Boeing, 777x, and Machinists Union

[2B]

Unions can be a funny thing. I find it hard to imagine that the rank and file would vote down a contract that the union was truly recommending for passage. I can't help but think that there was a quiet wisper campaign against it or that there is an effort by another group to take over the union.

 

[Buckeye]

Unions can be a funny thing. I find it hard to imagine that the rank and file would vote down a contract that the union was truly recommending for passage. I can't help but think that there was a quiet wisper campaign against it or that there is an effort by another group to take over the union.

Based upon the comments I've heard machinist friends make, sometimes I'm not sure they trust their union management much more than they trust Boeing management.

 

[HFWR]

Based upon the comments I've heard machinist friends make, sometimes I'm not sure they trust their union management much more than they trust Boeing management.

You're not paranoid if they really are out to get you...

From limited past experience as a union member, there is often/always peer pressure to not give in...

 

[Fermion]

At least Seattle is somewhat diversified, having Microsoft and Amazon headquarters. Maybe we can attract more tech to replace any lost Boeing jobs. I don't care a great deal as we are leaving the state when we ER in 2015. I haven't figured out which state to claim as a home yet, but considering Florida.

 

[haha]

Just posted in the Seattle Times

"States Salivating for 777-X Feast"

States salivating for Boeing 777X feast | Local News | The Seattle Times

Excellent, thanks for posting. I was able to read it, so I guess I am still in my quota of free articles this month.

I haven't subscribed in years, because while I like their business and sports news, the rest of it leaves me cold. I especially hate the Sunday Real Estate cheerleading section, and all the sob stories.

Great quote from Tommie Battlle, mayor of Huntsville. "Huntsville offers something Washington cannot, a good workforce that continually works and will not have work stoppages."

I agree with the consultant who assisted with the South Carolina plant choice for the 787, but is not working on this, that the key factor will be perceived quantity and quality of workforce. She also said that the 3 month deadline makes it very likely that only sites that are already involved with Boeing are likely to be in the running. If IAM Local 751 can be mollified, I expect it to be mostly built in Everett. But this is not somehing I would want to bet on. It might be the favorite, but taken as a group, the field has the edge.

Ha

 

[explanade]

BTW, I moved from Delta to United, partly because United was scheduled to get 787s in their fleet.

But those have faced delays and cancellations, even without suffering the more documented problems that other airlines faced with the 787.

Also hearing though that the seats are more cramped in the 787, both in economy and business. A lot of people say business class in 777 is better.

Then you have labor strife and the new planes don't look as appealing as they should.

 

[Chuckanut]

As SIS pointed out earlier, we have a new council member in Seattle. I don't think anyone from Boeing is going to rush out to negotiate with her. Fortunately her actual ability to get anything done will be limited, since she's only one voice on the council. But she'll definitely get plenty of press.

Boeing - Stop the Blackmailing - Vote Sawant

Boeing is not really in Seattle very much. It's two big construction plants are in the cities of Renton and Everett. It's airport is outside the Seattle city limits. Obviously, its corporate headquarters are in Chicago. Perhaps somebody can tell us what facilities Boeing actually has in the the Seattle city limits.

 

[haha]

Boeing is not really in Seattle very much. It's two big construction plants are in the cities of Renton and Everett. It's airport is outside the Seattle city limits. Obviously, its corporate headquarters are in Chicago. Perhaps somebody can tell us what facilities Boeing actually has in the the Seattle city limits.

I think people are mostly using Seattle as a metro designation, not thinking that Boeing plants or Paine Field are in the City of Seattle. Neither is Microsoft of course, but losing that payroll would certainly be a dark day in Seattle. As you are aware, Seattle is actually a pretty small city, in area and in population.

Ha

 

[Chuckanut]

I think people are mostly using Seattle as a metro designation, not thinking that Boeing plants or Paine Field are in the City of Seattle. Neither is Microsoft of course, but losing that payroll would certainly be a dark day in Seattle. As you are aware, Seattle is actually a pretty small city, in acreage and in population.

Ha

All very true, Ha. My point is that one socialist on the Seattle City Council doesn't really affect Boeing very much. Seattle while the big gorilla on the block, makes up only about 1/3 the population of King county and maybe 1/12 the population of the entire state. I doubt if the citizens of Everett, Renton, etc. are going to gang up on Boeing just to make a Seattle city council person happy. I don't think she represents their views at all. Just the views of those living in the People's Republic of Seattle.

Oh. Congratulations on your new mayor. He has got to be an improvement.

 

[haha]

All very true, Ha. My point is that one socialist on the Seattle City Council doesn't really affect Boeing very much. Seattle while the big gorilla on the block, makes up only about 1/3 the population of King county and maybe 1/12 the population of the entire state. I doubt if the citizens of Everett, Renton, etc. are going to gang up on Boeing just to make a Seattle city council person happy. I don't think she represents their views at all. Just the views of those living in the People's Republic of Seattle.

Oh. Congratulations on your new mayor. He has got to be an improvement.

I see; I didn't understand the thrust of your post. Seattle is definitely an island of weirdness.

Ha

 

[HFWR]

At some point we need to support job creators. If we don't, then somebody else will. It's great that the workers don't want to give in, but what will they say when they end up with nothing except an unemployment check?

I agree with this in theory, except lots of us have ended up with the unemployment check anyway...

 

[Fermion]

Seattle is definitely an island of weirdness.

Ha

No, that is Fremont.

 

[Hamlet]

Here's the thing--

In a world with a surplus of labor you get downward pressure on wages.

Instead of wages being set by the productivity of production, they get set by how desperate the workers are. The share of GDP going to labor has been dropping, and it appears to me that it will continue to shrink--

Workers

I think that this has a lot to do with the weakness of the global economy. How is demand going to be generated for products if the bulk of workers have less to spend every year? A billionaire generates a fraction of the demand that a thousand millionaires generate. So we see companies with soft revenue numbers, but they have higher profits because they cut costs (wages). Of course, globally that makes everyone's revenues softer, so they cut wages some more.

I think the global economy will eventually collapse if we don't start seeing some of the benefits of productivity gains start making it down to the masses again.

More of this 'race to the bottom' talk?

If you were trying to feed your family in an area w/o much manufacturing, and a big manufacturing plant moved in, and offered you a steady job at better compensation than you could get previously, would that feel like a 'race to the bottom' to you?

Or would it look more like, 'Those greedy people in the old plant didn't know how good they had it. We're happy to work for less than they were asking.'

Is it bad to bring help to those who most need it? In other conversations, this is called re-distribution of wealth, and is applauded by many. Is it different when a corporation does it? Is it different when we do it (shop for the best value, rather than shop to support the highest wages on the producer side)?

I guess I don't see any reason to be judgmental about it. If we have freedoms, then we (and corporations) will make these choices. It's natural. And I think it is good for America. What long term good would it be to discourage efficiency and productivity?

-ERD50

 

[explanade]

When unions had more leverage and more workers were unionized in the post-WWII period up to the mid '70s, GDP growth was much higher and per capita income growth greater.

Funny how that worked out.

 

[Texas Proud]

Well, and maybe no wonder. If the machinists turn down a commitment for decades of future work with angry rants about the company taking advantage of them, then the company will probably want the work to go somewhere else.

In an interesting twist, some big customers for 777x have been making public statements today that they want their planes built in ONE PLACE, whether it's the Puget Sound or elsewhere. But they do NOT want the kinds of problems the 787 suffered from being build by separate groups all over the world and then crammed together (sort of) in final assembly.

I would be very surprised if any complex machine was built all in one place.... heck, most cars are built in many countries and assembled at one location....

 

[samclem]

When unions had more leverage and more workers were unionized in the post-WWII period up to the mid '70s, GDP growth was much higher and per capita income growth greater.

Funny how that worked out.

Be sure to keep cause and effect in the right order. It's unlikely an increase in umbrella sales causes rainy weather.

 

[2B]

I see; I didn't understand the thrust of your post. Seattle is definitely an island of weirdness.

Ha

Seattle was an island of weirdness in 1965 when I arrived.

 

[2B]

When unions had more leverage and more workers were unionized in the post-WWII period up to the mid '70s, GDP growth was much higher and per capita income growth greater.

Funny how that worked out.

In post-WW II the USA was the industrialized world. As Europe and Asia (mostly Japan) rebuilt, the USA's ability to economically dictate the competitive situation disappeared. I've listened to this unions=prosperity argument before but it somehow never includes the broader macro-economic picture. The other favorite is high taxes rates=prosperity during the same period. It also never includes the macro-economic picture or the infinitely available tax shelters available so no one actually paid the high marginal tax rates.

My father was a unionized steel worker and went through many strikes and layoffs before finally losing his job in the early 1960s. The loss of this entire industry resulted from the unwillingness of the union (there was really only one for all of the steel companies) to adjust to a changing world economy. This did allow me to enjoy the largess of free government peanut butter, cheese, butter, rice and probably other items. I really enjoyed when we had a food drive for "the poor" at my elementary school and we got a box of can goods dropped off that afternoon. After about a year after he lost his job we became migrants out of the Pennsylvania rust belt.

France, Greece, Italy and much of Europe have very powerful unions that can effectively dictate economic policy. How's that working out for their GDP growth? Major manufacturing corporations are getting out as fast as they can. Germany is the one exception and you can see a partnership in many ways between their unions, industry and government.

My apologies to any moderator that feels my remarks that were intended to address an economic comment with an economic reply is considered to be too political.

 

[pb4uski]

....Seattle is definitely an island of weirdness.

Ha

At least you guys have confined it to one city..... here in Vermont, it seems to have taken over the whole state!

I guess that's what happens when you mix carrot crunchers, greenies and trust fund babies.

 

[ERD50]

Here's the thing--

In a world with a surplus of labor you get downward pressure on wages.

Instead of wages being set by the productivity of production, they get set by how desperate the workers are. The share of GDP going to labor has been dropping, and it appears to me that it will continue to shrink-- ...

I agree on the first line, but I don't think there was ever a time when wages were set by the worker's productivity. They were set by supply/demand. Businesses pay the lowest amount they can to attract the talent they need. Talent seeks the highest wages they can get for their 'product'.

Now, worker productivity can result in lower overall production costs, meaning a productive company can undercut the competition. With lower prices, there may be more demand for the product, and that cycles back to more demand for workers.

-ERD50

 

[jon-nyc]

My 2c, the union almost certainly shot itself in the foot, but it's hard to call them 'greedy' given that they were asked to absorb a material cut to their overall compensation.

I'd say they were unrealistic, even stupid, but not greedy.

 

[growing_older]

Unions can be a funny thing. I find it hard to imagine that the rank and file would vote down a contract that the union was truly recommending for passage.

I don't think there was any question about the union leadership recommending this contract for passage. They generally referred to it as garbage or worse, and in news reports before the vote the Union leadership was tearing up copies of the agreement and recommending rejection.

The union rally before the vote was strongly against the contract:

 

[pb4uski]

My 2c, the union almost certainly shot itself in the foot, but it's hard to call them 'greedy' given that they were asked to absorb a material cut to their overall compensation.

I'd say they were unrealistic, even stupid, but not greedy.

+1 but sometimes a half a loaf is better than none, and it look like they may end up with none unless they come to their senses.

 

[Hamlet]

In a a tight labor market, wages tend to rise in lock-step with productivity because workers have a strong bargaining position. Look at wages vs productivity in the US from 1945 to 1970. They were linked.

Yes, lower wages have resulted in lower prices, but the lower wages are hurting demand more than the lower prices are helping demand. Take it to its logical conclusion -- unpaid labor. How much demand are unpaid interns adding to the economy with their non-existant purchasing power?

In the US, its actually way worse than it looks, because Federal spending has done a decent job of propping up demand. Imagine the hit that US business sales would be taking if we didn't have SS, food stamps, unemployment insurance, medicaid, and a trillion dollar defense budget propping up demand?

I agree on the first line, but I don't think there was ever a time when wages were set by the worker's productivity. They were set by supply/demand. Businesses pay the lowest amount they can to attract the talent they need. Talent seeks the highest wages they can get for their 'product'.

Now, worker productivity can result in lower overall production costs, meaning a productive company can undercut the competition. With lower prices, there may be more demand for the product, and that cycles back to more demand for workers.

-ERD50

 

[2B]

+1 but sometimes a half a loaf is better than none, and it look like they may end up with none unless they come to their senses.

I suspect any changes will be evolutionary. The real impact won't be felt for 5 to 10 years but it will be real obvious after the 777x plans are announced. This will be followed by 1 to 2 years of attempted renegotiation by the union and governmental bodies which may or may not fall on deaf company ears. The question then becomes what will Boeing do with the facilities in the greater Seattle area. Boeing has other businesses besides the 777x.

Even with Microsoft and Amazon, Boeing is a big contributor to the financial status of the Seattle area. If/when they are materially gone, they will be noticed.