Boeing, Boeing: Labor in the Spotlight *(updated and bumped up)
Boeing's Dreamliner 787
UPDATE, 9/05: It’s a strike, apparently.
At 7:14 EDT, Boeing put out a press release announcing “the differences were too great to close.” It then said the International Association of Machinists “has called for a strike to begin” at 12:01 Saturday morning, Pacific Time. The union’s release includes this quote:
“The absence of job security language was a key reason why members rejected the company’s earlier offer and it is why Boeing is now facing the second major strike in three years,” said International President Tom Buffenbarger. “We’ve learned it’s not enough to have a good-paying job if that job can disappear at any time.”
This was a prominent theme of the Democratic National Convention, and it came up in John McCain’s acceptance speech, too. But will the candidates get involved?
What follows is the earlier post from yesterday.
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In a matter of hours, the largest aircaft manufacturer in the world, Boeing, might be hit with a strike. Many of its 27,000 workers are impatient to hit the bricks:
Less than a day after voting to strike, Boeing workers expressed frustration and anger on Thursday at the decision by (Machinist Union) leaders to postpone a walkout and negotiate further with the company.
Factory employees who showed up to work said about half of the workers did not come in for their assigned shifts and one mechanic reported that there was damage to bathroom fixtures and cash machines inside the production facility.
A Boeing Co spokesman declined to comment on activity at its plants on Thursday, but he said the company believed a resolution was possible by Friday at midnight when the 48-hour deadline extension lapses.
Machinists in Everett, WA Ready to Walk
In the past, a strike brought out the Democratic politicians around the country, especially where the company is headquartered. And we all know that Boeing recently moved its headquarters from Seattle to Chicago — Barack Obama’s home state. In fact, after Obama secured the nomination last week, Boeing paid for a full-page ad to congratulate him (which certainly had more to do with the firm’s efforts to wrest the $35 billion aerial refueling tanker contract from Northrup Grumman.)
If Boeing can’t settle the strike by midnight Friday, will Obama walk the picket line? Will Mayor Daley? As I recall, Chicago put on quite a show to lure Boeing.What’s the account status of the favor bank?
In the 1970s, industrial strikes were far more commonplace and, as a result, organized labor lost the position of political power to which it had become accustomed. In 2008, labor is making a major play at getting it back, working toward the election of Obama plus a filibuster-proof Senate majority that will pass its long-sought card check bill.
Will a Boeing strike upset labor’s patient strategy?
Interior of 787 Dreamliner
No question the strike will inflict damage on a major American company, one that has to compete with government-backed aircraft builders. It would further delay the company’s new commercial jet, the Boeing 787 Dreamliner, and cost the company $100 million per day. Boeing is “cash-rich but time-poor,” according to the Wall Street Journal:
Boeing already has given ground, but it hasn’t budged on demands for such things as higher pension payments, fewer cuts to health-care benefits and a limitation on contract manufacturing — including the right to claw back some outsourced functions.
With customers clamoring for their Dreamliners, Boeing might be tempted to yield. If the experience of Detroit’s auto makers is anything to go by, Boeing should resist caving in to demands that impede its future flexibility.
When times were good, General Motors, Ford Motor and Chrysler made optimistic promises, too. Performance ultimately made these impossible to fulfill. The car companies — and their workers — could never have imagined that their market share, at 73% just 12 years ago, would fall to less than 47%.
Making airplanes is a different business, and half of Boeing’s orders come from the Pentagon, a relatively safe long-term customer. But the competitive dynamics of the commercial-aircraft industry are shifting rapidly. China hopes to have large, domestically built passenger jets flying within 12 years. Brazil’s Empresa Brasileira de Aeronáutica, or Embraer, Canada’s Bombardier and others also are going after business now dominated by Boeing and European rival Airbus.
Motley Fool’s Rich Smith advises Boeing to let the strike happen, but for a different reason — to avoid late penalties it would otherwise owe to airlines for missing its Dreamliner deadline:
Fifteen months late for delivery (and counting), Boeing risks getting dinged with penalty payments for tardy delivery to customers who’ve already ordered planes. But perhaps Boeing could dodge those penalties, if, say, failure to deliver on time was caused by events outside of its control.
If Boeing has a “force majeure” clause in its contract, a legal concept present in most well-drafted sales contracts, that could excuse its failure to perform (say, by not delivering planes when it promised to) because of events outside its control (say, a strike).
It is striking, isn’t it, how all this manuevering is happening and neither of the presidential candidates seem engaged. Thirty, forty, fifty years ago, it would have been hard to keep them out.
