The fight between Boeing (NYSE: BA) and its machinists may go on a long, long time. While that may be bad for the union, it is much worse for Boeing. Its customers expect prompt delivery of fuel-efficient planes, especially the new Dreamliner. Boeing's management gambled on getting the union to knuckle under and lost.
According to The Wall Street Journal, "As far as our members are concerned, we are in this one for the long haul," said Mark Blondin, aerospace coordinator and lead negotiator for the 26,800 machinists. The statement does not sound conciliatory.
Shareholders are getting the worst of it. Boeing trades at about $57, down from a 52-week high over over $107. With delivery delays, revenue is certain to drop.
Boeing's case with the unions is weak. The company claims it cannot give machinists a good three-year deal because earnings may not be strong that far out. With the company's tremendous backlog, it would be hard to imagine that being true.
Boeing's management will not be remembered well by history. They thought they had leverage in a situation where they had almost none.
Douglas A. McIntyre is an editor at 24/7 Wall St.











Reader Comments (Page 1 of 1)
9-25-2008 @ 10:22AM
jfslenes said...
Although management is certainly partially responsible, the union is also extremelt greedy and very short sighted. Don't blame one or the other, blame both for possibly a stupid decision up there with the welfare for wall street.
9-25-2008 @ 11:37AM
Kate said...
Because Boeing has a list of orders, does not mean that list will be fulfilled. Order can be cancelled. I also agree that the union is unreasonable. With so many companies laying off thousands of employees, isn't this the time to be glad you have a job and you make good money? I come from a strong union family, but unions have gained so much strength, they are undermining the work place. And how much do you want to bet that those union workers at Boeing shop at Walmart? The non-union, Chineese importer champion of the US. Shouldn't Boeing employees only shop at union stores? The problem is Americans want to earn top dollar, but buy products at the cheapest prices. You can't demand union wages and then support non union companies like Walmart. This is why our country's ecomomy is out of whack (or at least one reason why).
9-25-2008 @ 11:40AM
Linda Hansell said...
Boeing is one of our few manufacturing companies left in the United States. They are prospering, have plenty of orders and make a good product. It seems to me that the Union has hurt manufacturing in our Country by demanding way too much. Workers should be glad they have a good, high paying job and should be trying to meet their order deadlines. Do we want Seattle to be like the other cities in the rust belt? Let's start putting America First.
9-25-2008 @ 1:31PM
Jeff said...
Aloha Doug
I enjoy getting your feed.
Boeing has been delusional even before the strike. Airbus kept warning about their orders while Boeing kept saying their's were firm. Hogwash.
Regarding the strike, I don't have a position on who is right and wrong. Airbus makes what many believe is a superior product however and the company just seems to be better screwed together.
Unfortunately, it appears near certain that Boeing will become a minor player in the industry, perhaps sooner than later.
Jeff
9-25-2008 @ 2:17PM
Lisa said...
Working in aerospace I can say without the union few people would want to work at Boeing. The benefits that make Boeing attractive (wages, education, ect.) wouldn't exist without a union. If Boeing had the chance they would outsource most of the work, cut wages, eliminate the education program, and fire over half of their work force. The jobs would be sent overseas where the labor is cheaper. Boeing would turn into an assembly plant and the good workers (yes there are good workers and they are the majority) would leave for better paying jobs. Because they would get paid more and work less hours elsewhere.
The "final" deal Boeing handed the union was bad. I would end up earning more money at my non union shop over the three years than my counterpart at Boeing. Is the union being greedy in asking for more? I can't really say yes. They're in a good position this year compared to other years where the union had to make several concessions. Would you ask for more money if you had the chance or would you give up a raise for the good of the shareholders?
Yeah the strike is hurting my company. I'd love for it to be over so we can ship our parts. But to be honest I wouldn't have a job if it wasn't for the union keeping Boeing in Washington.
9-26-2008 @ 8:59AM
JimE said...
For any of you out there who think that without a Union everything would be just fine, wake up!
The wages and benefits of most jobs, yes even non-Union jobs are because of what the Union people have fought for. If a non Union company wants good employees it has to match or better what the Union shops are offering, so you should all be sticking up for the Union Brothers and Sisters in hopes of their gains being passed on to you! Unless of course, your a CEO making millions!
9-26-2008 @ 5:22PM
Don Shuper said...
Would you sign on or accept a contract in which the ' fine print' takeaways have been unavailable to the employees for decades? Would you agree to a contract claiming pension increases of X percent, which really affect only a small portion of retirees?
PENSION INCREASES?
Boeing , the press and the unions usually claim an X percent increase in retirement benefits in contracts, but the ALTERNATE benefit formula applicable to most retirees has NOT changed since the early 1990's. The claimed increases apply only to the `Basic benefit' calculation e.g. $XX/month per year of Credited Service. The Basic benefit typically applies to the smaller group of long-term employees with average or below average pay during the 5 years prior to retirement or who have been on extended leaves of absence.
At the current Boeing proposed BASIC benefit of $80/month /year of credited service, and the currently reported average annual salary for an engineer at $92,100, the ALTERNATE formula will apply to at least half of the engineers retiring with around 31 years of service in the next 3 years.
For example, Evita Engineer with a final average earnings of approximately $82,500 or higher in 2009 would retire under the current ALTERNATE formula with about $2450/month at 31 years of Credited service in mid 2009. And therein lies the long hidden takeaway in the Boeing BCERP pension plan.Evita Engineer will have been shorted at least $100/month due to the hidden takeaways built in since the early 80's !
9-26-2008 @ 5:29PM
Don Shuper said...
To continue
For example -- What outsiders do not see or hear or realize about the 'great contract' is the hidden gotchas, and the improper use of " average pay " average raise ' etc. And the 2 decades old ' raise in pensions ' bit of X percent.
FACT 1- Most retirees with 25 to 35 years have until the last few years retired under the Alternate Benefit formula- and that formula has NOT changed since the 1980's
As a result, and due to the average 5 plus percent annual increase in the 35 year moving average of a factor called Covered Compensation used in the Alternate formula, retirees have been hosed out of pension payments of tens to hundreds of dollars PER MONTH for the rest of their lives.
http://tinyurl.com/6e7ote
SEE second page
FACT 2- Boeing has played games with a factor called Credited Service, which when combined with Covered compensation gotchas, result in ever increasing number of months of ZERO pension accumulation. This has been know by SPEEA since 1994, and nothing has been done. ZERO rate of accrual is a violation of ERISA, but if the union(s) agree to it in a contract, then nothing can be done!
http://home.att.net/~justfacts/BCERP07PENSIONESTBB.xls
http://home.att.net/~dshuper/GENERICPLOTA.html
FACT 3 Boeing has abused a provision in Federal Law ( 29 USC 186 ) which allows Boeing ( and ANY company ) to provide Company credited service for pensions for employees who go to work for the union full time. Its known as a no-docking provision in the codes. The provision was made to avoid problems with union stewards working on behalf of employees while being paid and accruing benefits from the company- which is essentially a conflict of interest. Otherwise, ANY payment by the company to a union official would be a direct criminal violation, either a felony if over $1000, or a misdemeanor if less. Boeings problem in this regard is that there is NO notice of this provision in the pension plan documents provided to all employees. Yet it is a hidden part of the Contract.
So what is management thinking ?
9-26-2008 @ 11:45PM
Kim said...
What's worse is that the same arrogant and essentially incompetent negotitations strategy that provoked a strike with the machinists is about to provoke a strike with SPEEA (the union that represents engineers and technical workers). If that happens, fully 1/3 of Boeing's ENTIRE workforce will be on strike. That's a management failure no matter how you look at it.
9-28-2008 @ 1:18AM
cutmasterchris said...
Corporate greed!!!under the table cash thats what this is all about!!!The iam can do the work cheaper and faster they have shown it in the past,but how do you get untaxable under the table money to the ceo.
9-29-2008 @ 2:16AM
Don Shuper said...
Perhaps - someday - pundits and employees may recognize that Aerospace employees, be they Engineers, IAM, Supervisors, or lower level managers are and have been for decades no more than " high tech " migrant labor, with onlly slightly better job security .
Outsiders gripe about the high average pay, with the average being deceptive. But consider that the industry has been since WW2 a boom and bust cycle between military and commercial and quasi government such as NASA. What it means is that with few exceptions, anyone who has over 15 years in the industry has survived at least three such cycles. In Southern Calif for example in the 50's and thru the 70's, it was hard to find anyone who had not worked for at least two or more aerospace related firms or major suppliers. Please keep that in mind when making comparisons to government jobs, and civilian type manufacturing or service jobs.
In washington state for example, teachers may appear to make less than equally educated aerospace types. But when comparing work hours and vacation time , plus a very generous pension, and about 3 MONTHS off per year compared to 4 weeks after 20 years, the numbers look VERY different.
Don
10-02-2008 @ 5:11PM
Lynn said...
Don:
I agree that IAM is not getting a fair deal! I'm also very disappointed that Boeing is not making a new offer now--it would be in their best interest, as well as IAM's. Benefits are a huge issue for all workers and takeaways are often hidden from view of the news and the public.
I do want to say though, that the comparison to teachers is an unfair one. Teachers work HOURS after the school day (some up to the very late hours and weekend) preparing lesson plans, grading papers, dealing with parents, attending student events in the evening and on weekends, etc. These hours are not compensated but are necessary to provide a good education to your children and to show that YOUR child is important. And three months off -- what a laugh! This time is spent preparing for the next school year, maintaining educational requirements to be a teacher (going to school), and often times working to try to supplement a low salary.
This information is provided just to show how not knowing all the facts (hidden information from the public and media) can be harmful to those workers of IAM and to those mentioned as a comparison.
10-06-2008 @ 11:04AM
Bill said...
As a former teacher, mechanic and SPEEA tech, I can lend support to what Lynn said about teachers. The time put in after class is often at least half or more of the time put in teaching in class. I can also attest to the fact that those averages on wages are mostly ridiculous. There are some who make very high wages and many who make much lower and probably not many in that average wage category.
It would sure be nice if you could get those who have already retired an increase in benefits.