Outsourcing at Center of Strike Against Boeing


The last time I wrote about Boeing, in August, relations between the aerospace giant and a union representing workers who help build its planes had soured, with the International Association of Machinists members threatening to strike. A major sticking point was the union's desire for Boeing to commit to limits on outsourcing. The union contends that outsourcing harms Boeing's long-term competitiveness.


Nearly 27,000 Machinists walked off the job last month, reports The Wall Street Journal, with job security a focal point of the strike. Boeing has increased its use of outside contractors for the past decade, a practice the company says has helped it slice in half the time it takes to build some of its jets. In 2002, despite strong union opposition, Boeing began allowing non-union contractors to deliver parts to the assembly line.


The problems Boeing has experienced with its new Dreamliner 787 jet, which was supposed to revolutionize the company's manufacturing process by outsourcing design and creation of components to multiple outside partners, have become a flashpoint for the Machinists. Says a union member quoted in the Wall Street Journal story:

If Boeing had let us build that airplane in the first place, it would be in service today.

Now, with the strike in its fifth week, the already tense relationship between the company and the Machinists just got a lot more so tense. As the Seattle Post-Intelligencer reports, Boeing Chairman and CEO Jim McNerney wrote in a lengthy message to union members that the company won't budge on outsourcing concessions.


Boeing doesn't want to follow in the footsteps of U.S. automakers who "all but 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,"wrote McNerny.


At this point, it's questionable whether either side can "win" the standoff. Industry consultant Richard Aboulafia predicts the strike, the Machinists' fourth in two decades, may lead Boeing to move its manufacturing facility out of Washington to a right-to-work state. Financial analysts fear the strike could last through November or even into December, which could cut Boeing's fourth-quarter deliveries by up to 64 percent.


Yet financial analyst firm Bernstein Research says that the contractors working on the Dreamliner project will help Boeing bounce back more quickly than it has in previous strikes. If the strike lasts less than 60 days, the company expects full recovery from disrupted production within six to nine months, according to MarketWatch.