th, 2008 at 4:43 pm
To Roland (Above) and all the people out there that think you don’t have it good at all. When Bellevue teachers are offered a 2.5% increase over 3 years on first offer and we are offered 11% on a BAFO. Look at it, look at the economy, have some common sense. We need some wording in the contract changed, but how much is greed taking into account here whe companies right now are fighting to stay in business and lean up. It can be changed and no I am not scared at all, in fact I have gone out and got a job while we are on strike. I don’t need to come back to Boeing, but I want too. So if you have a pissy-fit and keep the contract from being settled, look at the guy across the table in America that can not feed his kids and he just lost his house. I am so disgusted with members I know that did not read the contract and just went along and do not even have a understanding of the issues. They just want a “vacation”. Next time people read the contract, look around outside the Boeing walls and make a informed decision!
11. Jimbosc | September 19th, 2008 at 4:14 pm
Cathi - if you follow the markets that upside for 3-6 years is likely gone. Many of the orders on Airbus and Boing books will never be built given the global economic issues. IAM took a chance to improve this contract, but all industries face some harsh music in the next 2-4 years as the capital market (the $$$ to buy Boeing airplanes for example) has vanished. I doubt Boeing will budge much off their final offer based on the economic realities they face.
Jim
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