You saw that post the other day about Seattle City Council member elect urging Boeing workers to take over Boeing’s Everett plant. Turns out, those same workers are struggling on another front to ensure as little work as possible comes to the Puget Sound area.
Labor costs and uncertainty are the bane of airplane manufacturers. Finding a skilled workforce is hard enough. Paying them is relatively easy. But paying their pensions and health benefits (even during retirement) is a massive expense. Further, as Boeing has seen time and again, labor strikes disrupt delivery schedules on even the most popular Boeing products, leaving airlines and leasing companies tempted to buy Airbus.
So the Boeing management has an incentive to lock in labor agreements to ensure stability in the workforce, commensurate with the known backlog of orders for a product line.
Boeing’s highly anticipated 777X next-gen long haul airliner will be built. And the current order backlog is roughly eight years of stabilized production. So Boeing asked its machinist union to agree to a plan that would guarantee the 777X be built in the Seattle area, in exchange for concessions of the pension and health care benefits of future employees. The current employees would be grandfathered.*
The proposal was soundly defeated by the union membership. In effect, rather than the union looking out for the well being of its membership, the membership is looking out for the well being of the union, sacrificing their own job prospects for the union ability to negotiate on future members, of which there is no guarantee there will actually be any future members.
Boeing isn’t stupid. There isn’t some magical property to the Puget Sound area that mandates quality jetliners can only be built there. Just as Boeing has already opened a second production line for the 787 in South Carolina (again largely as a result of Seattle area union activism unrealistically driving up the costs of production in Washington), now again Boeing will be forced to consider production of the 777X elsewhere.
South Carolina would love to open a second production line. Long Beach, formerly the McDonnell Douglas production site, is wrapping up C-17 production and would be delighted to have another product.** Theoretically, the Wichita area could be in the running.
And then there’s Huntsville, AL. Home of our resident Rocket Scientist Roamy, HSV is jammed packed with an incredibly educated workforce. Not just in the scientist sense, either. The ranks of skilled workers there offer an attractive pool of potential workers. Further, the low costs of living, and high quality of life in the area would tempt many skilled workers in other areas to relocate.
Alabama in general has leveraged its assets to woo aerospace companies to relocate to the state. Airbus is actually going to build its most popular A320 family in state.
And now, HSV is trying to lure Boeing to Northern Alabama.
Mayor Tommy Battle confirmed Tuesday afternoon that Huntsville is one of several U.S. cities in the running to potentially produce Boeing’s next-generation 777X jetliner.
While Battle was unclear exactly how many jobs will be associated with the 777X, he said the economic impact would be similar to the last BRAC that brought 4,800 high-paying Department of Defense jobs to Huntsville.
“It’s probably in that range if they move everything to one place,” he told AL.com Tuesday afternoon.
Battle, Gov. Robert Bentley, Alabama Commerce Secretary Greg Canfield, Madison County Commission Chairman Dale Strong and other officials had about a two-hour meeting with Boeing executives in Birmingham earlier today.
On Nov. 13, International Association of Machinists members soundly rejected an eight-year labor contract extension that would have guaranteed the 777X jet would be manufactured in Washington state. Boeing said the vote left the company “no choice but to open the process competitively and pursue all options for the 777X.”
*And unlike Obamacare, if the employees liked their plan, they really could keep their plan.
**Of course, the costs of doing business in California strongly argue against Boeing leaping from the frying pan into the fire.
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