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Bitch-Slapped by Boeing

Why the Company Is Really Ditching Washington Workers

Bitch-Slapped by Boeing
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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. recommended

 

Comments (37) RSS

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1
One thought you don't print: 787 is FUBAR!Boeing can save carbon footprint (energy costs) shipping sub-par parts here to re-work/re-make
them adds to excessive cost over-runs.
Let Boeing own their fuck-up elsewhere keep that stink away from our workers. Boeing has been building there for years, was that just going to go to waste? Keep these jobs here, let them have those jobs there.
OF COURSE their unions sit-down sweetened the pot on the eastern seaboard, and why not? There will be plenty of 747, 767, 777 parts & planes on order for years, leaving enough for our workforce to prove their worth for future efforts that do NOT include a plane that will NOT FLY.
In the long term, this is not nearly as bad for all parties as a sensationalist journalist might prefer it to be. Use your head, not your other-less-than-useful-parts.
Posted by Nuclear Marc on November 6, 2009 at 2:54 PM · Report this
2
Hey, all my parts are useful.
Posted by jtwankerschmidt on November 6, 2009 at 3:24 PM · Report this
3
Well said, Nuclear Marc. As a non-union Boeing employee, I support the union and all that their negotiations have earned for US (the non-union workers) over the decades as well. Everything we non-union workers have is something Boeing was shamed into giving us because the union fought for it first and won.

That said, it's common knowledge that the union guys pressure their new hires not to work too hard. I walked through the factory today and as usual, there were dozens of them standing around doing jack shit on the company dime. They may be good at what they do, but they can be pretty fucking lazy, too. It pisses me off, personally.
Posted by gotmung? on November 6, 2009 at 3:24 PM · Report this
Will in Seattle 4
Boeing Management has a very very very bad track record - every time they outsource or part out production, they never meet their goals just revise them downwards and extend the production to delivery lag.

This is why I sold my shares in them and bought Embraer SA (never can spell it, don't care tho).
Posted by Will in Seattle http://www.facebook.com/WillSeattle on November 6, 2009 at 3:50 PM · Report this
Sargon Bighorn 5
Businesses come and businesses go. Some are big and some are small. Nothing is forever. A union is a good thing when the nation is growing fast and strong. It's a bad thing when the nation is growing slow and weak. Unions generally don't keep up with the times.

""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.."" Boeing must think otherwise. So much for what Ms Cummings thinks and what Forbes prints.
Posted by Sargon Bighorn on November 6, 2009 at 3:59 PM · Report this
6
This article completely ignores the strategic advantage of locating the second 787 facility in Charleston. If an earthquake cripples the Boeing facilities here, the seconds 787 plant in Charleston will allow Boeing to continue production (of the 787).

Boeing, however, should have been up-front about wanting to decentralize from the start and let the Puget Sound region know it is not in contention for this second production facility. Other than that, I would have done exactly what Boeing did and decentralize manufacturing.
Posted by gofly on November 6, 2009 at 4:30 PM · Report this
7
Blah, blah, blah. Boeing is just SO 70s! (Back when Seattle was a dumpy little place no onen wanted to live.) If Boeing wants to fuck the machinists then more power to them. I'm sure everyone at The Stranger believes that these people deserve their ridiculously inflated salaries and lucrative benefits. Cry me a fucking river.
Posted by Kirby on November 6, 2009 at 4:30 PM · Report this
8
Don't let Brendan see this!
Posted by gloomy gus on November 6, 2009 at 4:31 PM · Report this
9
Hey, Jake, The Seattle Times is a union shop and the The Stranger is not. Which paper produces a higher quality product?
Posted by Forget it, Jake, it's Chinatown on November 6, 2009 at 4:48 PM · Report this
10
Hooray! a smart pro-union article! Kudos, Stranger!
Posted by Kevin Erickson on November 6, 2009 at 4:49 PM · Report this
11
Jake:
Please don't write any more business stories.
It's quite evident that you're out of your league in writing about things you know little about.
You really don't get it, do you?
You're a terrible business writer.
Don't take this personally.
Maybe you can write some movie reviews or something for the Stranger...
Posted by Warren Buffet knows the truth on November 6, 2009 at 5:40 PM · Report this
12
King5 had a great story last night about the Washington aerospace suppliers who used to mostly supply Boeing but now work for anybody, but especially Airbus.

They point out that
"It's estimated there are at least 650 manufacturers in Washington who are considered aerospace suppliers. But there may be more that cross over a variety of industries. Largely, the industry has operated out of the spotlight as attention from media, state and federal governments keep focusing on Boeing."

http://www.king5.com/home/With-2nd-787-L…
Posted by uptown on November 6, 2009 at 5:45 PM · Report this
13
I'm mystified how someone could look a move to cut costs, and thereby increase profits, as a "fuck you" to anyone.

It's a business decision. It was made by accountants. If they believed that the net cost would be lower in Washington, they would have stayed, union or no.

Like it or hate it, this is pure profit motive. And last I looked, even Boeing's most disgruntled employees have a vested interest in the company being profitable.
Posted by also on November 6, 2009 at 5:52 PM · Report this
14
There is more to it than just labor costs and diversifying production to reduce the risk of strikes. There is also a very important political part that was revealed in the recent tanker wrangling with EADS. EADS was getting total republican support on the Hill. The deal puts 2 southern senators in Boeing's column.
Posted by Get Real on November 6, 2009 at 6:12 PM · Report this
15
I'm not going to say Boeing's management is making a good decision - lord knows why they originally decided to head up their newest plane with a salesman, not an engineer - but you can't say that the union's a victim. Seriously? Let's just look at the national landscale - GM, Chrysler - both FORCED into bankruptcy because the union wasn't willing to take a pay cut. Now, Boeing is moving more and more non-union.

It IS down to dollars and cents. Boeing is anticipating expanding SC to 6400 employees, and they'll be making, literally about half the hourly wages that Union machinists here do. HALF. That's not even counting overtime pay savings.

The union at this rate will be blaming ever company for screwing them over until there are no more IAM members working for companies anymore. Who will they blame then?

If unions want to remain relevant, they need to understand that the reason managers hate unions is because they cost a lot. Make that worth their while, and they'll shut up. When someone else comes along and offers a better price, sometimes you gotta cutt off a few slices of bread so that you can keep the rest of the loaf. Too bad the Union's more interested in cutting off their nose to spite their face.
Posted by manofoar on November 6, 2009 at 7:44 PM · Report this
16
I agree with Nuclear Marc on the point of this albotross. I think that this plane will be a succesful testbed of technologies for the next series. As for a commercial product, let SC have this short lived experiment. "Loyalty's" a double edged sword. If they need to bail on SC, they will. There's no agreement a corporate attorney can't weasle out of...

manofoar: Since when do union workers design and market products that ultimatley fail? You make the case of the auto makers but fail to mention that thier marketing and design strategies were whoefully inadequate. Ask Mr. Mullaly at Ford. He sure as hell didn't make your list. If I recall, he was the last person to head a winning airplane at, ugh, BOEING! Hey, can you work this weekend? Those stinkin' union guys came up with the weekend off thing... Didn't think so.
Posted by 7GT on November 6, 2009 at 8:26 PM · Report this
17
The Stranger loves irony. Let me a tell a story of irony.

Big Jake of the Stranger (regarding your own personal integrity, it looks like you abandoned publicola.net), is not a member of a union, writes a story about the benefits of union membership.
Posted by Hey, Jake, it's Chinatown. on November 6, 2009 at 8:56 PM · Report this
18
Tim Keck is so fuckin' cheap that his former news editor was reduced to stealing wine from QFC. Tim Keck is as cheap as ever.
Posted by Tim Keck is one cheap motherfucker. on November 6, 2009 at 9:05 PM · Report this
19
Maybe Boeing management simply got tired of the loathsome traffic in King County and acknowledged that the city and state will do nothing to improve. We can't even build a monorail for less than $11 billion.
Posted by montex on November 7, 2009 at 12:53 AM · Report this
20
7GT - you're totally right that what they were trying to sell to the public was total crap. But at the same time, if the company's broke, you can' expect them to still pay full wages. Broke's broke. You can either take a cut and keep a job, or the company goes out of business. The union should have worked WITH management to help solve the problem, not be part of it.
Posted by manofoar on November 7, 2009 at 2:13 AM · Report this
21
7GT - you're totally right that what they were trying to sell to the public was total crap. But at the same time, if the company's broke, you can' expect them to still pay full wages. Broke's broke. You can either take a cut and keep a job, or the company goes out of business. The union should have worked WITH management to help solve the problem, not be part of it.
Posted by manofoar on November 7, 2009 at 2:14 AM · Report this
22
Who the hell is Jake Blumgart, and why should I care what he thinks?
Posted by Man in the Street on November 7, 2009 at 6:26 AM · Report this
23
The key is four strikes in the past seven contract negotiations. It's not so much that Boeing is saying "Fuck you" to the union. It's more of a "We can't take it any more."

The response to an oppressive monopoly is to try to find alternatives. Boeing feels about the union the same way iPhone users feel about AT&T. Boeing found an alternative. Next year iPhone users will have an alternative. Would anyone want it different?
Posted by Marc9 on November 7, 2009 at 1:01 PM · Report this
24
Good article, Jake. Nice to see you caring about issues and getting people talking.

Also, who the hell is Man in the Street, and why should I care what he thinks?
Posted by rebeccawebster on November 7, 2009 at 1:02 PM · Report this
camlux 25
Since you can check what kind of aircraft you'll be flying before making that reservation, I think I'll start looking for Airbus products. Why support a stupidly-run company with in increasingly inferior product just to "Buy American"?
Posted by camlux on November 7, 2009 at 1:27 PM · Report this
26
"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.
>Bull Fucking Shit! This is how it starts, folks. And I, for one, don't want to fly on any plane that was put together my some non-professional non-Union machinist.
Posted by Crash on November 7, 2009 at 1:38 PM · Report this
27
Is anyone noticing that production schedules, production quality, and the move to Chicago all came after Boeing was overrun by McDonnell-Douglas management? Is that a coincidence or what????
Posted by BOZ on November 7, 2009 at 10:57 PM · Report this
28
My company took a huge hit after 9/11. We eventually went into bankruptcy. They took my retirement and 60% of my pay. Payroll costs, competitiveness, blah, blah, blah... If you took the figure they gained from all this, guess how long it took to burn through that cash... SIX MONTHS. Don't think for minute that management isn't the one aiming the gun. It didn't hurt for our CEO took a 1/2 Million dollar bonus while sticking it to the taxpayer ( PBGC ) for our retirement. Cry me a f*%^#'n river Chicago... You don't know what your life would be like without a Union.
Posted by 7GT on November 8, 2009 at 11:00 AM · Report this
29
I agree with all those who say this writer is out of his league. Stick to simpleton topics.
Posted by pedro on November 8, 2009 at 4:56 PM · Report this
30
Yeah let's all make fun of southerners for being poor and uneducated and then complain once companies flee our our state which enjoys an unsustainably high standard of living and subsequent snob factor. Tough cookies bitches.
Posted by fRankeNP3ni$ on November 8, 2009 at 5:37 PM · Report this
31
"The response to an oppressive monopoly is to try to find alternatives. Boeing feels about the union the same way iPhone users feel about AT&T. Boeing found an alternative. Next year iPhone users will have an alternative. Would anyone want it different?"

What a creatively hip way of humanizing (and normalizing) brutal business ethnic and greed.
Posted by taninecz on November 9, 2009 at 3:03 PM · Report this
32
"Jake:
I can't argue against what you wrote, so I will proceed to conduct ad hominem attacks like a child.
It's quite evident that you're out of your league in writing about things you know little about.
You really don't get it, do you?
You're a terrible business writer.
Don't take this personally.
Maybe you can write some movie reviews or something for the Stranger. I am so lonely."
Posted by Warren Buffet knows the truth on November 6, 2009 at 5:40 PM

fixed.
Posted by taninecz on November 9, 2009 at 3:08 PM · Report this
33
Umm, probably 30% of these comments are why I dislike reading the things people decide to say on the internet.
I'm happy to see thought-provoking comments on the issue, and so irritated by people just being dildos.
I love reading your writing, Jake, as always. And I appreciate your use of profanity, as always!
Posted by Brayne on November 9, 2009 at 6:20 PM · Report this
34
@32
Jake comes to the Stranger as a business writer after working 10 years in the Wall Street Journal's NYC office. That was after he served a five-year stint at Barron's, which was preceded by an internship at The Economist and graduation with an MBA from the Wharton School of Business.
Jake is where I get ALL my business news. And the Stranger is THE SOURCE for business news in Seattle.
And @33, Jake used the "F" word more often when he covered Goldman Sachs for the Journal. Because THAT'S great business reporting! The more "F" words you use, the more Pulitzers you win!
Posted by Jimmy Buffett's Berkshire Hathaway makes me rich! on November 10, 2009 at 9:59 PM · Report this
35
From a SC resident:

No new news there. It was an FU to the union and we were the beneficiary. Problem is Seattle is missing the point. Boeing - the company with the work – isn’t interested in playing nice with the Union anymore because the union is a non-value add and they don’t HAVE TO – nice thing about the US. The fact that Airbus gets along with their Unions is a moot point, but out there they desperately want to be like Europe….give all of their $ to the Govt and hope to get some back.
Posted by noneplease on November 11, 2009 at 12:09 PM · Report this
36
"Jake got an article published in the stranger. I didn't. I am insecure, jealous and live on the internet. I don't know what ad hominem attacks are, so I will ironically continue to fabricate information about authors instead of making real points on my own. I will also deride the general journalistic practices of a publication whose website I am a member of, signifying in broad strokes just how much time I have on my hands."
Posted by Jimmy Buffett's Berkshire Hathaway makes me rich! on November 10, 2009 at 9:59 PM

fixed. all day, son.
Posted by taninecz on November 12, 2009 at 1:09 PM · Report this
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