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TheStreet Open House

Boeing: Labor Crises Just Keep Coming

SEATTLE (TheStreet) -- For a successful company, Boeing (BA) sure has a lot of labor problems.

The sprawling aerospace company is facing a strike by 2,500 defense workers and International Association of Machinists members in St. Louis, just two weeks after the conclusion of a month-long strike by 1,900 defense workers and United Auto Workers members in Long Beach, Calif. In the fall of 2008, about 27,000 IAM commercial aviation workers in Seattle struck the company for 57 days.

Boeing
Boeing F/A-18

In all three negotiations, pension and benefit issues have been issues -- in particular, Boeing's desire to replace defined benefit pension plans with 401K plans for future employees. In the case of the Seattle strike, Boeing withdrew the pension change from its final offer.

Boeing makes commercial aircraft in Washington, C-17 freighters in Long Beach, and F-15 and F-18 fighter jets in St. Louis.

Mark Blondin, the IAM's national aerospace coordinator, said Boeing is "looking for a fight at every turn" as it aggressively "tries to strip away medical and pension benefits for future hires and allows subcontractors to come in and take work away." At the same time, in contracts with Boeing suppliers such as Spirit AeroSystems (SPR) and Triumph Group (TGI), pension plans are preserved, he said.

"The leadership at Boeing has made the decision they want to take the aerospace industry in the U.S. and cut it down," Blondin said. "They have made the decision they would like to be non-union, long-term." Boeing CEO Jim McNerney has said repeatedly that a key reason to build another 787 production line in Charleston, S.C. is to minimize the risk from labor disruptions in Everett, Wash.

Boeing spokesman Tim Healy said it is important to remember that "the success of a supplier partner depends, in the end, on the successful business of the customer, the airplane manufacturer." Boeing, he said, "must be competitive, not only today but also 20 years in the future" when it will almost certainly face competition from lower-cost foreign manufacturers in developing countries. He said Boeing sought to resolve pension and health care issues in talks with the IAM in 2009, just before the final decision to move some production to Charleston.

Unions also play a role in shaping the conflicts, according to Jonathan Cutler, a professor of American studies and of sociology at Wesleyan University who said successful companies are in fact more likely than unsuccessful ones to face labor resistance.

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