Boeing machinists strike: cons, and pros?

Posted by Courtney E. Howard

"No one benefits from a strike," Scott Carson, president and CEO of Boeing Commercial Airplanes, states in a message to Boeing employees in Washington, Oregon, and Kansas.

That seems to be the case, at first blush, but I wonder in this particular instance, if that is, in fact, completely accurate. I am fortunate for never knowing what it is to strike, but I have to wonder: what is the downside for these machinists striking? Conversely, what are the ramifications to mil-aero industry? Forgive my naivete, but those striking are reportedly gaining roughly $150 a week while on strike; and, they have already received (and rejected) an offer that includes pay increases, bonuses, and other incentives.

If we can believe what we read, the current labor stand-off can be summed up as follows:

Boeing's latest contract offer proposed an 11-percent wage increase over the three-year life of the contract, a one-time lump sum and ratification bonus, and other incentives that Boeing representatives revealed would add roughly $34,000 to the pay of the average machinist, who currently makes an estimated $65,000 a year, including overtime.

The International Association of Machinists (IAM) union seeks a 13-percent wage increase, no change to health care contributions, and the rollback of provisions allowing Boeing to outsource work.

What is the cost to everyone else? According to best estimates, the repercussions include $2.8 billion in lost revenue per month for Boeing, further delay of the Dreamliner 787, and suppliers potentially going out of business.

Carson's statement reads:

"The decision by the International Association of Machinists and Aerospace Workers to reject our contract offer is deeply disappointing, to say the least. The union has turned down what is, by any measure, a truly exceptional offer -- bar none. Our company went to extraordinary lengths to conduct these negotiations in an atmosphere of openness and transparency that allowed more time to understand the key issues and create a package that is unquestionably the best in our industry.

"An 11 percent general wage increase -- combined with a lump-sum payment, a ratification bonus, cost-of-living adjustments, improved pension and health care coverage and other benefit enhancements -- all added up to an outstanding package that balanced the needs of the employees with ensuring the long-term competitiveness of the company. In addition, our negotiators removed several company proposals that the union saw as issues in order to keep the negotiations moving forward and to make progress toward a solution.

"As disappointing as the IAM decision is to us, the impact is considerably wider. Our customers are obviously going to be affected. They are counting on us, and any delay of our new, efficient airplanes is going to hurt an already strapped air transport industry burdened with high fuel costs. Our suppliers, too, will feel the impact quickly. And there's no question about the negative economic effect on our local communities. As we've said before, no one benefits from a strike.?

In a recent article (http://www.businessweek.com/ap/financialnews/D933D49O1.htm), however, Daniel Lovering offers a potential "silver lining." "Suppliers will have time to untangle problems that have delayed the company's long-awaited 787 jetliner," as a result of the machinists strike, writes Lovering.

We in the press can speculate all we like, but we want to hear from you: the sub-contractors, suppliers, and customers.

How are you being affected by the strike? Do you anticipate problems down the road as a result of the ensuing Boeing strike and labor negotiations?

If you are struggling with a challenge, consider "bouncing" issues off (or simply venting to or commiserating with) industry peers in the Command Post online community at http://community.milaero.com/.