It’s one small step for a space program that has taken so many giant leaps backward. By awarding Boeing a $4.2 billion contract and SpaceX a $2.6 billion deal, the United States government will at least get domestic “taxis” to ferry American astronauts to the International Space Station. Since the space shuttles were grounded in…More
Unless, like me, you like to watch trains move through Seattle, the dramatic photos of 737 fuselages spilled into a Montana river may have been the first time you realized that railroads are an essential part of building airplanes in the Puget Sound. The bodies are made by Spirit AeroSystems in Wichita, a former Boeing division…More
I gave the opening speech this morning at the Association of Labor Relations Agencies meeting at the Seattle Hilton. Among the things I said was that it was unclear whether the new International Association of Machinists contract with Boeing was a pathbreaking way for a union to be relevant in the 21st century, or, as…More
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?More
As it became apparent that rules would be relaxed for cellphone use on airliners, some wag tweeted that passengers will ask to be re-seated next to a screaming baby. Now it looks as if you won’t have to make that choice — but only for now.
One of the most interesting things I learned in Dominic Gates’ story today in the Seattle Times is that the most number of jobs Boeing is promising prospective 777X sites is about 8,500 direct jobs.
Also, the factories for the new airliner and its advanced wing will require an investment of $10 billion (assuming, I assume, they don’t use Everett, where many facilities and much infrastructure already exists). And from the states that want this prize, Boeing wants…a lot to lower its costs.
Machinists here refused the company’s hurry-up-and-say-yes proposal. Yet Washington has approved $8.7 billion in tax breaks. Would Boeing come back with another offer for the union, or is it done — even though the Puget Sound region offers the best place to build the plane?
My question for you: Based on the information we have now…
Read on for some of the best business stories of the week and the Econ Haiku.More
Why did they do it? Many in the Puget Sound are still asking this question after the Machinists decisively rejected Boeing’s offer to build the 777X here. I’ve written about the miscalculations and misunderstandings on both sides.
But I received an email from source containing a letter that a union member sent to Boeing Commercial Airplanes chief Ray Conner in response to his open letter, which ran in newspapers, urging acceptance of the deal.
You can disagree or not, but here it is:
Dear Mr. Conner,
I am Boeing employee working under the current IAM 751 contract. I am also a third generation Boeing Employee. Growing up my (now 86 year old) grandma had a saying that has stuck with me until now. She always said, “Boeing has been good to this family.” A statement I have always believed to be true until this last contract proposal.
After World War 2, my grandfather retired from duty in the Air Force and began his career at the Boeing Company. In the 1970’s two of his sons hired on in Tooling, joining their father at Boeing until his retirement. Both sons continued on to have long careers with the company. The oldest retired a few years back and the youngest, my father, is still an active employee with 35 years at Boeing. Currently, all three of his daughters are financially supported by Boeing incomes. Along with me, my two brothers-in-law are also employed at Boeing. Two of us are IAM members and the third is an Engineer who is in fear that his job may be eliminated or moved out of state. One of my brothers-in -law has a father who is also a 30+ year IAM member. Apart from my immediate family we also have many extended family members who are current, long time Boeing employees.
A cynic might say that Boeing has the International Association of Machinists right where it wants them. The company came to Washington first to build the new 777X. Workers voted down the requested contract extension. So if the new airplane is built elsewhere, it is the union’s fault.
But last night’s vote and the circumstances surrounding it are filled with shades of gray.
Boeing is operating as a multinational company in a “shareholder value” environment created since the 1980s and in a competitive world. Thus, record profits and high executive compensation are not at odds with trying to drive down costs, including — especially — for labor. They go hand-in-hand. While Boeing benefits from government subsidies and other “rents,” it worries about rivals that will emerge from China and Brazil in future years.
Executives are not unmindful of the value of the Puget Sound aerospace cluster and the high-skilled workers that saved it from the outsourced disasters of the Dreamliner. That’s why the company would rather built the 777X here, but not at any price.
They also operate in a quick-step world. Everybody knew a decision on where to make the new airplane was coming. State officials and union leaders seemed to understand the need for a speedy process.More
There’s only one big question in the Puget Sound region today: Will the Machinists accept Boeing’s hard-ball offer to build the 777X and its composite wing here? I’ll be writing about this more on Sunday. At the moment, the deal is far from a sure thing.
At the end of a Thursday meeting with members, District 751 President Tom Wroblewski tore up a copy of Boeing’s contract, calling it “a piece of crap.”
It’s easy to sympathize with union members who are angry with being asked to give back gains it took years of collective bargaining to achieve. Boeing is booking record profits and not asking top executives to hold back on taking high compensation. There may be a division between older workers that can ride out the backlog of orders here and retire fine, and younger ones that hope to have a place to work for the next 25 years.
To restate the obvious, Boeing does not have its old loyalty to the region. It has other places to build the airplane, however much that may cost, however destructive it might seem to throw over Washington’s high skills and experience. Non-union South Carolina would do anything to land this project and future ones. And a “no” vote could begin a slow death spiral for the company’s employment here.
What do you think will happen?
Read on for the best economy and business stories of the week…and the haiku.More
Factory orders rose 1.7 percent in September powered by demand for commercial aircraft (n.b.). Their value, $490.8 billion, now stands at a record, surpassing the previous top reached before the recession.
What missing are the jobs, which historically have paid much better than most service positions. Factory jobs were little changed in the September employment report. As the chart below shows, manufacturing employment entered a deep slump after 2000 (when China entered the World Trade Organization) that was only worsened by the Great Recession.
On average, 17 manufacturing operations closed every day between 2000 and 2011, according to the Information Technology and Innovation Foundation. Employment has not made a meaningful rebound.
This data seems at odds with the many stories we read over the past year about manufacturing coming back to the United States.More