Real Change News | Doing everything cheaper

November 4, 2009
Vol: 16 No: 48

Community & Editorial

Doing everything cheaper

by: David Groves , Washington State Labor Council, AFL-CIO

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Boeing has chosen Charleston, S.C., over Everett as the site for its second 787 Dreamliner assembly line. But for all the finger-pointing, tongue-wagging and hand-wringing about what went wrong and who deserves the blame, there is one thing we can agree upon: Boeing executives are fully committed to building airplanes on the cheap.

They are pursuing an all-too familiar business model used by manufacturers of everything from running shoes to cell phones. Outsource as much work as you can. Make suppliers cut their costs to compete for your business. Make your employees compete against cheaper workers elsewhere. Do everything cheaper.

The $5 billion question is: Will this cost-cutting strategy work with commercial airplanes? After all, these are complex products with tens of thousands of parts, each airplane customized to exacting specifications. And there is no margin for error at 35,000 feet.

The early answer is an emphatic “NO.”

Two years behind schedule and counting, the delayed 787 has already run up a staggering $5 billion in penalty fees Boeing must pay customers, according to Wall Street analysts. The reasons for this are clear. Boeing executives decided to outsource design and production of almost the entire plane and perform only the final assembly in-house. But the far-flung global supply line has failed to meet deadlines and specifications, the jet is still too heavy, and the parts haven’t fit together.

Two major contractors, including the 787 fuselage supplier in Charleston, failed so spectacularly that Boeing had to spend more than $1 billion to buy them out to try to resolve the problems. And guess who has gotten to fix the production problems inherited from South Carolina and elsewhere? The skilled and experienced workers in Washington are logging millions of hours of overtime to try to rescue the 787 program.

If ever there was a time to get back to basics and focus on what works well here in Washington state, that time would be now. But instead, Boeing executives have doubled down on what’s already a losing bet. They have chosen to expand 787 production in South Carolina because of its low wages and its laws that discourage unionization.

The average pay for Boeing Charleston’s 787 fuselage workers is $14 an hour. That’s about where wages start for newly hired machinists in Washington. Their pay here averages closer to $28 an hour. These family-wage jobs, which also
include good health insurance, pension and other benefits, are the product of decades of solidarity among our unionized workforce.

For decades, Boeing has negotiated and agreed to these contracts. And it has thrived, building the best and most profitable planes in the world to become an iconic success story for American business.

But Boeing is under new management. Its executives are now focused on maximizing profits by cutting costs, and they are showing no regional loyalty to the company’s birthplace. In 2001, they moved their corporate headquarters from Seattle to Chicago, expressly to separate its decision making from its hub for commercial aircraft production. Since then, they have continually stepped up the outsourcing of Boeing jobs on existing commercial jet models to lower-cost parts suppliers.

It’s been truly painful to watch Boeing’s new outsourcing strategy fail so dramatically with the 787. It’s been painful for the company’s bottom line and for shareholders. And it’s also been painful for employees, who are proud to work for Boeing and have watched the company jeopardize its long-standing reputation for quality, efficiency and innovation.
Now, as employees here work overtime to fix the problems caused by this troubled business strategy, their thanks is a slap in the face from management with its choice of Charleston over Everett.

“We are astounded that Boeing has chosen to compound the problems of the 787 program by further fragmenting the supply chain,” said Ray Goforth, executive director of the Society of Professional Engineering Employees in Aerospace/IFPTE 2001, which represents Boeing engineers. “There is no credible business case for this decision.”

To their credit, the Machinist’s Union has responded by calling on its members to focus on what they do best, building the best airplanes on the planet and saving the 787 program.

“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,” said Machinist’s District 751 President Tom Wroblewski in a message to members. “Without us, the Dreamliner is just a pipedream. Let’s focus on making it a reality.”

Boeing’s Chicago-based executives have staked their jobs — and the future of the company — on a reckless business strategy. For them, the price of failure is probably a generous severance package and another high-paying job “cutting costs” at another Fortune 500 company.

The price for us, the people and community that built Boeing into one of the greatest and most profitable companies in American history, is far steeper.

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Comments

This editorial captures most of what can be said with respect to the Boeing decision to move its production facilities to SC. T.M.Sell, PhD, professor at Highline Community College said th new management of Boeing is, “driving the company into the ground.” He added, “it is now lead by an individual that knows more about post it notes that airplanes.” So very true.
As much as I wanted Boeing to remain, their attempt to undermine the wages and benefits of workers and use it as justification for their self-inflicted failures convinced me they ourlived their citizenship in this state. A decision to remain and attempt to bring the state to its knees by extracting everything but our first born and for the state to give in to them would be far more damaging long term.

This state can and will go forward without them. Will if be difficult? Yes, Yet at one time we were a one economy industry and we have deversified considerebly.

One has to understand, when a company is dead set on reducing workers to share cropers, every sector of the state suffers. When wages and benefits are reduced to less than a living wage, it reduces purchasing power for every citizen of the community. After all, those wages pay tuitions, pay doctors, car dealers etc.

Go Boeing and produce a plane in a state that ranks 37th in education.

Allan B Darr

Allan B Darr | submitted on 11/06/2009, 2:56pm

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