Boeing Strike May Emerge As Test of Labor's Mettle
Source: Wall Street Journal
Authors: J. Lynn Lunsford And Kris Maher
The strike at Boeing Co. by 18,300 International Association of Machinists and Aerospace Workers looms as a potentially important test of the labor movement's ability to respond to the shifting realities of the global economy.
As companies increasingly face pressures to take advantage of lower labor costs around the world, it puts them on a collision course with labor unions. In part because the machinists union remains powerful -- few other unions are able to single-handedly bring a company to a standstill -- the outcome of this strike could be a good indicator of whether organized labor still has the ability to force a company to meaningfully alter its course.
Boeing's largest labor union last week voted to strike rather than to accept the Chicago company's proposed three-year contract, which offered bonuses but not the high pensions, benefits and job-security measures the union had sought. "This is the same fight all across America, to maintain the standard of living for working families who generate the profits for the corporate elite," said Mark Blondin, District 571 president. "Those at the top are not giving back, and neither should our members."
Even on the picket line, Boeing union members are aware of the larger fight. "We're middle-class union dinosaurs trying not to become extinct," said Gary Hagen, a 52-year-old carpenter who has worked for Boeing for 20 years.
The strike has immobilized Boeing's commercial-jetliner assembly lines just as an improving global-aviation environment has led to a surge in orders, especially for its fuel-efficient 787 "Dreamliner" single-aisle jet. Boeing in recent months has gained sales momentum over its chief competitor, Europe's Airbus.
Boeing's efforts to get the machinists to accept greater flexibility fit a strategy other companies are trying to push onto unions to remain competitive globally. "That Boeing is willing to take a strike right now, with competition with Airbus, signals its willingness to engage in a high-stakes gamble," said Marick Masters, a professor of business administration at the University of Pittsburgh.
He said similar confrontations are just around the corner for the auto, rubber-making and telecommunications industries. If unions don't become more flexible on some of these issues, he said, "the companies will not only outsource more, they will either go into bankruptcy or go out of business."
As the Boeing strike enters its first full week, officials at Boeing and the union will begin to evaluate how best to restart the talks. Both sides say they are willing to talk, but each says the other is going to have to start listening. A Boeing spokesman said yesterday that it may be "a while" before negotiations resume.
Before the ill-fated contract vote, Commercial Airplanes President and Chief Executive Alan Mulally appealed to union members to "adapt" their thinking. "For all of us to keep our jobs, we have to keep getting more competitive every day, forever," he said. But union leaders contend that Boeing's definition of adapting is for the union to do all of the changing. "Management wants to talk about partnerships, but they want everything on their terms," Mr. Blondin said. "This union would love to work with Boeing to make it more competitive, but we finally had to say, 'Enough.' "
Analysts say that Boeing can easily withstand a strike that lasts several months. In a news release last week, Standard & Poor's Rating Services said its ratings and outlook on Boeing weren't immediately affected by the strike. The rating agency said Boeing's ability to weather the strike would be aided by "substantial" cash generation from its defense business, "sizable" cash resources of about $5 billion, and marketable securities totaling about $3 billion as of June 30, as well as $3.5 billion in credit facilities.
The situation at Boeing is different in many respects from the strike at Northwest Airlines, where its mechanics union walked out after the groups failed to reach agreement over layoffs and wage cuts.
Labor experts say Boeing isn't in as strong a position as Northwest in their respective labor disputes. For one thing, there is little chance that Boeing could bring in enough skilled replacement workers to keep its operations going during a strike as Northwest did. Many also believe Northwest wants to get rid of its small, isolated mechanics union, whereas Boeing will have to find a way keep working with the machinists, who as members of the AFL-CIO enjoy broad union support.
John Budd, a professor of industrial relations at the University of Minnesota, said the Boeing strike could have repercussions beyond the labor movement. "Pensions and outsourcing are not just union issues," says Mr. Budd. "They just come to a head very visibly with unions because they have the ability to strike."
