Advertising

The Seattle Times Company

NWjobs | NWautos | NWhomes | NWsource | Free Classifieds | seattletimes.com

Business / Technology


Our network sites seattletimes.com | Advanced

Originally published Wednesday, September 10, 2008 at 12:00 AM

Comments (0)     Print

Outsourcing issue still divides Boeing, Machinists union

A resolution of the Machinists strike at Boeing may rest finally upon one perennial issue: the outsourcing of Machinist work now done in local plants.

Seattle Times aerospace reporter

A resolution of the Machinists strike at Boeing may rest finally upon one perennial issue: the outsourcing of Machinist work now done in local plants.

The union's ambition isn't to scrap the global-manufacturing model Boeing established with the new 787 Dreamliner, in which huge sections of the aircraft are completed overseas and elsewhere in this country. Boeing appears irrevocably committed to that strategic model, and the union can do little about it.

Instead, union leaders are trying to preserve the assembly and ancillary work still done here, including the delivery of parts to the assembly line and the maintenance of the factory buildings.

Since 2002, Boeing has whittled away at the work done in its Puget Sound-region factories. Leaders of the International Association of Machinists (IAM) want at least the right to bid for work against outside contractors and prove they can do it more productively.

Union leaders see Boeing's refusal to even consider that as proof the company is not concerned about saving money or improving efficiency, but rather about weakening the union long-term by having nonunion people do IAM work.

According to sources familiar with the contract negotiations, the economic differences between the two sides are not insurmountable. There is a gap, but Boeing can produce more money and the union can compromise.

But the outsourcing issue could be a showstopper.

"It's easier to get money out of this company than ... to get a commitment that they aren't going to get rid of our people," said Tom Wroblewski, IAM District 751 president. "The company would like to see as much of this work go away as they possibly can."

Wroblewski's fired-up members seem determined to claw back some of the concessions on outsourcing made in the 2002 contract.

But Boeing spokesman Tim Healy said that would inhibit the flexibility of the company's production operations.

"To the extent that the union wants to roll back the clock to a time before 2002, we don't see a reason to do that," said Healy. "It's asking us to fundamentally change the way we do business."

Who delivers parts?

advertising

In the current negotiations, union leaders have focused on reversing changes imposed in the 2002 contract that have led to increased outsourcing.

Although 62 percent of union members rejected that contract, it went into effect anyway because less than two-thirds voted to strike amid the steep industry downturn after the Sept. 11, 2001, attacks.

One change made then allowed Boeing to have parts suppliers and contractors come into the factory and deliver parts directly to the assembly line, instead of having all parts delivered to a receiving area manned by Machinists, who then directed them to where they were needed.

Healy said the older system involved two or three transfers of parts before they reached their destination. "That kind of inefficiency just doesn't work well," he said.

Boeing has used its freedom to outsource this work only on the 787 Dreamliner. All parts are delivered to the 787 assembly line by a North Carolina-based, nonunion logistics company called New Breed.

The IAM accepts that the New Breed contract for the 787 work is a done deal. But it wants a commitment that the parts-delivery subcontracting won't be extended to other current or future jet programs.

"We certainly want to prevent them from bringing nonunion people into the factory," said Wroblewski. "On future jet programs, we want to make sure that once those parts hit the factory door, it's IAM members who move those parts."

Some 2,000 Machinists, from forklift drivers to stores clerks, work in job categories related to receiving parts or tools and delivering them to mechanics in kits.

Mark Blondin, IAM national aerospace coordinator and lead negotiator with Wroblewski, said the parts-delivery clause is for those people "a serious threat" to their livelihoods.

Let the union bid for work

A second contentious issue left over from 2002 is that Boeing severely watered down a section of the contract designed to limit outsourcing.

Until then, Boeing wasn't allowed to lay off any Machinists as a direct result of outsourcing. And when outsourcing was planned, it had to give the union six months to review the work and to put together a business case for keeping it in-house — in essence allowing the union to bid against outside contractors to keep the work in-house.

In 2002, the company added five exceptions for which the six-month review process did not apply. The exceptions included outsourcing work to countries that bought Boeing planes or to suppliers that shared risk.

Since then, the union has in some cases successfully argued to keep work from being outsourced. Last December, an IAM team convinced Boeing it would save money if it retained the building of the 777 auxiliary power unit in Everett rather than outsourcing it.

But because of the added exceptions, said Wroblewski, more often work has gone out.

"Even if we prove we can do it better, cheaper, faster ... they can offload it anyway," Wroblewski said.

In the negotiations, the IAM is asking Boeing to remove the five exceptions and give the union a chance in all cases, including future jet programs, to bid on work and prove it can do it more efficiently than an outside contractor.

Motivation questioned

Blondin said Boeing's refusal to eliminate the exceptions shows its motivation is not to save money. He interprets it as an attempt to reduce the number of IAM members and weaken the union.

"That's how we felt in 2002, and that's how we see it today," Blondin said.

Loren Thompson, an industry analyst with the Lexington Institute, notes there are other reasons besides saving money for outsourcing, reasons encompassed in the exceptions Boeing wrote into the rules in 2002. He argues that Boeing's need to outsource work to countries that buy airplanes is legitimate.

"Most of Boeing's outsourcing is not done to save costs," said Thompson, adding that the New Breed contract was an exception. "Nobody outsources to Japan to save money."

Boeing's Healy said the company cannot tie its hands on operational decisions by agreeing to the review process every time outsourcing is considered. He said management needs to be able to respond to market conditions without a nod from the union.

"We need the flexibility to react more quickly than a six-month process would allow," he said. "The language [in the contract now] is what we need to stay competitive."

Tom Buffenbarger, the IAM's international president, said in an interview after the failure of last-ditch contract talks in Florida last week, that the union merely wants the chance to make a case for saving money.

"They think we are trying to wrestle away their right to run their business, said Buffenbarger. "Far from the truth. We're trying to show them how to run the business better."

Unlike the gaps between the two sides on wages, pensions and health-care costs, this difference — retaining management control of operations versus stopping the trickling away of union jobs — cannot be settled with money.

So far, neither side has budged.

Dominic Gates: 206-464-2963 or dgates@seattletimes.com

Tunisia production

to save Airbus money

European Aeronautic, Defence & Space said it will shift work to non-European countries including Tunisia as it seeks $1.4 billion in cost-savings, two-thirds from its plane-making unit Airbus.

The plan, meant to help EADS cope with a weak dollar relative to the euro, runs through 2012 and won't include any fresh job cuts, Toulouse, France-based Airbus said Tuesday.

"We're planning to produce basic parts in Tunisia, while research and production of more sophisticated parts and composites would be in Europe," EADS spokeswoman Gaelle Pellerin said.

Airbus is already building an assembly line in China for A320-series single-aisle jetliners and plans to "increase its presence in India," EADS chief Louis Gallois said.

Bloomberg News

Copyright © 2008 The Seattle Times Company

More Business & Technology headlines...

Print      Share:    Digg     Newsvine

Comments
No comments have been posted to this article.

UPDATE - 09:46 AM
Exxon Mobil wins ruling in Alaska oil spill case

UPDATE - 09:32 AM
Bank stocks push indexes higher; oil prices dip

UPDATE - 08:04 AM
Ford CEO Mulally gets $56.5M in stock award

UPDATE - 07:54 AM
Underwater mortgages rise as home prices fall

NEW - 09:43 AM
Warner Bros. to offer movie rentals on Facebook

Advertising

Video

Marketplace

Advertising