Boeing 
may lose a $1 billion order from Oman Air for its 787 Dreamliner if the schedule for the 787 slips any further, the Gulf carrier said, according to Bloomberg.
Oman has ordered six Dreamliners for delivery starting in the first half of 2014. It may turn to the Airbus A330 widebody if a two-delay for the 787 is extended, Oman CEO Peter Hill told Bloomberg.
“I really hope they get their act together,” Hill said. “Further delays might mean that we’d have to look elsewhere.”
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:
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.”
The Machinists union say suggestions by Boeing that its decision to build a new 787 assembly line in South Carolina are based on concerns about future strikes by the union are false.
“Corporate decisions like this are years in the making, and this one is no different,” Machinists international president Tom Buffenbarger said in a statement. “Until the last minute, executives feign indecision in an effort to dodge responsibility and to squeeze the last drops of goodwill out of a community that is losing a part of its legacy, and more important, its employment base.”
According to the Seattle P-I, the union offered Boeing a 10-year, no strike-deal and was willing to discuss a longer-term agreement to get Boeing to commit to putting the second line in Everett, Wash.
South Carolina Gov. Mark Sanford immediately issued a statement yesterday following Boeing’s decision to put a second 787 assembly line in his state. Sanford hailed the move as the biggest economic development effort in South Carolina’s history.
I wonder whether the coup will help save Sanford’s political career.
Talk of his impeachment began last summer after it came to light that he had secretly spent five-days in Argentina with his girlfriend. When he returned, he admitted to a year-long extramarital affair.
I wonder whether the Boeing win will temper the impeachment sentiment.
The Los Angeles Times gives an overview on Boeing’s troubles with its 787 Dreamliner program. The 787 is more than two years behind schedule, and by some estimates, costing Boeing $4 billion more to develop than planned. Read the story here.
Secretary of State Hillary Clinton toured the modern Boeing Design Center in Moscow Tuesday, where 1,400 engineers work.
“This is a very exciting visit for me,” Clinton said in remarks after the tour. “I feel like I should apologize to all of the engineers because we’re interrupting their legendary 24-hour workday. Because of the connections with Wichita and Seattle, they literally work around the clock, and it shows in terms of their productivity and the results.”
Boeing engineers in Wichita have long worked with engineers at the Design Center on a variety of work packages.
Their work “does illustrate the kind of closer collaboration that we’re seeking to encourage between American companies and Russian companies, between American experts and Russian experts – in this case engineers- who are the very best in the world,” Clinton said.
Boeing and Airbus are on track to build a record number of jets this year. But next year, that may change.
The planemakers may have to cut narrowbody airplane production by as much as 30 percent by 2011, according to aerospace analysts and consultants polled by Bloomberg. Boeing’s 737 and Airbus’s A320 contribute the majority of sales for the companies.
Boeing currently is producing 31 737s a month. Four respondents to the Bloomberg survey said they predicted Boeing to scale that back by at least 10 percent to 28 a month by 2011.
The planemakers still have order backlogs to carry them through the next seven years at current rates after they limited production increases to smooth out demand swings when the market was robust.
Changes to 737 production would impact Wichita’s Spirit AeroSystems, which produces the fuselage.
If you have a huge cup of coffee and the time, you can read the Air Force’s Draft Request for Proposal document for its next aerial refueling tanker. The Air Force released the document today. You can read it here.
Your reading of it may not understandably be as thorough as the one Boeing and Northrop Grumman will do. Both are locked in a fierce competition to supply the Air Force’s next aerial refueler.
Boeing said today its next step is to perform a detailed review of the proposal.
“We want to understand how requirements will be defined and prioritized and how the proposals will be evaluated,” the company said today. It then will decide which plane to offer the Air Force — or whether to offer both the 767 and the larger 777.
On second thought, if you’re reading the entire document, you better put on a pot of coffee.
Boeing has a new leader of its Global Services and Support business, Anthony Parasida. Parasida replaces Dennis Muilenburg, who became president and CEO of Boeing’s Integrated Defense Systems after Jim Albaugh’s appointment as the head of Boeing’s commercial aircraft division.
Boeing Wichita operations report to the St. Louis-based division. The move is effective immediately, the company said.
Parasida had been vice president and general manager for Airborne Anti-Submarine Warfare & Intelligence, Surveillance and Reconnaissance Systems with Boeing Military Aircraft.
Australian airline, Virgin Blue Holdings, is in talks to buy $3.5 billion in Boeing airliners, the Australian Financial Review said.
Virgin needs to replace planes that will come off lease, the report said. It plans to buy 35 and 50 aircraft as leases of 25 Boeing 737s expire.
