What does it take to get a world-renowned aerospace company to snub its birthplace and outsource thousands of jobs to a conservative state with a history of screwing up its products?
Apparently, not much: just a lump sum up front and the promise of a union-free workplace.
As you've probably heard, last week Boeing infuriated local labor leaders and disappointed our state's politicians by deciding to open up a second 787 production line in South Carolina. While the company says this wasn't an anti-labor move and politicians like Governor Christine Gregoire have tried to spread the blame around so that no one's fully at fault, it's hard to read this as anything but a blatant power play by Boeing against the local machinists' union—whose members build the majority of the company's aircraft.
Relations between Boeing and the machinists have been acrimonious of late, with strikes accompanying four of the past seven contract negotiations. So the choice of Charleston over Everett can basically be interpreted as the new managerial line: Fuck you, machinists.
The company, of course, denies that the union was a principal consideration. "It was a factor, but it wasn't a main factor at all," Boeing spokesperson Yvonne Leach said in a phone interview. "This is a strategic business decision for us, for our long-term competitiveness." Leach went on to say that no regional jobs would be lost.
Much of the regional analysis of Boeing's decision has been influenced by this company line. Governor Gregoire's statement tried to place blame evenly, even though it has been clear for quite some time that Boeing was not bargaining in good faith. Others, including Senator Maria Cantwell, stuck to the company's bland assurances that no Puget Sound jobs were lost (true, but we didn't gain 800 jobs, which is the whole point). Conservatives have taken the opportunity to blame the union entirely, describing the decision as sound business reasoning by Boeing.
The idea that Boeing's bottom line required this decision might be credible if the move made any business sense. But it doesn't. Boeing already has a ground presence in South Carolina, with two plants cranking out plane parts that are then shipped to Washington to be combined with other outsourced parts. These two Carolina plants will have to be significantly expanded to accommodate the new line. Thousands of new workers will have to be hired, trained, and put through an unusually steep learning curve. But the Charleston plants have already proved dysfunctional. In 2008, the first Carolina fuselage to arrive in Everett didn't have a workable internal wiring system, setting the project back significantly. Now, a year and a half later, the project is 140 weeks late and billions of dollars over budget.
"There is nothing in Charleston that shows they have their production issues solved," says Scott Hamilton, an area aerospace analyst. "Charleston still has production problems that Everett has to fix. Why add the additional risk of a new facility rather than taking a safe bet and taking the experienced people who are already fixing the problems coming in from everywhere else?"
The answer seems to be: the better to dick over the local machinists' union. The move doesn't even really work from a labor-cost standpoint. Starting wages at the South Carolina plants are only a dollar less than starting wages in Everett. Of course, the unionized workers get paid better as time goes on. And deservedly so—by then they are really fucking good at one of the most complex manufacturing jobs on the planet. That kind of experience and skill pays off in quality. And quality is important when it comes to fully loaded jumbo jets hurtling across the sky at hundreds of miles an hour. As should be obvious to Boeing's executives and board members, the company's stock price is directly tied to the ability of its workforce to avoid deadly (not to mention costly) screwups.
To be fair, Boeing had some understandable complaints about the local machinists. The union's wish list in the 787 second-line placement negotiations included everything from recession year bonuses to a seat on the board of directors. But those who try to draw a false equivalency between the two sides, like Gregoire did in her press release, ignore a couple of key points. First, the union was willing to be bargained down, which is the point of asking for so much going into negotiations in the first place. Second, Boeing's big stipulation—a 10-year no-strike contract—was both insulting and nonsensical. (By law, workers can't strike while under contract with a company.) The company, it seemed, went into the negotiations with its mind already made up.
"It became clear early on that the company was less interested in making a deal than they were in getting more incentives out of South Carolina," said Frank Larkin, communications representative for the International Association of Machinists and Aerospace Workers. "The longer they sat at the table with us, the more South Carolina offered them."
In the end, South Carolina governor Mark Sanford, famous for outsourcing his sex life to Argentina, offered Boeing $170 million in incentives to outsource the second 787 line to his state. But even considering the hefty size of the bait, the decision still doesn't make much business sense.
"Washington has been recognized by Forbes as one of the best places in the country to do business," says Kathy Cummings, communications director for the Washington State Labor Council, noting that the magazine ranked South Carolina far behind us, at 25th best. "They told the governor they weren't leaving because of the business climate," she continued. "It looks like they just wanted a union-free environment."
Things don't have to be this way. Employers in Europe play nice with their unions. Boeing's chief competitor, Airbus, is thoroughly organized. It even has union representatives on its corporate board.
The chance that Boeing will learn from its European counterpart is vanishingly small, however. Like the majority of America's large corporations, it is more likely to continue engaging in warfare against its unions. Short-term incentives and a driving desire to monopolize power will turn future debates, like the upcoming 2012 machinist contract negotiations, into potential battlefields.
Which, long-term, is bad for Washington, bad for the machinists, and—though the company doesn't seem to get this yet—bad for Boeing.