EVERETT -- Jetliner production is set to halt at 12:01 AM in Puget Sound, costing The Boeing Company as much as $100 million per day and further stymieing its struggling 787 Dreamliner program with the walkout of 27,000 machinists.Negotiations between Boeing and the International Association of Machinists and Aerospace Workers Union (IAM) collapsed after a 48-hour contract extension yielded no new breakthrough.
Boeing says that for the, "787 in particular, a protracted strike could risk the ability to fly in the fourth quarter," adding "mitigation plans are in place to minimize impact of work stoppage."
The 787 programme is already fifteen months behind schedule.
All aircraft completed prior to the strike will be delivered on schedule, and Boeing pledges continuing support for all aircraft in service.
Boeing has estimated that it will deliver between 475 and 480 aircraft in 2008, a number that is likely to be impacted with the strike.
For the Next Generation 737, Boeing's highest production rate aircraft, each day that the strike rolls on means one less 737 delivered to airlines, many in desperate need of fuel efficient aircraft to replace aging fleets.
In the first half of 2008 Boeing delivered 187 737s.
For the widebody twin-engine 777 programme, every five days means one less aircraft delivered. During the first half of 2008 Boeing averaged a production rate of just under seven per month to deliver 39 777s to its customers.
Currently, Boeing has eleven 777 aircraft at various states of completion on the flight line at its Everett, Washington facility, including four for Emirates, two for Brazil's TAM, and one each for Cathay Pacific, Air Canada, Qatar Airways, Asiana Airlines and fledgling trans-pacific Australian carrier V Australia, which is set to begin service from Sydney to Los Angeles on 15 December.
In addition, the 777 freighter program is undergoing a certification campaign with two aircraft based at Boeing Field in Seattle. The first 777F is set to be delivered later this year.
For Boeing's lowest rate production aircraft, the widebody 767 and 747 lines, the first half of 2008 saw an output of roughly one per month, delivering six and nine aircraft respectively.
An IAM strike also halts production for the 747-8F, which is scheduled for roll-out in February of next year.
On 3 September, 87% of the IAM membership--Boeing's largest union--voted to strike, with 80% rejecting the company's best and final offer. Later that evening, Boeing and the IAM leadership agreed to a 48-hour extension in the contract to negotiate with the assistance of a federally appointed mediator.
"Despite meeting late into the night and throughout the day, continued contract talks with the Boeing Company did not address our issues," said Tom Wroblewski, IAM district president, in an open letter to the union membership.
Boeing also expressed its disappointment in the outcome of the negotiations.
"Over the past two days, Boeing, the union and the federal mediator worked hard in pursuing good-faith explorations of options that could lead to an agreement. Unfortunately the differences were too great to close," said Scott Carson, president and CEO of Boeing Commercial Airplanes who was present at the negotiations.
This will be the first time the IAM has voted in favor of a strike in back-to-back contract negotiations. The union's 2005 strike lasted for 28 days.
As IAM prepares to strike, both sides indicated it was the responsibility of the other to step up and return to the negotiating table.
"We are interested in speaking to the IAM," said a Boeing spokesman. "And when we hear from [the IAM] we'll be able to [continue negotiations]."
"If this Company wants to talk," said Wroblewski. "They have my number, they can reach me on the picket line.
Photo Credit: FlightBlogger
on September 5, 2008 7:29 PM | Reply
Good. Flying off to Disney World (if this was true) would have been an attempt to lure the union leaders away from their reality toward that highfalutin world that managers live in. So, the IAM leaders were not seduced. Were the families included?
And, by the way, if Boeing management could do that now, why not do it on a regular basis? Fly some IAM, and even SPEEA, families off to have fun.
Despite the mocking words out of Texas (sheesh, they gave us Enron - are they still proud of that?), Boeing cannot just pick up and leave. How long would it take?
Well, that same 'leavin' argument was used in Wichita. So, who is entrenched there now (hint: ultra-rich Turner and his slaves - ol' Jeff will face the IAM's wrath in 2010 - can't wait!)?
on September 5, 2008 7:45 PM | Reply
Brilliant, congrats IAM for shooting yourself in the foot. A strike only gives Airbus more time to develop the a350 eating into 787 sales. It pushes back the 737 replacement (and sales before it flies due to customers who don't want to be burned twice). What do you hope to get, another percent or two raise? Is that worth a week, or months without pay? Doesn't this just give Boeing another reason to move the 737 replacement outside the Puget Sound where people will do the same work for half the wage? If you dislike your working conditions so much, why not do what any non-union employee would do and leave?
on September 5, 2008 10:31 PM | Reply
Re: Old Guy
"Flying off to Disney World would have been an attempt to lure the union leaders away from their reality toward that highfalutin world that managers live in."
Your spin is so far off base it's laughable! Your point aims to paint Boeing management as out of touch and deceitful, however you miss two very important details: "Disney World" is the site of the IAM's Grand Lodge convention this Sunday, and the IAM international president was already there and would be able to join in the negotiations. If anything, it gives the IAM another advantage by having another prominent union figure to lay the pressure on Boeing!
And instead of Boeing paying to ship entire families off on vacation, why can't the union members take the higher pay that they've been offered and spend that money however they would like. Boeing is an aircraft manufacturer, not a travel agency.
The entire state of Texas is not responsible for Enron, a handful of greedy self-serving, powerful criminals were. It was an entirely unrelated situation, and certainly doesn't discredit a Boeing employee from commenting on something very close to him.
I think you are correct that Boeing cannot just pack up and leave, but it can certainly start looking around for places to produce future products if need be. There are plenty of people in plenty of places in this country, and out of it, that will happily work for fair pay and benefits without creating a war every time a contract expires.
"Ol' Jeff will face the IAM's wrath in 2010 - can't wait!"
This does not strike me as a good strategy for entering negotiations with a company you fear will be moving your job elsewhere. Unfortunately, there are a larger number of hard-working people whose jobs could be lost due to a smaller, but more vocal, number's arrogance, contempt and unwillingness to negotiate on a reasonable level.
-Rick
on September 5, 2008 11:07 PM | Reply
Correct me if I am wrong, but didn't they go to Disney because the IAM international president was there for a conference on Sunday?
on September 6, 2008 1:59 AM | Reply
Yes, the IAM rep was already at Disneyworld for a conference, this has been reported previously by several sources. OldGuy needs to check the situation before firing off like that.
on September 6, 2008 9:27 AM | Reply
In Response to "TEXANS"
Boeing employees sure do place alot of faith in just a hand full of people to guard their path for financial security. What ever happened to self responsibility? Boeing needs to look to future financial soverenty.
With all the problems and delays on the 787 and with the 747-8 coming online i can only imagine the huge cash flow.....out of the company. It would be smart of the union to extend the contract until the 787 is in full production and the 747-8 is flying. Then go back and sit down at the table.
If I were Boeing Management I would be putting out a HELP WANTED sign at the gate. I would replace each and every worker who walked off the job.
Ronald Regan broke up one "Good Ol'" boy club!
As for moving all FA&D to Texas don't you think that Boeing Executives have a plan to move it.
Look at the 777 line and the 787 is there really anything that couldn't be moved quickly? I also want you to take a look at the Boeing facility in San Antonio, TX. There is enough space there under roof to take care of the 787, 747 and yes the 737. And just for a kicker we will throw in our cheaper gas and sunny days for free!
Texas also has a great road system. The I-5 inter-shame system and the fact that the GOOD OL' Boy union was alive and corrupt was what made this 20 year Boeing vetran leave Seattle.
I hold value on self responsibility and my own self value. I got a $15K pay raise to leave Union Washington and yes I still work for Boeing!
In fact I will be going to work on Monday! (PAY CHECK) I go to work because I said yes to the job for the pay they offered. If I didn't like their offer I would just move on the next offer.
If you don't like how much you make, QUIT!
I bet there will be a bunch of home, car and boat forclosures in the next 90 days in Washington.
THANK YOU BOEING for giving me such a wonderful career!
This message brought to you by:
THE RIGHT TO WORK STATE OF TEXAS FOR A NEW BOEING BEGINING.
on September 6, 2008 12:57 PM | Reply
The OldGuy did not 'fire' off. His CYAs could be the parenthetical usage ('if this was true') plus the phrasing; so now that we know the facts of the jaunting off to Florida and, more importantly, of the use of this delaying tactic by Boeing, we can ask: were the consequences of the vote changed?
Was this delay anything other than a slap in the face of Boeing's work force? Did Boeing expect that they could prevail upon the union leaders to offset what a vast majority of the members voted for?
OldGuy would ask, does Boeing not know that what a union brings to the business environment is an attempt at democracy (albeit, probably less than optimal) and empowerment?
Unfortunately, leaders in both the Company and the IAM are subject to the Peter Principle.
One of the consequences of the strike is that we will get another postponement of the real test of the 787. It has to take to the sky so that a whole bunch of questions can be answered (potemkin-ness aside).
But, that test is only of the physical part. The other topics related the business side, how people are treated and how ought we allow resource exploitation (including misuse of cheaper labor elsewhere), are still very much open.
on September 6, 2008 1:09 PM | Reply
Comments like that certainly don't help people looking at the IAM as a bunch of sheep being led by the nose by union leadership. Maybe they should have had one more voting card that said "Have you read on your own and fully understand the contract as offered?" Of course with union leaders staring down their rank and file as they placed their votes into garbage cans (how fitting), I am sure we couldn't have counted on an honest answer to even that question.
Its a shame its come to this, and I DO blame both sides for this problem now. But if I hear one more machinist say its all about outsourcing because thats whats caused the 787 to fail so far I may just lose it. As an employee of one of those "spawn of satan" suppliers for this program, maybe more time should be focused on complaining about a Boeing management and design team that can't make up its mind about anything on this program to date and spends most of its time forcing changes down to its suppliers, rather then the fellow hourly and salary employees of those companies being incompetent, unskilled workers as compared to the pedestal Everett workers seemed to have put themselves on.
Sorry to rant, but I feel better now!
on September 6, 2008 1:10 PM | Reply
II am so pleased to see that the IAM has called a strike!
If it was me I would extend the current contract until the 787 is being delivered to worldwide customers and the 747-8 is flying but I guess common sense isn’t required to work in Seattle, WA.
It looks like Washington State wants to jump to the top of the foreclosure ladder.
I want the Boeing Executives to take note of the non-union environment we have here in Texas. It won't take long at $100 million dollars a day to pay for a move to Texas. We have plenty of wide open space in which to grow your next century of aerospace.
We are proud of our industry friendly environment. Texas has a highly skilled aerospace worker base. With our lower tax rates and no personal state income tax demonstrates we are ready for the challenge to build high quality aircraft for the world leader in aerospace.
This message brought to you by:
Texans for Aerospace and a new Boeing beginning…
on September 6, 2008 2:15 PM | Reply
To 787Supplier.
The Boeing people may appear to be on a 'pedestal' somewhat; but, to date, Seattle has been successful in keeping Boeing going. So, there is a legacy that cannot be diminished; yet, we need to face the future, as Texas keeps telling us.
Okay. One problem is that Boeing has learned, internally, how to go to the wire with mods (design tweaks). You can thank people like myself (and several armies of others) who brought that about through PLM and CAx. Yes, starting with the 777 (and all programs up to the 787) were driven by expertise and advanced systems. The results were phenomenal and almost magical. On later programs, management came to expect miracles (which come via good people, not just processes); and, we delivered, albeit with blood, sweat, and tears (by the IAM people give more than any of the managers; this tale will be told - including how spawning off Wichita was stupid for all except Turner - ultra-rich guy).
What then happened? Well, Boeing didn't think that it had the resources or knowledge to tackle the new plane. So they spread both financial and engineering risks. And, they went with an immature PLM/CAx system. These risks are still playing out; get the damned thing in the air ought to be the refrain; but, this latest little wart will hopefully allow one more pass through the schedule toward something workable; technical assessment will be the final authority on whether this was a good or bad idea (actually, a whole bunch of changes along many axes - oh, magic, work your stuff).
But, as you note, the commitment strategy was kept to that of the late-binding (apologies to the CS types) mode to which they became accustomed due to their own internal expertise (who, in many cases, were not appreciated - but, managers have gotten to this type of thinking for many reasons).
A review of all this stuff was sent to Boeing management in 2004 (with even the phrasing alluding to the 'perfect storm' [popular show at the time]), but Boeing proceeded along with the plan. As we know, it's been a learning process all around.
About the supply-ee beating upon the supplier, well, that was the name of the game in the Toyota model. The top guy can plan based upon some abstract set of notions that puts a golden-glow around risk management; you see, all those under have to take up the slack that results from the need to fill in where the 'ideal' view of the top-down was off. So, suppliers, get used to it.
The top guy wants everyone under him to be nimble, even though he may have his big foot in their way.
Oh by the way, the US economy has been kept afloat by external money and by access to cheap labor. At some point, those whose hands have been burned (for instance, China took at least a 2B hit with one deal) and whose feet have danced trickily for us will attempt to turn the table (not unlike Texas trying to pilferage Washington's aura).
on September 6, 2008 5:40 PM | Reply
Unions are ridiculous! All they do is promote "work less for the same benefits". No union member has ever had to make payroll, make the tough decisions to keep a business running, etc... Unions are un-American. IMO.
on September 6, 2008 8:36 PM | Reply
I am a new hire. It is a good contract for most of the positions. The union is hyping up the situations where emotional employees get frustrated with Boeing. It seems like non-Boeing people disagree with the strike and the immaturity of the cause for a strike. While the Boeing machinists do not realize they cannot get a job elsewhere compared to what Boeing offers. If these same Boeing employees are not employed at boeing, they would accept a job offer from Boeing with less than what is offered from the final contract. If you do not like what Boeing is doing, quit and find another high paying job with better benefits. good luck looking!
on September 7, 2008 1:02 AM | Reply
"Misuse of cheaper labor elsewhere"?
The first and foremost responsibility of Boeing's management is to ensure the sustained profitability of the company. Boeing is a business, not a charity or welfare organization. Double-digit-percent pay increases multiplied by 28,000 have a significant impact on the cost of producing their product, which will either mean lower profitability on the product itself or higher sale price, making the product less competitive. If they, as a company, can find a place to build either the components of their aircraft or the aircraft itself somewhere other than where it currently is, for a substantially lower cost and at the same quality level, then they have every right and every reason to do so.
Does it suck to lose your job to someone who will do it cheaper? Hell yes! But that's the reality of things, and I don't think that walking off the job because you're worried about outsourcing will help your cause.
TEXANS made a great point as well. Boeing may not be in a strong enough financial position right now to make a more generous offer simply because they've yet to see a significant enough return on investment on any of the three simultaneous programs they're working on. The 777F is at least flying, but not one has been delivered yet. The 787 is bogged down by delays and still has yet to commence flight testing, and the 747-8 currently only exists in very small pieces. Boeing has taken a risk and made a large investment on each of those, and there are still a lot of potentially expensive "unknowns" that could crop up at any time. I think that being cautious with regard to additional expenses is a responsible thing to do at this time.
-Rick
on September 9, 2008 1:01 PM | Reply
sorry folks but not all us texans are dumb ass. I have lived in texas all my life and have been a good union member for 35 years. More power to unions and to the iam striking boeing.