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Originally published Wednesday, October 22, 2008 at 12:00 AM

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Boeing, union differ on outlook for strike talks

Boeing and its Machinists union sharply disagree on prospects for a settlement of the 47-day-old strike, even as they head into renewed negotiations Thursday.

Boeing and its Machinists union sharply disagree on prospects for a settlement of the 47-day-old strike, even as they head into renewed negotiations Thursday.

Boeing chief executive Jim McNerney expressed optimism Wednesday about renewed talks set to begin tomorrow in Washington, D.C.

But later, Machinist union International President Tom Buffenbarger poured cold water on hopes of any quick restart to production in Boeing's Puget Sound-area factories.

"I am not optimistic that we'll get a settlement.... I am not deluding myself into thinking this meeting will be any different than the one in Spokane," he said in an interview.

McNerney's take on the strike, which has left the company burning through cash and 27,000 families missing a paycheck for almost seven weeks, came in an early-morning earnings conference call with analysts.

"I think there's a way to work with the union to meet some of their goals," McNerney said, referring specifically to the issue of outsourcing parts delivery work, which caused the last talks to break down Oct. 13 after two days.

He said that since those negotiations, which took place in Spokane, further "informal" talks have suggested positive movement from the leaders of the International Association of Machinists (IAM) union.

"There have been some informal discussions that have, I think, indicated a constructive (mind) set on both sides," McNerney said, "which is why we both agreed to get back together."

A source close to the talks said there had been "both direct and indirect contact" between Boeing officials and the union since the Spokane breakdown "to try to get the two parties back to the table."

But in an interview later, Buffenbarger sharply disagreed with McNerney's description and criticized the Boeing chairman's lack of close involvement in the dispute.

"I don't know where he's coming from," said Buffenbarger.

Buffenbarger said he has had no contact with Boeing since those talks collapsed. He added that he won't initially attend the Washington, D.C., talks because he has learned from the mediators that McNerney will not be there, only top Boeing negotiator Doug Kight and Commercial Airplanes chief executive Scott Carson.

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"We've been at this table how many times with Kight and Carson?" said Buffenbarger. "They can't move on their issue. We need fresh direction. ... McNerney's signature is going to have to be on any deal."

A Boeing insider defended McNerney's role, saying he has been involved "through multiple channels at multiple levels of conversation throughout the negotiations process."

"It doesn't mean he has to be at the table," the insider said.

In his conference call, McNerney said any resolution of the parts delivery question must preserve management's right to run the business as it sees fit.

But Buffenbarger's take on the issue suggests the gap between the sides remains difficult to bridge.

Buffenbarger conceded that Boeing had offered in Spokane to protect the jobs of the 2,000 Machinists who now work in jobs associated with parts delivery, and to redeploy them elsewhere as those jobs are replaced by automation and by outside non-union parts suppliers.

But he insisted that if the union agreed with the proposal, the eventual reduction in the workforce would be unacceptable.

"As attrition goes forward, as people retire and leave, Boeing will find ways to diminish the workforce by 2,000 jobs," Buffenbarger said. "Doug Kight blurted out in a negotiating session: 'We're going to get rid of those 2,000 jobs, one way or another'."

Indicating a hardline stance, Buffenbarger couched the disagreement over those jobs as part of a much bigger national labor struggle, with management intent on reducing union workers.

"This strike is symptomatic of greater labor strife elsewhere," he said. "In America, we're tired of saying goodbye to our jobs. This may be a watershed event."

Buffenbarger said that, given the state of the national economy, he suspects political pressure has been applied to the Federal Mediation and Concilation Service to push for a settlement.

Last week, the Federal Reserve estimated that the Boeing strike alone was responsible for a half-percentage point out of a total 2.8 percent drop in total U.S. industrial production in September.

One of several mediators between the union and the company is former Democratic House Majority Leader Dick Gephardt.

Gephardt played a key role during the 2005 Boeing Machinist strike and was credited with helping resolve that dispute after a month-long stoppage.

Gephardt returned to informal mediation between Boeing and the IAM at the beginning of this strike and again last week.

Buffenbarger said he talked with Gephardt following the breakdown of the Spokane talks, "exploring ideas around this outsourcing issue."

If the talks in D.C. get past the outsourcing problem, the two sides will still have to agree on wages and benefits. Those economic issues won't be easy either.

In the meantime, Machinist families are in increasingly difficult financial straits. And Boeing is bleeding cash.

On the teleconference to discuss Boeing's third-quarter earnings, chief financial officer James Bell disclosed that the strike, which began Sept. 6, directly reduced net company profits in September alone by $260 million, or 35 cents a share.

The pre-tax reduction in operating profits at the commercial airplane division was about $350 million.

The results also show Boeing's cash and liquid assets slashed by $3 billion for the quarter, due to the strike, 787 costs related to the delays that preceded the strike, and also spending on several defense-side acquisitions.

Company spokesman Todd Blecher said the hit to Boeing's cash position that can be directly attributed to the strike's impact — during the month of September alone, when the quarter ended — is slightly less than $1 billion.

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

Copyright © 2008 The Seattle Times Company

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