Bluffers beware

This first appeared as a Comment in the 19 November issue of Flight International

Ask any poker player: calling someone on a bluff is always a risky bet.
Boeing’s machinists in Seattle have now made themselves clear. The vast majority of them are willing to risk losing the 777X assembly line, tens of thousands of jobs and possibly aircraft manufacturing in the Seattle area altogether, rather than cede key benefits. 
No doubt many union members who voted to reject the proposed contract on 13 November believe Boeing is bluffing about threats to seriously consider alternatives to Everett, Washington, for assembling the 777X.
But the 30,000 members of the International Association of Machinists and Aerospace Workers (IAM) District 751 must know that they are taking a huge risk.
Boeing now has to decide whether the cost savings of a new labour deal are worth the complexity and cost of transferring 777X final assembly away from Seattle.
The company has also made itself very clear. Boeing believes it faces an existential threat unless it reduces its cost structure. The squeeze began more than a year ago with suppliers and even came with a catchy slogan: “Partnering for Success”.
The pending launch of the 777X programme provided Boeing with an opportunity to extend the cost-saving push to its own workforce. It has been building for several months, with the airframer transferring hundreds of engineering jobs for the 737 Max and 777X from the Seattle area to its network of design centres and defence sites.
The IAM contract is just the latest move. Its primary goal is to finally abolish company-funded pensions.
The vote revealed that 67% of the IAM’s members oppose the plan. If Boeing was bluffing, it severely miscalculated how the offer would be received. And if it is serious, the company prioritises ridding its balance sheet of future pension obligations at whatever cost to the timing and risk of the 777X programme.
Of course, it is possible that both sides are still willing to compromise. But whatever happens next, the damage is already done. An IAM strike now seems almost certain when the current contract expires in 2016. And Boeing may have had its fill of toxic industrial relations in Seattle.
A poker game is not the same as real life. A suspected bluffer at a poker table either has the cards or he doesn’t. In a real negotiation, even a stance that starts out as a bluff can transform into an actual intention. No matter who is bluffing in this round, Boeing’s machinists in the Seattle area are holding the weaker hand.

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