Friday, September 5, 2008

Boeing

The union just announced that their members are on strike. I figured this was going to happen as I'm sure there was no way Boeing was going to even start to meet its obligations for the 787 dreamliner. They've had many delays because of delays in their supply chain. This gives the company an out on their deliveries of the new aircraft. The company has orders for over 900 787s which would be a couple of years work. The biggest sticking point is the outsourcing of jobs by the machinists. The monetary offer was 11% pay raise over three years. For a journeyman that's a nice chunk of change but then you have to remember that the workers give up a great deal in terms of working overtime being away from families.
So this will do just wonders for the economy up here. Housing has been down for several months. Banking has taken a hit. A lot of the construction jobs have been put on hold and now this. I only wish I knew what was in the contract for orders but this time around it's known that the company will loose $120 million per day. Last strike was a while back that lasted 29 days but that was when the orders were 500 to 600 aircraft. Then there was the 84,000 jobs lost nation wide just last month.
Wonderful economy eh George. Dumb monkey.

13 comments:

Gary ("Old Dude") said...

So the union turned down an 11percent increase in pay, and walked out. The company will lose 120 MILLION dollars a day----no doubt orders will be cancelled and ultimately go to the competition---less orders translates into less need for workers,----no orders, no business, no need for workers at all-----whats wrong with this thinking?

Dawn on MDI said...

I remember when the local paper maker's union went on strike while I was in college. Over a thousand families lost incomes when BE&K brought in scabs to rill their places. Thanks Ronald Reagan. Unions have never fully recovered from his 8 years in office. Out of curiosity, how long has it been since the machinists last got a raise? What has happened to their health insurance benefits in the past contract cycles? What about their pension plan and retirement health insurance? People are angry enough now that they are demanding much more after years of going without. I'd be interested to know more before I pass judgment.

Sue said...

I'm not sure how long you've lived "near Seattle" but growing up there in the 50's and 60's I do remember the billboard that once said, "Will the last person to leave Seattle please turn off the lights?" or close to that. That is when I was made aware of just how much power Boeing has on the economy in the beautiful Pacific NW.

Demeur said...

Gary
No it doesn't work that way. When they get the order the buyer must put down 1/3. In the contract there's a provision to delay delivery in the event of a work stoppage. So no they'll actually need more workers as the orders get backlogged.
Dawn
They can't use scabs to build planes. The plant shuts down with only a maintenance crew and managment inside twiddling their thumbs. I worked up there as a subcontractor during one of the strikes.
Sue
The economy up here has expanded since then but with a down housing market and retail sales down it's getting mighty quiet around here. The only good thing is traffic has gotten much better.

MRMacrum said...

Boeing's woes are in my opinion a wonderful, or in this case a sad microcosmic look at the problems of American manufacturing in general. And please correct me if I am wrong here.

Management's cockiness over the Transport plane and unwillingness to be competitive created much of the problems the company is facing today. But can you blame them? It was a long standing tradition that major military contracts stayed in this country. But not anymore. Not only is American business moving offshore, but the US government is moving it's business there also. The global economy has come home to roost in all facets of our business culture. Even the sacred areas of Defense contracting.

Do not get me wrong. I feel Boeing should have been more on the ball. They saw this coming or should have. The current problems with the 787 just show how there is an obvious disconnect at the top from their fantasy and the real world.

Problems in the supply chain often are results of the manufacturing sub contracting base having closed or moved off shore. Add in the reliance on cheaper raw and processed materials from overseas, and it's no wonder Boeing is floundering.

The loss of that Military Transport affected my area hard here in Maine. We have a Pratt Whitney plant that is a major employer in the area. When Boeing lost the transport, Pratt lost the engine contract. While the new fighter engine is still on tap, Pratt did not follow through with new hires as they had intended. For an area that struggles all the time like I live in, this did not help.

I have no sympathy for Boeing or any other of the multi-headed goliaths that embraced NAFTA, shut down domestic manufacturing bases and moved them for the short term goal of higher profit. But I do have empathy for the worker. It is so easy to blame the workers, unions , the little guy. But their pressure for a larger piece of the pie is only part of the equation and it is now proving that they are indeed not even the main reason now. We have armed our foreign competition with all the tools to defeat us in the market place. We gave away our processes and technology in the short sighted pursuit of profits now. There is no worse example of how to run a business than the mentality that has run American business in the last 40 years.

Demeur said...

Mac
It's a little more complicated than that. The first contract for the transports was a lease deal. Boeing had a mole in the defense department. After the deal was set she gets caught fired and then a cushy job with Boeing. The deal got cancelled because people realized that it would be far cheaper to buy the aricraft.
As for Boeing being on the ball I think they knew what they were doing. Remember they have to compete with Airbus a subsidized company. As for the parts problem you have to remember that there's 2 million parts that go into an aircraft. It's not like you can snap your finger and have suppliers retool. The other issue here is the I'll scratch your back if you scratch mine. Other countries want a piece of the pie so that they can afford to buy our products and you know planes aren't cheap.
The funny thing is or was that some countries have had so much work that they sent it back here to the U.S. That's what India did not too long ago.
But yes I agree with you about the defense contracts. We should only make that here. You may know who your friends are one day and have to fight wars with them the next. And knowing how these government whores work they'll sell arms to both sides.

dana wyzard said...

In world war two, the USA found a cheaper way to make rifles for our "boys" and outfitted them immediately. When the "boys" discovered that they heated and locked up, becoming useless, they had to use them as clubs. USA decided that it would be too expensive to remake them properly.

It's always the same. Just a different generation.

Demeur said...

Yea Dana you'd think we'd learn something from the past but noooo. Just keep repeating the same mistakes over and over. This time around it was armor and flack jackets. Like Billy (bbc) would say "these monkey's just don't learn."

1138 said...

Gary doesn't even know where the planes or the parts are built ot that the failure of delivery is coming from plants outside Boeing.
He should also examine the very poor performance of that competition that he thinks the 1st class workers at Boeing should fear.

Nope, the place to bargain from is a position of strength and that's what labor is doing with management.

It is a bit more complex Mac if you've watched Boeing absorb (bail out) the other domestic manufacturers over the years.
The megacorp syndrome is in large part driven by other nations not having our antitrust laws, and us having lowered our standards rather than requiring them to raise thiers. Now we are probably too weak to even try.

BBC said...

I wouldn't blame it all on George. Even though I believe in Unions I still think that they often get too greedy, always wanting more and never being happy with what they have.

Give them more and the price of everything goes up to pay for it, it's just a vicious circle.

And keeps going on until it topples and we have to start over again. Fuck it, I'm going camping, you work it out and fix it.

BBC said...

Actually, I don't give a fat fuck if another airplane ever gets built anywhere on this planet.

Even some of the pioneers of that industry came to see what a monster they had created and understood that it would help destroy mankind and the planet.

MRMacrum said...

Demeur - I understand you cannot solve the problem immediately. My point was Boeing and the rest of American business allowed and even encouraged the parts and materials suppliers to move their operations offshore. Many of the "subcontractors" are nothing but smaller cogs in the huge multi-nationals anyway. Any sympathy I have for their Parts stream problem is nil. They created their own problem and using the workers striking as a handy excuse.

1138 said...

Demeur, mac,
You guys are talking refueling, not transport correct?
The deal got canceled not because of price, the lease deal wasn't about price, it was about delivery.
The deal got canceled so that McCain could try and give the contract to lobbyist friends at Northrop, Airbus at the expense of long term security.