59 Comments Add your own

• 1. Aotearoa  |  October 26th, 2009 at 21:29

  

  Nice piece that makes a lot of sense. Thanks for the update and well considered thoughts.

• 2. Boeing Worker (Everett)  |  October 26th, 2009 at 21:40

  

  By far the best analyses of a second line I have seen.

  All major talking points touched, and I think you may be on to something here in relation to the model/production line.

• 3. Bobbelieu  |  October 26th, 2009 at 21:43

  

  Personally, I think a discussion Boeing opening up a new line in Charleston is mostly academic. In the short term (3-5 years) they just can’t do it. It might seem like a good idea (and I personally have no objection to it) but I can’t see where it will help them in any meaningful way. Boeing hammers the “Bad IAM” drum whenever they don’t get all the concessions they want from their main union, but the problems that Boeing has made for itself are far more legion. Their ill-conceived outsourcing model just being one example.

  To really understand the complexity of where Boeing has jumped the track in the last 10 years you have to start with the merger between McDonnell-Douglas. From that point on things started going south. The M-D management model, grafted securely to the corporate DNA, simply does not work very well.

  But who knows? If they complain loudly enough the Washington state government might give them more tax concessions like the last time they made noise about leaving.

  And perhaps this is really what it’s all about.

  B~

• 4. Homer Simpson  |  October 26th, 2009 at 21:57

  

  Well, I guess everything in the Boeing garden is just rosey.

• 5. Aurora  |  October 26th, 2009 at 22:23

  

  I agree partially with Bobbelieu, it is academic–to a certain extent. However, the negotiations are very, very real as to what the future of the aerospace manufacturing base in Washington State is going to look like. Will it be hollow, surviving on KC-767, 737, 777, and 787-8 orders–while the new business goes to South Carolina, Texas, and elsewhere? Or will it remain Boeing’s core manufacturing redoubt?

  The future is very much in play here. The union can wreck havoc on the company for the next decade if it decides to strike, play “work to contract”, “sick outs”, etc.. However, with the last strike, the tolerance for that behavior has simply disappeared, both with the company’s management and the community at large.

  What form will the future look take in Washington state as regards the aerospace manufacturing sector? A continuing center of manufacturing excellence or a slough of despond mirroring Detroit?

• 6. Bobbelieu  |  October 26th, 2009 at 22:35

  

  And what would stop any new lines we open up in other states from becoming unionized?

  They’d have to go to someplace like Malaysia to out run them.

  Again, there is no reason to lean only on IAM’s insistence on a fair contract as Boeing’s primary problem. You are identifying a single tree in a larger forest.

• 7. Paulo M  |  October 26th, 2009 at 22:36

  

  Absolutely. Nice illustration.

  Until Line 1 at Everett is going like a Boeing does (some of these are doing beautiful things every day) - it’s premature to think of line 2.
  Just get this thing going and do this:

  You, yes YOU Boeing, and you, yes YOU IAM - MAKE PEACE ALREADY.

• 8. Aurora  |  October 26th, 2009 at 23:40

  

  Bobbelieu, the Japanese auto transplants have been extraordinarily successful in staying non-union, so have other industries. I’m sure the IAM and SPEEA (for starters) would try to organize at any Boeing facility outside Washington state. However, as we’ve seen recently in Charleston, some of these places are just culturally adverse to unionization. Not saying it couldn’t happen, but I am saying that’s its not a sure thing.

• 9. Ed  |  October 27th, 2009 at 14:33

  

  This is less about a Boeing/Union conflict, right now, than it is about getting a very big program into production and beginning to catch up on two years worth of delays.

  Both Boeing and the IAM know this and right now need to work together to help solve the production problems, accerlarated support from suppliers, and reduce future labor disputes.

  The company and the union each need each other right now, and now is close to the time to make a decision on where to put a second line. This has implimentcations not only for the B-787 but also for future airplane designs. Right now, all other airplane designs are firmly footed in WA. If and When SC (or somewhere else) ever comes into play is nothing more than a pure business decision to be made now, and also in the future about future designs.

  Those who question the capability of the SC work force in building airplanes seem to have forgotten this is the same deal NG is trying to do with the KC-X (A-330MRTT) assembly in AL. All they will be doing is assembling an airplane designed somewhere else with parts coming from other places. If the good people in AL can do it, I see no reason why those workers in SC cannot.

• 10. Chris Wallace  |  October 27th, 2009 at 14:35

  

  Boeing senior management is not looking at the near term, but the long term. Putting a second line into Charleston is going to add more pressure to an already stressed program in the near term, but this is not just about the 787. Boeing also wants to move the 737 and 777 replacement programs out of Washington.

  Unfortunately for the IAM, they have lost already. Their only viable option is to “surrender” and accept a 10 year no-strike clause in return for securing the second line in Everett and keeping Charleston at bay for 10 years. If they don’t accept the clause, the line will go to Charleston. The decision to place it in Charleston has already been made. The only thing that will stop it is to accept the no-strike clause extension.

  It doesn’t matter if Charleston struggles to meet Everett’s quality and quantity through 2012 (when the IAM contract comes up for renewal). A Charleston worker’s pay rate is half that of an Everett worker’s and I expect medical and other benefit costs are also much lower. And Charleston is pushing education and training at the high school and trade school level to develop a cadre of quality aerospace workers so soon enough Charleston will be able to assemble a 787 as well as Everett can.

  Now it is true that a strike in Everett in 2012 will idle Charleston, even if Charleston is completely non-union. This is why Boeing wants that no strike clause - to ensure 787 production and development will continue unabated through around 2020. But if the IAM does not give Boeing the clause (which will trigger Charleston landing the second line) and they do strike in 2012, then at that point Boeing won’t even consider Everett for the 777 replacement nor Renton for the 737 replacement. They might very well not consider Everett for the KC-767 if they win the KC-X RFP. They need to shut down the line at Everett to make it ITAR-compliant, so they might as well just build a new factory for the KC-X and push out the remaining civil orders at Everett then close down the line.

• 11. Aurora  |  October 27th, 2009 at 15:45

  

  Good recap, Chris. I think that sums up the situation nicely. For the union, its time to decide if they want to be part of the future, or a case study in some b-school curriculum alongside Eastern airlines.

• 12. Dougloid  |  October 27th, 2009 at 16:31

  

  Quote: To really understand the complexity of where Boeing has jumped the track in the last 10 years you have to start with the merger between McDonnell-Douglas. From that point on things started going south. The M-D management model, grafted securely to the corporate DNA, simply does not work very well. Unquote

  Somebody please fully explain this to me, citing proper reference material that supports the proposition being advanced here. I mean, I’ve heard it said in a number of places in the last year but my memory of events is somewhat different-the reasons for which, go figger.

  It seems to me that rather than poor li’l ole darlin’ Boeing eating a poison mushroom at the hands of the Evil Empire, poor li’l ole darlin’ Boeing had been Seneca-like, screaming “Douglas delenda est! Rat now!” at every opportunity, and when the deed was finally done and the thirty pieces of silver were dutifully handed over, the battered victim bled to death at Earl Dougherty Field before the buildings were bulldozed and the ground seeded with salt.

  That’s the experience I remember, because I was there for a good chunk of it. Not all, you understand, but much of it.

  Plus, I have an interest in how folklore and rumor become facts “everyone knows”.

• 13. Chris Wallace  |  October 27th, 2009 at 18:18

  

  I think where it comes from, Dougloid is that Boeing started really going off the rails once they merged with McDonnell-Douglas. So in many people’s minds, this is therefore the cause of Boeing’s problems.

  As you and I both know, the truth is not so simple.

  Phil Condit was a career Boeing man (he joined in 1965 on the SST program) and became President in 1996 and Chairman in 1997. And it was in 1997 that Boeing Commercial Airplane’s production process imploded, leading to an over $1.5 billion pre-tax charge in Q3 of that year and the first annual loss in five decades.

  In fact, Condit admitted that without the merger taking place that same year which allowed Boeing to apply a number of lucrative McD defense contracts worth close to $18 billion in revenues to their books, that annual loss might have been far worse than the $178 million because Boeing would have been dependent on commercial aviation revenues which were moribund due to production being stopped for a time to allow the supply chain to recover.

  Condit also was behind the 1996 purchase of Hughes Space and Communications Company, a unit which performed so poorly Boeing sued Hughes to recover over $650 million of the original $3.75 billion price in arbitration (which Boeing lost).

  So it’s clear everything was not “peaches and cream” prior to McD’s management merging with Boeing’s. And it is now McD people who are trying to salvage the 787 program after the career Boeing people messed it up so badly.

• 14. Chris Wallace  |  October 27th, 2009 at 18:20

  

  In other news, the South Carolina Senate has just given initial approval to a package of financial enticements to convince Boeing to place the second line in Charleston.

• 15. bobbelieu  |  October 27th, 2009 at 20:08

  

  Back in the old days, M-D’s solution to keep themselves in business was to sell off parts of themselves and their technologies in order to keep their stock price up. Once they reached a point where they didn’t have anything else to pawn, that’s when Condit and Stonecipher made the deal.

  Poor Phil. He was a great engineer but a weak CEO. Stonecipher effectively pushed Phil out of the way and brought the M-D way of doing things to Boeing…and we aren’t quite so sparkly any more.

  To deny that the merger had a negative effect on the Boeing way of doing business is to avoid the obvious. Either that or you haven’t lived through both eras: The Boeing one and the merged one.

  It’s obvious to us. I’ll let all of you out there in InternetLand bandy that one about to your satisfaction. I live with the reality every day.

  B~

• 16. Paulo M (Johannesburg, RSA)  |  October 27th, 2009 at 20:36

  

  13. Chris Wallace | October 27th, 2009 at 18:18

  Thanks for that. That was quite clearly the best explanation of the Boeing-MDC conspiracy talk. Necessitated a bit of historical reading.

  Many Moons ago, when I was still in high school, I collected the following data:

  Fortune 500 - April 28, 1997, pg 112:
  ‘Last year Boeing [No. 36] agreed to merge with McDonnell Douglas (No. 87), a move that will give it a major presence in the defense business and should provide a counterweight to the more volatile commercial aircraft market. At the same time, the company has undertaken a nose-to-tail overhaul of its production processes, revamping some procedures so entrenched that they date back to the construction of the B-17 bomber in World War II.’

  ‘Boeing plans to replace 400 independent computer systems with just four software programs, which will manage aircraft production from the parts suppliers to the final customer. A team of Japanese consultants, well versed in Toyota’s legendary production methods, is helping Boeing improve productivity. One small example: Workers can now set up a 250-ton hot-forming press in just 100 seconds - a process that used to take nearly an hour.’

  - The magazine said Boeing profits increased 179% - the 29th biggest gain on the F500. (On the previous page, there’s an awesome picture of a 747 fin in Everett.)

  - The magazine also says Boeing signed a 10-year $6.7 billion 106-jet contract with Delta. (This became a factor in the MDC merger with EU antitrust officials.)

  Time, July 13, 1998, pg 39, 40:
  ‘… rushing to complete 13 behind-schedule NG 737s parked outside.. ..Renton… …even as Boeing was planning to speed up the NG 737 line from 14 planes a month to 21 to further clear the backlog..’

  ‘Boeing managers like to describe a ship like the wide-bodied 747 as ”6 million parts flying in close formation,” and they have long stood ready to customize them not just for every airline but for every single order. Boeing offers the 747’s customers 38 different pilot clipboards, for example, and 109 shades of the colour white.’

  ‘With the goal of cutting the cost of building jetliners 25%, Boeing began by designing its wide-bodied 777 (rolled out in 1996) entirely by computer….’

  ‘Boeing suddenly faced the task of transforming the way it builds planes while furiously ramping up production of new jets.’
  ”I’ve described it as trying to change the tire on my car while going 60 miles [95 km] an hour,” says [Phil] Condit.

  ‘The Renton line was crippled by ”travelers” - jobs that got skipped for lack of parts or other problems and then had to be done out of sequence. That often required ripping out finished work, a costly process that worsens delays and helps make ”travelers” jobs five times as expensive as installing parts in the right order.’

  ‘Things got so bad that Boeing halted its 737 and 747 lines for nearly a month last October.’ (Same effect as a strike.)

  -The magazine lists several factors for Boeing’s troubles, the following are really quite interesting.
  –Soaring Demand: orders of 754 in 1997 vs. 124 in 1994
  –Work Force: Huge layoffs in the 1990’s meant loss of experienced workers.
  –Supply Network: earlier cutbacks drove many outside suppliers out of business, causing parts shortages later.

  ————————-

  Basically, you can pick out many of Boeing’s troubles from how it manages its production systems in hard times. This will always catch the company when it attempts to rebound. There is certainly a flaw in that aspect of Boeing management that appears to predate the merger with McDonnell Douglas.

  Also, you can see the roots of Boeing’s Lean+ initiative started at around the time of the 777’s development, when the company realised that its production and labour methods were starting to make it uncompetitive.

  Certainly, many of the of the troubles now experienced on the 747 and 787 are a continuation of those prior troubles.

• 17. Homer Simpson  |  October 27th, 2009 at 20:38

  

  14. Chris Wallace | October 27th, 2009 at 18:20

  I’m sure the WTO will be interested to hear that.

• 18. Chris Wallace  |  October 27th, 2009 at 20:38

  

  Well it is true that McD had their own problems coming in. Their YF-23 (built with Northrup) lost to the Lockheed and Boeing YF-22 in the Advanced Tactical Fighter competition and their proposal for the JSF was rejected in the initial rounds which might have hurt the YF-32’s chances against the YF-34. And of course McD Commercial was just re-treading the DC-9 and DC-10 programs to create the MD-8X, MD-9X and MD-11.

  So perhaps the underlying truth is that McD in part exacerbated already existing problems appearing in Boeing in the late 1990s.

• 19. Vero Venia  |  October 28th, 2009 at 01:28

  

  Do you think it is possible to consider a mixed 777/787 operations in the facilities which will be developed? Perhaps the new facilities can accommodate some large composite parts manufacturing for the hypothetical enhanced 777.

• 20. Dougloid  |  October 28th, 2009 at 04:28

  

  Thanks Chris.

  “So perhaps the underlying truth is that McD in part exacerbated already existing problems appearing in Boeing in the late 1990s.”

  That’s a long chalk from “well, everyone knows it to be true and if you don’t take that for granted you’re an obtuse internet dimwit.”

  “It’s obvious to us. I’ll let all of you out there in InternetLand bandy that one about to your satisfaction. I live with the reality every day.”

  All I’m seeing is a conspiracy theory: “Boeing management sucks. It must be someone else’s fault.”

  To which I politely say twaddle. Marshal your facts and stop blaming everything on a company that was sucked dry and dismembered nearly fifteen years ago.

  I mean, why stop there? You can always blame Curtiss Wright-or how about Convair?

• 21. JustSomeDude  |  October 28th, 2009 at 10:02

  

  In 2007, I e-mailed then Mike Bair about the fact that the 40-26 Building in Everett (the current 787 bay) was plent wide enough for two 787 lines side-by-side, just in case the plane needed two lines (with then 800-plus orders)….

  Mike Bair replied, “won’t need two lines, one line will work just fine”. (he had a lot of “under-estimations” of the efforts needed, didn’t he).

  But also, the entire 787 Production Model, from the very beginning (2003 or 2004-ish), was so far off from reality, and not even one aspect of it made one bit of sense, and many smart people said so, but Boeing Management would not listen.

  And, just to add one more thing, at Boeing any idea presented to Management that makes sense is outlawed completely, while only ideas which are impossible to impliment are then mandated to the workforce “follow or else!” This has been the “Boeing way” since long before the Merger, but like Chris Wallace said, the Merger exacerbated an already flawed Management system with an even dumber management system, getting dumber by the month.

  If they keep going like they’re going, I see Boeing totally gone in ten years and under criminal investigations… regarding even more 787 delays, crashes and/or outright fraud, and various other problems similar to Enron and GM… all of these prevenable, but they wouldn’t listen to good advices anywhere along the line… and so oh well, huh.

• 22. Aurora  |  October 28th, 2009 at 12:43

  

  News reports this morning indicate the talks broke down and that Boeing will announce the 2nd line will go to Charleston. That’s a bad loss for WA state.

  However, it cool heads can prevail, there is still the 777 successor and the 737RS. The loss of the 2nd line hurts, but its not the end.

  That last strike looks even more ill advised now, doesn’t it?

• 23. Dougloid  |  October 28th, 2009 at 13:54

  

  Has anyone considered that the “second production line” scenario was cooked up to pressure labor into concessions they might not otherwise make?

  It’s not that far from Electrolux: “We’re moving the plant to Mexico/El Salvador/Viet Nam….”

  At Douglas we made the floors for the DC9/MD80 series aircraft. Douglas set up a scab facility in Utah where people don’t cuss, smoke, or drink, they come to work every day and think eight bucks an hour is peachy keen. Then the factory moved the production of the floors to Salt Lake. So here’s what happened.

  First they sent a bunch of these doofuses to work in the plant and learn the task….that went well.

  Then we’d send the parts to Salt Lake. They’d make the floors. They’d send them to Long Beach for some special machining and then back to Salt Lake for final assembly, they’d come back to Long Beach and we’d have to rework them. Make to print was unheard of in Salt Lake, evidently.

  I see something similar in this second line story.

• 24. Aurora  |  October 28th, 2009 at 15:00

  

  Dougloid, you may be correct, but no one wants to deal with a strike every time a contract comes up for re-negotiation. If management did indeed “cook up” the 2nd line as a way to pressure labor into concessions then perhaps they felt they had no choice if they were ever to get back some bargaining power? What was the theme of the last strike, “its our time”? What about the one before that? “Boeing doesn’t respect us”? Maybe the next time the contract comes up for re-negotiation the majority of the members will say “let’s save what we can”.

  Perhaps when the rancor and bad feelings subside afther this decision, enough of the membership will conclude they need another union representating them and vote to decertify the IAM?

  Why doesn’t the IAM put Boeing’s last offer up to the membership for a vote?

• 25. Leelaw  |  October 28th, 2009 at 15:11

  

  “…Until the first line is up and running, a second line was always in the pipeline, however, its just not as important when you stand back and look at the bigger picture - because without a fully operational line in Everett, the business proposition for a second line, from a supply chain perspective simply cannot be reconciled, especially when revenue from deliveries is nowhere near a point of maximisation…”

  Amen. Just another instance in the saga of this development program where management seems compelled to put the cart before the horse.

• 26. Dougloid  |  October 28th, 2009 at 17:31

  

  I’ll file this under the “I’ll believe it when I see it.” heading.

  “Perhaps when the rancor and bad feelings subside afther this decision, enough of the membership will conclude they need another union representating them and vote to decertify the IAM?”

• 27. Chris Wallace  |  October 28th, 2009 at 18:16

  

  Homer Simpson noted: I’m sure the WTO will be interested to hear that (South Carolina is providing incentives for Boeing to move to Charleston).

  They might, but don’t forget that Alabama did the same thing to land the KC-30A line so both Boeing and Airbus face the same risk…

  Dougloid asked: Has anyone considered that the “second production line” scenario was cooked up to pressure labor into concessions they might not otherwise make?

  It is pretty clear that this was the case. Boeing offered no concessions in exchange for the “no strike” extension and would not agree to keep the 737RS and 777RS programs in Renton and Everett.

  But again, Boeing is taking the long-term view. We’ve seen that a strike costs Boeing and it’s suppliers hundreds of millions of dollars a week. No matter how much re-work Boeing has to do on 787s assembled in Charleston, it’s going to be cheaper than a strike. And those Charleston workers will get better over time and the amount of re-work will lessen. It effectively has to since Boeing now has the ability to fire workers if they don’t improve at will. That alone should be an incentive for those workers to improve.

  Also remember that there is nothing that prevents the workers at Charleston from forming a union - they were a union until last month, after all. So it’s not like Boeing can just screw them over with abandon lest they compel the workers to unionize to improve their lot. The Charleston workers tossed the IAM because they felt they could get more out of Boeing negotiating themselves. If that proves to be not the case, then the IAM will start to look good again.

  In other news, Seattle radio is reporting that Boeing could announce the location of the second line today and everyone is sure it will go to South Carolina now that the IAM in Washington will not roll over.

• 28. Curious  |  October 28th, 2009 at 20:46

  

  Does anyone know how long it would take to make a second line operable?

  Also, when does the expenditure of monies commence and in what magnitude.

  What I take away from this posting is that there really is no immediate rush to start a second line so I just wonder if this is really a showdown in the negotiations.

  A settlement that does not include the 737 is a very easy middlepoint and should be an easy compromise for the Union

• 29. Paula K  |  October 28th, 2009 at 21:15

  

  SEATTLE, Oct. 28 /PRNewswire-FirstCall/ — Boeing (NYSE: BA) today announced that it has chosen its North Charleston, S.C., facility as the location for a second final assembly site for the 787 Dreamliner program. Boeing evaluated criteria that were designed to find the final assembly location within the company that would best support the 787 business plan as the program increases production rates. In addition to serving as a location for final assembly of 787 Dreamliners, the facility also will have the capability to support the testing and delivery of the airplanes.

  “Establishing a second 787 assembly line in Charleston will expand our production capability to meet the market demand for the airplane,” said Jim Albaugh, president and CEO of Boeing Commercial Airplanes. “This decision allows us to continue building on the synergies we have established in South Carolina with Boeing Charleston and Global Aeronautica,” he said, adding that this move will strengthen the company’s competitiveness and sustainability and help it grow for the long term.

  Boeing Charleston performs fabrication, assembly and systems installation for the 787 aft fuselage sections. Across the street, Global Aeronautica, which is 50 percent owned by Boeing, is responsible for joining and integrating 787 fuselage sections from other structural partners.

  Until the second 787 assembly line is brought on line in North Charleston, Boeing will establish transitional surge capability at its Everett, Wash., location to ensure the successful introduction of the 787-9, the first derivative model of the 787. When the second line in Charleston is up and operating, the surge capability in Everett will be phased out.

  “We’re taking prudent steps to protect the interests of our customers as we introduce the 787-9 and ramp up overall production to 10 twin-aisle 787 jets per month,” said Albaugh.

  “While we welcome the development of this expanded capability at Boeing Charleston, the Puget Sound region is the headquarters of Boeing Commercial Airplanes. Everett will continue to design and produce airplanes, including the 787, and there is tremendous opportunity for our current and future products here,” Albaugh emphasized. “We remain committed to Puget Sound.”

  Approximately 55 airlines have ordered around 840 787 airplanes since the program was launched in 2003. The 787 family of airplanes will carry 200 to 250 passengers on flights up to 8,200 nautical miles (15,200 km). The 787 will be more efficient, quieter and have lower emissions than other airplanes while offering passengers greater comfort and the convenience of direct, nonstop flights between more cities around the world.

  “The 787 will provide airlines with unprecedented operating economics and efficiencies. It also will take passengers where they want to go, when they want to go, and do it more comfortably and affordably than ever before,” Albaugh said. “This airplane will allow us to continue to set the standard for commercial aviation in the second century of flight.”

• 30. Chris Wallace  |  October 28th, 2009 at 21:21

  

  The $170 million in upfront grants for startup costs, plus multiple tax breaks that would be worth tens of millions of dollars more that South Carolina granted Boeing requires Boeing to add 3800 new jobs (I am guessing on top of the current 1900 employed by them and Global Aeronautica) and invest $750 million in the facility, so I expect that means that the 737 replacement, at least, has a good shot at going in there.

• 31. JayPee  |  October 28th, 2009 at 21:31

  

  27. Chris Wallace
  “They might, but don’t forget that Alabama did the same thing to land the KC-30A line so both Boeing and Airbus face the same risk…”

  So who is going to launch a WTO suit at Airbus for getting incentives from Alabama? Washington State?

• 32. Paulo M (Johannesburg, RSA)  |  October 28th, 2009 at 21:32

  

  Astonishing announcements being made at Boeing today. If they can get this thing going, damn, wow - production ramp-up is right around the corner. Two lines. Very, very interesting.

• 33. Erik Bloodaxe  |  October 28th, 2009 at 21:40

  

  This was inevitable. The writing was on the wall since Boeing bought Chas from Vought. The real clue came when Boeing got permits to clear the land in Chas. This whole thing with the IAM was eyewash.

  In the whole problem between the managament and the IAM, there is plenty of blame to go around on BOTH sides. Boeing managment are stupid and short termist. Period. The IAM is greedy, and dumb. This does not make a good cocktail.

  The problems with managment are directly related to the merger. Yes, it’s largely Condit’s fault. He was a CRAPPY CEO. The first rule of M&A is eliminate the CEO of the company you are taking over. Give him a nice hand shake, a fat check, then send him PACKING. Step 2 is to evaluate his Lieutenants and eliminate any potential rivals there as well. NONE of this Condit did. Stonecipher totally steamrolled him. MD managers who had completely screwed up their company came into Boeing (who yes, had problems of its own) and continued to screw things up, but now they had even more mayhem to cause with a truely global company.

  Companies get the unions they deserve. If a company treats its employees like adults, you tend to get adult responses. Treat them like children, you get childlike responses. Boeing is as much to blame as the union.

  The union, well… that last strike was just dumb. Greedy and dumb. The writing was on the wall economically. Plus the contract offered was not bad. In fact, from what I read of the offer, it was quite good. I read a lot of comments from IAM (or supposed IAM) that indicated they were just out to make trouble. They wanted to strike, so they were gonna. I never once got a truely GOOD answer from an IAMer about WHY it was worth it.

  I’ve lived in Chas before. It’s a nice enough place, but I am not optimistic that Boeing will be able to set up shop there as flawlessly as they seem to think they will. Keep in mind, these are the SAME dimwit managers who perpetrated the entire 787 fiasco to begin with.

• 34. Aurora  |  October 28th, 2009 at 22:03

  

  The 2nd line is merely the beginning of a long term shift to right to work states for Boeing. This may have been the last chance to reach a mutually beneficial working arrangement.

  I’m mystified as to why the union did not put the company’s last offer up to the membership for a vote?

• 35. Aotearoa  |  October 29th, 2009 at 02:04

  

  North Charleston is an Air Force Base right? Or used to be? After all this news, I Googled it to check it out and now I’m wondering more about the Airport there.

  Is it now GA, Commercial or what? Suddenly (for me) for some reason, this place is a whole lot more interesting.

  (I live in Australia BTW so please excuse the ignorance)

• 36. Boeing Investor  |  October 29th, 2009 at 12:02

  

  Saj,

  I hope you will update your comments and give a reassessment of the new formula.

  Where do you see the advantages and what obstacles do you think will have to be overcome.

  This sounds like a rampup in Everett. Do you think the suppliers can keep up with the new tempo. Is this happening too quickly or can it be done now that Charlotte is getting its preparatory act together.

• 37. Boeing Investor  |  October 29th, 2009 at 14:45

  

  Additional Question:

  Do you think this decision has anything to do with the Tanker Contract. That is, looking at the 787 production line in Everett, now one in Charlotte , the 767 line in Everett, the announced Surge and the possibility of a Tanker Contract…can production be moved in ways to make it more efficient. Ways that were not available before this expansion.

  Or more simply put, is this is only about the 787 line

• 38. Chris Wallace  |  October 29th, 2009 at 15:53

  

  Curious: The Charleston facility is expected to be fully operational by 2013 in time for the 787-9 to begin production. It is possible that Charleston will initially handle 787-9 production while Everett continues with 787-8 production.

  Boeing Investor:

  While Kansas is a Right to Work state, as well, the workforce at Boeing Wichita is predominately IAM unionized. As part of the negotiations for the 787 line, the IAM wanted assurances from Boeing that the KC-767 work would be done in Everett and Wichita, however Boeing refused to give them.

  The first nine KC-767s (4 for Japan, 4 for Italy and one for the USAF under the 2001 lease) were built in Everett and then flown to Wichita for conversion into tankers. The current plan is to shut down the 767 line in Everett and make it ITAR compliant so that Boeing can build both military (tanker) and commercial models on the same line (as can be done with the third 737NG line in Renton).

  However, now that Boeing has a second commercial airliner assembly facility in Charleston, they now have the option to build a new ITAR-compliant 767 assembly facility there to build the KC-767 and either allow the Everett line to complete the remaining commercial 767s on order and then shut it down, or shut it down and complete all 767 assembly at the new line.

• 39. NH  |  October 29th, 2009 at 18:53

  

  Well, I guess it’s a done deal now; but until recently at least, I wasn’t really sure if Boeing would actually go ahead with a second line that was not at Everett. I would have thought with all the problems they had with their supply chain model for the 787, why would they turn around and make the production process even more complicated yet again by having two geographically separated 787 assembly lines, especially one where there is little aerospace industrial heritage. I agree with other posters that they will be able to get through initial teething trouble with working up a new facility in SC after a little bit of time, but does the 787 really need any more teething trouble at all? Boeing didn’t foresee all the problems that lay ahead in their new supply chain model when they set that up for the 787. Isn’t a SC final assembly line going to be potentially just as complicated to pull off. If, as has been suggested, the SC facility will be dedicated to the 787-9, is Boeing setting itself up for future -9 delays due to final assembly bottlenecks? I hope Boeing will adequately plan for and mitigate such risks this time. The 787 program wouldn’t need another headache.

• 40. Chris Wallace  |  October 29th, 2009 at 22:30

  

  The Seattle Times had in-depth coverage on this event.

  Everett will in fact be building the 787-9 and Charleston will focus on 787-8 production when it comes on line in 2011. Boeing will spend the next 18-24 months before the Charleston plant comes online to get the suppliers up to the 10 shipsets per month production rate and work out the logistics of getting 7 of those shipsets a month to Everett and 3 to Charleston. The original production plan was for 10 shipsets a month delivered to Everett, so even though the suppliers are behind schedule getting to 10 shipsets a month, they are not being asked to provide anything more than they originally were expected to - they will just be built across two lines as opposed to one.

  As for the 787-9, SPEEA is not happy about the move because a number of their engineers will now be moved to Charleston to build and staff that facility which will put more pressure on those remaining in Everett to complete the design work on the 787-9 and 787-3 as they also continue to improve the 787-8.

  Based on local media reports, both the leadership and membership of IAM 751 appear to be of the opinion that Charleston is incompetent and that they will be incapable of building the 787 to the competency of Everett. Some people are of the opinion that the IAM 751 is expecting/hoping that the Charleston FAL fails spectacularly which will force Boeing to come back to the IAM hat in hand in 2012 and give the IAM the power again.

  Personally, if this really was their belief and/or plan, the IAM 751 misplayed the hand. Boeing will not allow Charleston to deliver an unsafe plane. So they will assign whatever resources necessary to ensure those planes are just as good as the ones coming out of Everett and they won’t need to keep those resources in place forever.

• 41. Aotearoa  |  October 30th, 2009 at 01:29

  

  40. Chris Wallace | October 29th, 2009 at 22:30

  “both the leadership and membership of IAM 751 appear to be of the opinion that Charleston is incompetent and that they will be incapable of building the 787 to the competency of Everett. ”

  Such arrogance won’t help them…

  “Some people are of the opinion that the IAM 751 is expecting/hoping that the Charleston FAL fails spectacularly which will force Boeing to come back to the IAM hat in hand in 2012 and give the IAM the power again..”

  …and neither will that attitude which is the same kind of thing that got them into their predicament already.

• 42. Falcon  |  October 30th, 2009 at 14:15

  

  As usual most people here can’t handle the time dimension. If a step takes multiple years to achieve then you can’t wait for the previous step to complete before you start. If things were done that way it would take decades to build the simplest of things. Keeping things moving in parallel so that it all comes together at the right time is the art of project management. Nowhere has it been perfected better than in large kitchens.

  The two things that, in my opinion, stand out in Boeing’s announcement is that they only expect to produce three planes a month in SC and that they are setting up not only initial testing but also delivery. It is a lot of cost that needs to be allocated to those three planes per month. I had expected a 50/50 split. Similar there is a lot of cost to build up an organization for delivering just three planes per month. Boeing obviously is prepared to spend a lot of money to move things away from Washington.

  The elephant that in the room is what went so horribly wrong that they abandoned getting the single line to 10 per month as originally envisioned?

• 43. JustSomeDude  |  October 30th, 2009 at 18:45

  

  I’ll predict that the 787 Maden Flight gets delayed yet again, that if ever in service it is plagued with problems and never ever performs up to expectations or advertisements… similar to the problems it has had for the last many years.

  The main reason it won’t perform well and hasn’t so far, is the new Management wants to constantly cheapen things down (structure, wages, parts) instead of making a truly quality product.

  Even the new SOB fixes, they know what the 100 percent mark is, yet they want to try the 20 percent mark to see if that is enough, which it won’t be… and so I still predict structual problems and performance shortcomings plaguing 787 forever.

  Boeings worst product ever, a dud.

  Such that all the conversations previous will not even matter.

• 44. Curious  |  October 30th, 2009 at 18:45

  

  I think there are more options and obstacles to this story than are presently being discussed.

  The speed with which the 787 gets certified, the possible award of the Tanker, the progress and sufficiency of the supply chain, the surge etc.

  We have the justification and reason for the decision but the actual mechanics and allocations still seem to be an idea “in the works” .

  Certainly more risk has entered the picture and the first plane has not yet flown

• 45. Erik Bloodaxe  |  October 30th, 2009 at 20:25

  

  Falcon, if you read the article, you would see that Everett will be at 10 while Chas gets up an running. Once Chas is on line, Everett will cut back to 7.

  This had nothing to do with Everett not being able to get to 10/mo. and everything to do with Boeing management wanting to break the union.

• 46. Sky Taxi  |  October 30th, 2009 at 20:37

  

  Aurora wrote;
  “I’m mystified as to why the union did not put the company’s last offer up to the membership for a vote?”
  There was no offer.

  Here’s a message from union leader Tom Wroblewski to the union members.

  October 29, 2009 - “I’d like to respond to Doug Kight’s e-mail to managers explaining what he says were the stumbling blocks that kept us from reaching an agreement to keep the second 787 line in Everett. It’s misleading, it’s disappointing and it’s not truthful.

  Boeing would not commit to any agreement to keep the second line in Everett. That, and only that, is the reason why our conversations went nowhere.

  The proposals Boeing e-mailed today were more detailed than anything we heard from the Company during three weeks of face-to-face conversations. They threw a lot of numbers around while we were talking together, but they were never willing to put them in writing. If they’d been this willing to put numbers in writing a week ago, we might have got somewhere.

  We presented them with an initial verbal proposal. They never responded to that first proposal in writing, and never told us what they wanted to see in an agreement — and absolutely never told us there was a deadline for submitting revised offers. Instead, we found out the hard way that they’d set an arbitrary deadline; when it passed, they just walked away. They’ve set a lot of unrealistic deadlines with the 787. This was just one more.

  The discussions we had with them were like trying to build a foundation for an agreement on the shifting sands of the desert. As soon as we got close to an agreement in one area, the Company would change the subject. We never exchanged formal written proposals– and we never got a guarantee for the second line.

  Aside from being misleading, the tone of this e-mail was disappointing too. I see no value in going back and rehashing this. It serves no purpose. They got what they wanted from South Carolina. It’s time to move on.

  This latest Company e-mail is just another smoke-and-mirror tactic trying to confuse the situation. Boeing executives had made their decision long before they ever sat down to talk with us. They’re breaking ground in Charleston in two weeks and planning deliveries for 2012, both clear signs this was their plan all along.

  The simple truth is there won’t be any new jobs in South Carolina if our Members here in Puget Sound can’t find solutions for all the 787’s problems. We’re the ones who will fix the mistakes and get the first planes ready to fly, and we’re the ones who will be building 787s on two lines in Everett - the main line and the new surge line — while they’re still filling in swamp land in Charleston.

  Without us, the Dreamliner is just a pipedream. Let’s focus on making it a reality, and quit stewing and fretting about who said what and when.”

• 47. Aotearoa  |  October 30th, 2009 at 20:58

  

  Quoting Sky Taxi | October 30th, 2009 at 20:37

  “The simple truth is there won’t be any new jobs in South Carolina if our Members here in Puget Sound can’t find solutions for all the 787’s problems. We’re the ones who will fix the mistakes and get the first planes ready to fly, and we’re the ones who will be building 787s on two lines in Everett - the main line and the new surge line — while they’re still filling in swamp land in Charleston.

  Without us, the Dreamliner is just a pipedream. Let’s focus on making it a reality, and quit stewing and fretting about who said what and when.”

  So how does the Union respond to the news?

  More threats. Yep, they’re really learning…. NOT!

• 48. Chris Wallace  |  October 30th, 2009 at 22:46

  

  Actually, Aotearoa, I find Mr. Wroblewski’s comments a bit refreshing.

  Now that the camel’s nose is under the tent, the IAM needs to show that they can build a 787 faster, better and more economically than a non-IAM workforce can. It’s really the only way (that and not striking in 2012) to prove to Boeing that they are not just relevant, but essential, to the long-term financial success of Boeing.

  Because right now, Boeing feels they are a threat to that success.

• 49. Aotearoa  |  October 31st, 2009 at 01:55

  

  I’d like to agree with you Chris but as always, it seems their motives are more negative than positive.

  Boeing has simply had jack of them.

• 50. Dougloid  |  October 31st, 2009 at 05:44

  

  Aurora sez “Dougloid, you may be correct, but no one wants to deal with a strike every time a contract comes up for re-negotiation. ”

  True. But I think what I was pointing at was the forced transfer of work group knowledge. Let me explain.

  The scenario I described was accurate, and when the mutts from Salt Lake came around they were supposed to get taught by the floor builders how to do their jobs so they could put the Long Beach floor builders out on the street.

  How do you think that went over with the people on the shop floor? It was kind of an insult, because people who’d been building those damn things since the early sixties had sort of a proprietary interest in the work. Oh, yeah, maybe the company can do what it wants with the work, but you can’t help human nature. When you start messing around with a fellow’s meal ticket they’re bound to get annoyed about it.

• 51. Leelaw  |  October 31st, 2009 at 13:11

  

  “When you start messing around with a fellow’s meal ticket they’re bound to get annoyed about it.”

  Perhaps management should limit the training function to employees close to retirement, they would have the most self-interest in the success of the new workforce if they want their pension benefits to be secure?

• 52. Tom  |  October 31st, 2009 at 16:02

  

  It amazes me so many blame the union for the present situation. But those who actually work at the company see things differently.
  First was it the union who paraded the 787 out to the press as ready to go! Was it the union who lied to the shareholders, employees, press, customers! Was it the union who told employees to buy the contract threw heavy intimidation or else!
  Now if the company had just told the truth from the beginning, that the 787 program had major problems, the union would have never went out on strike. But union members were lead to believe the company was poised to make billions and were not going to share. The union already got hit from 9-11 and were waiting for payday.
  Does anyone really believe that a strike would of happened if the truth had been told. But as it is, Boeing lied to everyone and now brought this on themselves. You have got to wonder how so many analysts missed this story?
  Perhaps some of the press should be looking at the upper management as the ones to blame, first for ethics violations, then for becoming the liars they are! Perhaps some new management is needed. Someone who knows the meaning of honesty and good will, trust. Then perhaps a better result will come from negotiations with the unions. But, hey what do I know…….

• 53. Boeing Investor  |  October 31st, 2009 at 17:43

  

  Is it possible for this Company to come together and succeed?

  The issues above indicate so many obstacles. In truth, the most important thing to stabilize attitude and cooperation between Management and Labor. There will be an increase in hiring in Everett ( surge) so jobs are not immediately threatened. There is future work in the upcoming years ( 777, 737) so there are ways to appease Labor and perhaps enter into a future contract that serves both parties.

  Airbus is hemoraging monies and the possibility of the 350 being delayed or not built at all would benefit the 787 enormously.

  This changes the overall production options of the Company and hopefully a chance for management and labor to reconcile more realistically.

• 54. Falcon  |  October 31st, 2009 at 18:34

  

  @Eric Bloodaxe,

  They are taking space from the 767 line to reach surge rate, i.e. they can’t do it with the existing line.

  Not sure what article you think of that says the surge is 10 per month, I can’t find it in any of the articles I have seen.

  However, if what you say is true, that they are spending the money on tooling, employeeing and training of people to get the Everett capacity to 10 and then just abandon it – It certainly validates my statement that they are prepared to spend money on getting out of Washington. How much profit is given up?

  I agree that reducing union influence is a major reason but I think there is more to it. Way too much of Boeing’s revenue is going through that single enormous building. It is never a good thing to have all eggs in one basket and with this they have another basket.

  Personally I’d like to see them move the entire 787 line to SC for this reason. Overtime make Everett the location for a single brand new line, 777 or even 737 replacement. Require much more of that model to be produced there so the most important things are within “screaming distance” and pulsate under the same environmental conditions to keep things in sync, sell the rest.

• 55. Dougloid  |  November 1st, 2009 at 05:12

  

  Leelaw sez “Perhaps management should limit the training function to employees close to retirement, they would have the most self-interest in the success of the new workforce if they want their pension benefits to be secure?”

  Fact is, I had a similar experience with an equally insensitive manager.

  I worked for a FBO in Michigan, they hired me to set up a factory approved TPE331 major repair facility, spent nearly $100 large doing it-the best of everything- and was a happy guy until the boss came around with a guy I’d seen in the shop and says “This is Ken. He doesn’t know what you do. He doesn’t know why you do it or how or what it costs. In fact, all he knows about Garrett engines is that they’re painted a light green color. Teach him everything you know so he can order you around because he’s your new boss.”

  Three months later I was back in California working for Atlantic Aviation and going to GE school in Linn, Mass.

• 56. Dougloid  |  November 1st, 2009 at 23:18

  

  Erik Bloodaxe sez: The problems with managment are directly related to the merger. Yes, it’s largely Condit’s fault. He was a CRAPPY CEO. The first rule of M&A is eliminate the CEO of the company you are taking over. Give him a nice hand shake, a fat check, then send him PACKING. Step 2 is to evaluate his Lieutenants and eliminate any potential rivals there as well. NONE of this Condit did. Stonecipher totally steamrolled him. MD managers who had completely screwed up their company came into Boeing (who yes, had problems of its own) and continued to screw things up, but now they had even more mayhem to cause with a truely global company.

  Specifics, my good fellow, will make an argument that’s worthy of respect. At this point all anyone’s said that supports this McDonnell Douglas indigestion/blame theory is they’ve named a couple names that everyone knew.

  You know what it sounds like to me? People are more interested in blaming people for something that happened 15 years ago, when Douglas-at least LGB commercial- was stabbed in the back and left to bleed to death-rather than look in the mirror and say “That was then. This is now. What am I doing today to make things better?”

  The first thing a lot of people at Boeing could do is quit blaming all their problems on something that happened a long time ago, and recognize that today, as Pogo saith, “we have met the enemy, and he is us.” or, for the more intellectually minded “The fault, dear Brutus, lies not within our stars but within ourselves, that we are underlings.”

• 57. Tom  |  November 2nd, 2009 at 12:52

  

  I’ll stop the blaming once the company exec’s stop it’s lying ways. No one seems to want to address this in any way, shape or form?
  I guess if you have stock in the company, it’s easy to overlook.

• 58. Dougloid  |  November 2nd, 2009 at 14:03

  

  I’ll stop the blaming once the company exec’s stop it’s lying ways. No one seems to want to address this in any way, shape or form?
  I guess if you have stock in the company, it’s easy to overlook.

  So address it already and quit yer gripin’.

• 59. Blog-O-Rama - AirplanePat&hellip  |  November 3rd, 2009 at 01:20

  

  [...] Milwaukee market, where Southwest is now flying, saying unionized airlines can too be profitable; FleetBuzz Editorial with an exceptionally detailed look at Boeing’s Charleston decision (and equally detailed [...]

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