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Jon Talton

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

January 3, 2014 at 10:27 AM

Vote: The future of the 777X and Puget Sound

Machinists wait in line Friday morning at the Everett union hall to vote on the Boeing contract proposal. (Mike Siegel / The Seattle Times)

Machinists wait in line Friday morning at the Everett union hall to vote on the Boeing contract proposal. (Mike Siegel / The Seattle Times)

Members of the International Association of Machinists are getting a second shot today at approving Boeing’s offer to build the 777X here. In the previous vote, they rejected it by a 2-to-1 margin. What happens if the deal is voted down again?

Boeing wants to build the airplane here. IAM members are split and disinformation is rampant (e.g., Fact: if the deal is approved, it won’t affect the pensions already accrued).

The Teal Group’s always entertaining Richard Aboulafia channeled his inner Dr. McCoy from Star Trek (“Dammit, Jim, I’m a doctor, not a bricklayer”) to explain the situation. “Dammit, I’m an industry analyst, not a psychologist. That’s really what it comes down to. From an industry and economics standpoint, the line will stay in Puget Sound. But then there’s the mysteries of the human psyche.”

The Puget Sound beats all competitors in terms of geography, infrastructure, experience, state government support and customer concerns about avoiding another 787 debacle. Extending the contract would also avoid future labor trouble. He continues:

Back to Psych-landia. Boeing’s line decision isn’t driven by any of the factors described above. Instead, management would really like to be out of what it sees as a toxic relationship. And Boeing management isn’t totally wrong. To put it another way, the union isn’t blameless… Nevertheless, Boeing management needs a reality check. Final assembly labor costs are a small fraction of the total cost of building a jet. Giving workers some of what they want would have a negligible impact on competitiveness, particularly since it would reduce costs and mitigate risks associated with moving the line. If management won’t compromise, that has less to do with economics and more to do with personal distaste.

Your task, in today’s poll, is to speculate on what happens if the machinists turn down Boeing a second time. “Dammit, Talton, I’m a reader, not a psychologist.”

This Week’s Links:

How Big Data could help the 1 percent and hurt the little guy | Salon

Why SAC’s Steven Cohen isn’t in jail | BusinessWeek

Disinformation on inequality | Paul Krugman

Should taxpayers subsidize insuring homeowners against climate change-induced flood damage? | Naked Capitalism

The rich country trap | Simon Johnson

Why aren’t Americans clamoring for policies that would help the 90 percent? | Brad DeLong/Project Syndicate

Countries where people give, or don’t | Tim Taylor

Today’s Econ Haiku:

The big election

It’s not mayor or SeaTac

Hint: They build planes, too

0 Comments | More in Aerospace/Boeing | Topics: 777X

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