Air Capital Insider

Boeing officials sent out a memo yesterday saying why its discussions with its Machinists union were unsuccessful. Last week, the company announced it would move a second 787 assembly line to South Carolina. The Machinists sent out a memo in response. I’ve posted both memos here.

***This message is being sent from Ray Conner, Commercial Airplanes vice president of Supply Chain Management and Operations, and Doug Kight, Commercial Airplanes vice president of Human Resources, to all Commercial Airplanes managers and HR employees.***

Why our discussions with the IAM were unsuccessful

You have undoubtedly heard the many reactions and opinions of people weighing in on our decision to expand our 787 production capacity to Boeing Charleston. Not everything you read or hear is accurate, and that’s why we feel it’s important to share information to help your teams sort through the many perspectives.

We’d like to emphasize that Boeing considered many complex factors in this decision. Working with the union to achieve our objectives of production stability and long-term cost competitiveness was one of those factors.

We personally participated in the dialogue with the International Association of Machinists, starting in the summer. We held talks over many weeks with both IAM international and local representatives. The talks were constructive and all participants were engaged in a good-faith effort to address the issues. During these discussions we very clearly laid out our objectives and our need to have the union’s best offer for an agreement by mid-October to enable us to prepare a recommendation for the Oct. 26 meeting of Boeing’s board of directors. The IAM gave us that final proposal on Wed., Oct. 21.

Unfortunately, that offer fell short of what would have been needed for Boeing management to recommend to the board that the second 787 line be put in Everett, Wash. The union:

• Offered to extend the current contract eight years to 2020.
• Included annual general wage increases of 3 percent on top of an annual cost-of-living adjustment that has added more than 1 percent a year for the last 20 years.
• Required three lump-sum bonuses of $5,000 or 10 percent of earnings, whichever is greater, in 2009, 2013 and 2016.
• Included an annual pension increase of $2.50 per month for the life of the agreement, taking the pension to $103.50 by 2020.
• Demanded that Boeing promise to be neutral on all IAM organizing and decertification campaigns anywhere in the country.
• Required that Boeing guarantee to put future airplane programs in the Puget Sound region far into the future.
• Agreed to share medical cost increases, but deferred that sharing until 2018.

We told the IAM that we wouldn’t be able to make commitments on future airplanes so far into the future. And we couldn’t agree to blanket neutrality on international IAM campaigns that had nothing to do with our Puget Sound work force. Both issues were identified early as roadblocks to moving forward.

We stated that we needed an extension of at least 10 years to the current contract. We offered annual wage increases of 2 percent, a bit higher than the average increase that our IAM-represented employees have gained over the last 30 years. We offered annual pension increases at the same rate. We offered to introduce an annual incentive plan that could have boosted income annually for our employees.

In the end, we told the IAM clearly and repeatedly that their offer did not meet the objectives we had set out for a proposal to the board of directors. We asked them if they were sure that this was the best they could do on a range of issues, and they said it was. We gave them an ample, fair opportunity for discussion throughout this process, and the union was unwavering in its positions on key issues. That’s why we declined to participate in their request for 11th-hour talks.

On the positive side, we shared a lot of information with the union about the intense global competition we face, our business environment and our business issues. The union agreed to a framework on sharing future medical cost increases. We developed an approach to an incentive pay plan that would reward employees for achieving annual targets in the areas of cost, quality and productivity. We had good, constructive dialogue on a range of important issues, and we hope to build from there in regular meetings with union leadership. We remain committed to improving our relationship with the IAM.

When all is said and done, we believe that we are in the midst of one of the most exciting, dynamic times for commercial aviation. And the Puget Sound region is the hub for aerospace talent. We solve incredibly challenging technical problems every day and we work together to get the job done. Puget Sound and Charleston combined are a great engine for growth and a successful future for us all.

Message from District President Tom Wroblewski to 751 Members in Response to Doug Kight’s 10/29/09 Memo

October 29, 2009 – “I’d like to respond to Doug Kight’s e-mail to managers explaining what he says were the stumbling blocks that kept us from reaching an agreement to keep the second 787 line in Everett. It’s misleading, it’s disappointing and it’s not truthful.

Boeing would not commit to any agreement to keep the second line in Everett. That, and only that, is the reason why our conversations went nowhere.

The proposals Boeing e-mailed today were more detailed than anything we heard from the Company during three weeks of face-to-face conversations. They threw a lot of numbers around while we were talking together, but they were never willing to put them in writing. If they’d been this willing to put numbers in writing a week ago, we might have got somewhere.

We presented them with an initial verbal proposal. They never responded to that first proposal in writing, and never told us what they wanted to see in an agreement — and absolutely never told us there was a deadline for submitting revised offers. Instead, we found out the hard way that they’d set an arbitrary deadline; when it passed, they just walked away. They’ve set a lot of unrealistic deadlines with the 787. This was just one more.

The discussions we had with them were like trying to build a foundation for an agreement on the shifting sands of the desert. As soon as we got close to an agreement in one area, the Company would change the subject. We never exchanged formal written proposals– and we never got a guarantee for the second line.

Aside from being misleading, the tone of this e-mail was disappointing too. I see no value in going back and rehashing this. It serves no purpose. They got what they wanted from South Carolina. It’s time to move on.

This latest Company e-mail is just another smoke-and-mirror tactic trying to confuse the situation. Boeing executives had made their decision long before they ever sat down to talk with us. They’re breaking ground in Charleston in two weeks and planning deliveries for 2012, both clear signs this was their plan all along.

The simple truth is there won’t be any new jobs in South Carolina if our Members here in Puget Sound can’t find solutions for all the 787’s problems. We’re the ones who will fix the mistakes and get the first planes ready to fly, and we’re the ones who will be building 787s on two lines in Everett – the main line and the new surge line — while they’re still filling in swamp land in Charleston.

Without us, the Dreamliner is just a pipedream. Let’s focus on making it a reality, and quit stewing and fretting about who said what and when.”