Boeing Settles Strike with Some Outsourcing Concessions

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Earlier this month I wrote about the longstanding rift between Boeing and the International Association of Machinists, which resulted in a contentious seven-week walkout. One of the union's key demands was for the aerospace giant to agree to future limits of outsourcing.


Despite tough talk from Boeing CEO Jim McNerney, who said his company wouldn't follow the example of U.S. automakers that "fatally wounded themselves years ago by promising unsustainable wage and benefit levels and by agreeing to contract conditions (including job guarantees) that limited their flexibility to run their businesses in the face of intense global competition," the uniongot some concessions from Boeing.


As BusinessWeek reports, citing a union statement, Boeing agreed to "stronger provisions for the union to bid against subcontractors for work; a revised agreement to protect about 2,200 facilities and maintenance jobs; expanded job protection for an additional 2,920 forklift drivers, environmental control personnel, inventory clerks and other workers, and limits on vendor deliveries to the shop floor."


Other features of the agreement, which remains tentative until a union vote: wage increases adding up to 15 percent over the four-year life of the contract, and preservation of existing medical cost structure and benefits through 2012.


The proposed contract is expected to go to the union for a vote within five days, reports MarketWatch. Despite the concessions, Scott Carson, president and CEO of Boeing Commercial Airplanes, says the deal "preserv(es) our ability to compete," implying that Boeing will still rely on subcontractors for production of its 787 Dreamliner jet.


Most of the jobs directly protected under the agreement seem like the kind Boeing likely wouldn't open to outside contractors anyway. Provisions allowing bidding against subcontractors put pressure on the union to deliver competitive terms.


The stock of Boeing and some of its biggest suppliers rose after the announcement even though several financial analysts lowered their short-term outlooks for Boeing.


Next up for Boeing is contract negotiations with the Society of Professional Engineering Employees in Aerospace, which represents nearly 24,000 tech workers. Preliminary talks over the summer were "heated and confrontational," according to the union.