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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

September 6, 2012 at 10:28 AM

Boeing and the race to the bottom

As a manager, I supervised union employees for years. It’s easy, especially with professionals. Unless, of course, you are determined to continue redistributing income from the middle class to the very rich while rubbing the union’s face in it. And that appears to be Boeing’s strategy in dealing with the Society of Engineering Employees in Aerospace (SPEEA). The savage spirit of Jack Welch is alive and well in Chicago.

There are two sides in any negotiation and it’s impossible to know all the details and nuances unless you’re sitting at the table. Still, based on the reporting of the Seattle Times’ Dominic Gates, it seems Boeing wants to pick a fight with its engineers. Put them in their place. This is odd coming from a company that croaks so much about the value of “labor peace.” Such peace requires two sides working together.

Boeing is offering only a 3 percent raise, down from the 5 percent won in 2008. Also, “a key Boeing proposal would switch new hires from the pension plan that current employees have to a 401(k)-type plan that SPEEA says will deliver up to 40 percent less upon retirement than the current Boeing pension.” This from a company that posted $4 billion in profits and has a vast backlog of orders.

Boeing says it wants to prepare for future competition by reining in compensation. That would have more credibility if it started at the top. CEO James McNerney was given total compensation of $22.9 million in 2011. It’s also bad strategy. The engineers and Boeing’s historic — but neglected after the McDonnell takeover — engineering culture represent a massive competitive advantage. Smart management would want to invest in this culture, especially the people, rather that low-balling them. “No nerds, no birds,” indeed.

The American middle-class has been hollowed out by this kind of action across corporate America. It’s a looter/taker mentality, with outrageous CEO pay, bad mergers, industry consolidation and a Wal-Mart attitude toward workers much at odds with the capitalism that made America great and exceptional.

In Boeing’s case, here is a company that has received billions in incentives from the state of Washington, fawning special treatment and has the U.S. government as its No. 1 sales rep. Surely a company like this (“we built it”) would seek to act in the national interest. And yet it wants to throw some of its most valuable employees (who do not inhabit the executive suites) into the circling drain of downward mobility. Maybe just a little dip of the toes for starters. But after 30 years of this across the economy, we know where it leads.

And Don’t Miss: The next major real-estate cycle: Walkable urbanism? || Atlantic Cities

Today’s Econ Haiku:

Bond buying, bulls run

If only the ECB

Had acted sooner

Comments | More in Aerospace/Boeing, Labor unions, Pacific Northwest economy


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