Boeing Braces for Potentially Long Workers' Strike

Just one day after The Boeing Co. (BA) was notified that a multi-billion dollar U.S. Air Force tanker competition has been put on hold, the embattled aerospace firm said it was steeling itself for a long strike by its hourly work force.

Boeing’s commercial aircraft production areas were quiet Monday after the manufacturer’s 27,000 machinists walked off the company’s jetliner assembly lines to protest a proposed labor contract they contend falls far short of what’s fair in terms of health-care benefits and job security, MarketWatch.com reported.

On Wednesday, Boeing Chief Financial Officer James A. Bell said the company expects the strike to last at least 30 days and said the job action will cause additional delays in its vaunted 787 Dreamliner commercial jet, the Seattle Post-Intelligencer reported.

"I think there’ll be at least a one-month delay," Bell said Wednesday at a Morgan Stanley conference Webcast from Dana Point, Calif. "Right now, it’s a one-for-one day slip on the 787 and all other programs as well."

The International Association of Machinists and Aerospace Workers Union continued its tough talk.

"We will continue this fight ‘one day longer’ than the company can afford until they meet our demands," the union told its members via a late Sunday posting on its Web site, the P-I reported.

Tom Buffenbarger, the union’s national leader, told The Seattle Times that if the strike costs Boeing $100 million a day in lost sales, as many Wall Street analysts predict, it will take strikers one month and a week to drain the company’s $10 billion cash reserve.

As of now, no new talks have been scheduled.

With the Dreamliner program already 14 months or more behind schedule, the strike now puts in jeopardy Boeing’s plans to test-fly the jet in November and to start deliveries in the third quarter of 2009. Parts shortages and supplier issues have created delays. Boeing has distributed production of the airplane throughout the world.

While conceding that there are still "significant issues" between Boeing and the union, Bell said, "we’ll never get to a complete impasse."

Although the dispute over the use of outside contractors to perform work that union workers have done in the past is the main sticking point, Bell noted that it’s also "not the only issue we’re apart on."

On Aug. 28, Boeing offered the employees who make parts and actually assemble the jet aircraft a wage-and-benefits package that includes an 11% raise over three years, bonuses, and a 14% improvement in retirement-pension payments. Boeing also shifted healthcare costs to workers via higher co-pays and medical deductibles.

But the union wanted a 13% raise.

Tanker Deal Shelved

The U.S. Defense Department this week shelved the competitive bidding on the aerial refueling tanker contract, a move that enables the incoming presidential administration to choose the winner of the $35 billion contract. The competition pits Boeing against a team consisting of U.S. defense contractor Northrop Grumman Corp. (NOC) and Airbus SAS parent European Aeronautic Defense and Space Co. NV (EADSF.PK). Airbus, a pan-European maker of commercial jetliners, is Boeing’s arch-rival and nemesis in that business.

The bidding process for the tanker deal - which could have an ultimate value of $100 billion if all the tankers are built - has been riddled with controversy from its very start. This "cooling-off period" will allow the award to be made objectively, U.S. Defense Secretary Robert Gates said in a statement.

"Over the past seven years the process has become enormously complex and emotional - in no small part because of mistakes and missteps along the way by the Department of Defense," Gates said. "It is my judgment that in the time remaining to us, we can no longer complete a competition that would be viewed as fair and objective in this highly charged environment."

Back in February, the Air Force awarded the contract to the Los Angeles-based Northrop Grumman/EADS NV team. But after protests from Chicago-based Boeing and a report from the Government Accountability Office that ripped the Air Force for its management of the bidding process, the government reopened the bid on an expedited basis.

An earlier contract that would have had the Pentagon leasing the new tankers from Boeing was permanently grounded after criticism from U.S. Sen. (and current presidential candidate) John McCain, R-Ariz., and investigations that lead to guilty pleas from a defense official and some Boeing executives, Bizjournals.com reported.

Boeing said it welcomed the Pentagon’s decision to cancel the competition for now, stating it would allow more time for the complex repeat run-off to be conducted. As Money Morning reported, even after the Pentagon decided to redo the competition, Boeing had threatened to withdraw if it did not get six months to submit a revised bid.

"The Boeing Company welcomes the Defense Department’s decision and believes that it will best serve the war fighter in allowing the appropriate time for this important and complex procurement to be conducted in a thorough and open competition," spokesman Dan Beck said.

Original post

Comments

[Steven Hansen:]

this is not 1910 and no one wins a strike. with airbus already ahead this year in bookings, the dollar strengthening (airbus sells in dollars and its costs are in euros), and now boeing's union on strike - boeing and its union are just giving away market share.

screw all this talk by the presidential candidates about american companies shifting jobs overseas. boeing and its union are handing jobs to europe and nobody is saying sh*t.

2008 Sep 12 06:25 AM

[notsosmart:]

just another union commiting suicide.anyone remember the printers union in nyc.? they folded paper after paper until they themselves folded.with the high unemployment these machinists ought to be glad they have a job.pretty soon china will be building jetliners.

2008 Sep 12 10:48 AM

[Vision12:]

We all ought to be glad we have a job....for now. How long do we alllow corporate America to take, take, take, while we pay, pay, pay? Yes, they are fortunate to have jobs, and I agree. But soon the only jobs left in America will be minimum wage at Mickey D's. And McCain is the one trying to hand jobs to Europe, thru Airbus and the tanker deal.......

2008 Sep 12 04:14 PM

[bill d:]

Vision my a$$ - look at the past - your Communistic type rants are out of date.
Are you seriously believing the last offer Boeing made was unacceptable ?

2008 Sep 12 07:05 PM

[113 Steve:]

Why is it no one remembers Enron, it was not a union that brought the company down but upper management. Corp. America has gotten so bad that it is hard to make a living. Yes, I do work at Boeing and I am proud to be in a union. I asked a question once to upper management and it went something like this.
If everyone union member agreed to take a $1.00 per hour cut and agreed to pay $100 on their medical every month, how much would you lower the cost of the airplane to better compete?
The answer was, we would not lower the cost of the plane as it would bring in more profit and we would use that money to send to our share holders. I then asked if management was willing to give us some of their bonuses and pay part of their medical, the guy lost it and started screaming and shouting and he had to leave the room. I was not allowed to talk about what they get because it was personal. Yet, is it not personal when they try to take from me or by brothers and sisters?
Boeing has never came out and stated they could not afford to pay us, it is they don't want to pay us.
No one talks about the last four years without a raise, so this would be a 11% raise over a period of 7 years since I have not had a raise in the last four years. Thats about 1.5 percent a year.
Does not any one understand that if jobs keep going overseas the u.s. will not have any good paying jobs left? They say it is cheeper to make overseas but has the price actually come down on cars that is being shipped in from over there?
Look at walmart, they buy from China and elswhere and their profits are huge, they pay people enough to get them on food stamps. The tax payer pays for their food stamps and any other benefit they may get.
This is not about unions getting a fair hand it is about keeping jobs and making a wage that people can buy a home, etc.

2008 Sep 15 01:31 PM

[Rolandownth...:]

What people and investors forget; it's not that we are greedy or obsessed about money. More to the point it's about take aways and falling threw the middle class cracks as inflation eats up any gains we make. I urge everyone to start learning about the national debt and fiat money that grows year after year. About the 7 trillion in Social security; and 34 trillion in Medicare. Not to mention trillions going to bail out bankers and putting the debt onto the tax payer. Your childrens future. About the north American trade union and the new currency; the amero.
About the constitution as we know it and the bill of rights that will disappear once the North American union goes into effect. Why do you think the borders can't be closed. Why do you think we fight wars for oil. Start using your brain and watching less TV.

2008 Sep 15 08:55 PM

[youaredumb:]

It is clear that unionites are pissed because they feel they have been jipped....this is the difference....
If a non unionite gets jipped he looks for employment elsewhere...if he finds a better offer he takes it and shifts the labor market in favor of the other company....Boeing would then need to consider its pay and benefits package and maybe raise them to attract employees from the labor market...but if he doesnt find it he relooks at his pay and benefits package and says maybe this isnt too bad....I am actually better off than I thought.

A unionite feels jipped and says to his "brother and sisters" (you sound like a cult by the way)...I feel jipped, dont you feel jipped?...I cant wait for 1,2, or 3 years for our contract to come due...I am going to "fight" this time...I am not going to be "disrespected"...I will strike if I have to and show them who is "boss"...we have the company by the "balls" this time we can really make them "hurt"...they will have to give in to our "demands"...

And alas, that is the disconnect. The non union member sells his labor individually in the labor market and "knows" what the real world is like and what he is worth.
The unionites never look out at the real world...they believe they are entitled to their "demands" because well you see they have all grouped together and they will really make you hurt if you do not comply...they never look out the window at what is happening in the real world...they never gain the perspective necessary to sound intelligent on labor issues or the economy...they do not know how much to ask for or what benefits are appropriate because they do not know what their labor "should" be worth on the open market.

I see you unionites as a bunch of adolescent bullies on a train that is flying down a track that ends in an abyss miles down the way...some of you do not care because you will be getting off the train (retiring) before it gets to the abyss...but most of you are too stupid to see the abyss for what it is...you believe the train conductor (your union leadership) who tell you the abyss is not really there....so willingly you keep feeding the coal to the furnace and speed up the process....such insanity

2008 Sep 16 09:39 PM

[Rolandownth...:]

It's obvious you have never worked at Boeing.
You seem to be the ignorant one. I have learned to speak from only my experience, as this is the one that counts.
For one thing; we are specialists. We work in an industry that has highly specialized work and skills. You can't just walk into another company and sell them your skills.
Thats the biggest problem. It takes years to learn what we know and years to achieve the level of expertise. You can't compare this to the auto industry; housing; mining; or most other companies.
So until you've lived it; I would try and learn more before you speak again.

2008 Sep 17 12:28 AM

[113 Steve:]

This is to the article above (youaredumb). I am sorry you don't have a good paying job and I am sorry that you think people accept that they are only worth what their company pays them. I see things differently, I believe people should stand up for themselfs and get what they deserve. I am not sure you understand what that means since you are only worth what your boss pays you.The Boeing company does not talk about the billions of dollars the IAM got them in tax breaks for assembling the 787 here, they don't talk about the IAM standing up to the government for the tanker and now it is back up for rebid. I wonder why that is, maybe it could be then only want the public to hear and see what the Boeing company puts out to the public??? I am sorry your now worth more because if you were then you might be able to understand that we are not only fighting for ourselfs but for others that want the courage to stand up and say enough is enough.

2008 Sep 17 05:50 AM