Emboldened by the UAW and longshoreman unions, the machinists union is overplaying a weak hand.
Boeing Held Hostage
The Wall Street Journal comments The Machinists Take Boeing Hostage
Boeing on Friday said it will slash its workforce by 10%, or about 17,000 workers, in the coming months. It also announced $3 billion in charges related to its commercial jet program and $2 billion on its defense and space division, largely owing to delays caused by the work stoppage as well as higher costs.
Boeing has offered a 30% pay increase over four years, plus $9,360 a year in contributions to employee 401(k)s and lower healthcare premiums. But the union is refusing to settle for less than a 40% raise and restoration of the defined-benefit pensions that the company scrapped a decade ago.
The 62% pay increase recently won by East and Gulf Coast longshoremen may have emboldened the machinists to hold out for more. Boeing called off negotiations last week, saying the union made “non-negotiable demands far in excess of what can be accepted if we are to remain competitive as a business.” Union boss Jon Holden replied: “We’re in this for the long haul.”
The union’s demands would render Boeing less competitive against its commercial jet rival Airbus and U.S. defense contractors. That will mean less work for the machinists. Boeing may also try to lower costs and avoid future work disruptions by shifting more production to its plant in South Carolina, as it did after the 57-day machinists strike in 2008.
While the strike doesn’t have the same potential to shut down the U.S. economy as the longshoremen stoppage, it could have larger consequences for national security. The strike is delaying production of military jets, and the layoffs could reduce research and development on defense and space.
Boeing has made a lot of mistakes, but the answer isn’t to drive the company out of business.
Boeing has a quarterly net loss of $6 billion over troubled programs. Boeing will record a net loss of $9.97 a share for the quarter ending September 30. Analysts forecast a loss of $1.19 a share.
The Journal noted that before the machinist walkout, Boeing was burning more than $1 billion a month from its operations, as it slowed production to deal with quality issues that surfaced after a door panel blew out midair on a 737 MAX in January.
S&P had estimated Boeing will burn $10 billion in cash this year. It put Boeing on its CreditWatch negative listing to signal an increased likelihood of a downgrade to junk status.
If defined benefit plans are indeed nonnegotiable, Boeing’s best response may very well be to shut the company down and let the workers plead for their jobs back.
Defined benefit pensions plans would bankrupt the company just as they bankrupt the trucking industry.
I am 100% in favor of Boeing moving all of production to a nonunion state.
Manufacturing Employment Is Not the Future, Nor Should We Try
On October 5, I commented Manufacturing Employment Is Not the Future, Nor Should We Try
The US is the global leader in technology, space, information, biotech, and innovation in general. That’s more than good enough.
I was primarily talking about clothes, washing machines, cars, and other things of no vital interest to national security.
Weapons and aircraft are in a different class. So is a nationwide port strike where the longshoreman union held the nation hostage. In those cases I would gladly bust the unions.
Instead, we have competing idiocy of Trump and Biden, both demanding US workers pay more and get less.
Buy American Provisions Cost $125,000 Per Job Created
Also consider Buy American Provisions Cost $125,000 Per Job Created
“Buy America” sounds great. But it’s costly and about to rise steeply.
I am 100% in favor of letting private unions go on strike except were there is an unnatural monopoly (PATCO and longshoresmen).
I am also in favor of letting companies pack up their bags and go wherever they want leaving the strikers without a job.
Since it costs money to move operations, things would be reasonably in balance, especially if we add national right to work laws which I am in favor of.
Related Posts
September 26: Trump Claims Tariffs Will Reduce the Trade Deficit. Let’s Fact Check.
Trump proposes 60 percent tariffs on China. Would that reduce the trade deficit? Where? How?
October 1: Trump vs Frederic Bastiat: Who Is Right About Tariffs?
This post is about Trump’s proposal to use tariffs to fund projects.
Tariffs and union power go hand in hand.
We need new slogans to celebrate. How about “You can get better, but you can’t pay more!”
Tariffs are a hugely regressive tax on the poor. If you are cheering Trump’s tariff plan as a solution to anything, you are really cheering higher taxes on those who spend every penny on food, clothes, and shelter.