Farnborough Air Show Has Ugly Side, Says Union President

FARNBOROUGH, England ( TheStreet) -- The 2012 Farnborough Air Show is shaping up as a good one for Boeing ( BA), and that's fine with Tom Buffenbarger, president of the International Association of Machinists, which represents about 29,000 Boeing workers.

But Buffenbarger said the show also has an ugly side, which involves the lineup of representatives from various countries, states and other jurisdictions trying to lure manufacturing with the promise of lower costs, primarily labor costs. "It's not just the glitz and glamor of watching airplanes do tricks in the sky," he said.

IAM represents about 100,000 workers at aerospace companies including Boeing, Lockheed ( LMT) and GE ( GE) and at engine makers Pratt and Whitney and Rolls-Royce. The unionized jobs involve highly skilled workers who generally are compensated at high levels. But in nearly every case, distant locales are trying to lure the work. Often, the companies listen eagerly.

Buffenbarger said the only way to protect U.S. jobs is through bargaining. "The issue of job security is important to us, and it's incumbent upon us for that to be something we protect in our contract," he said.

"The first time I went to Farnborough was two years ago," he added. "I was shocked at what I saw, in the sense that our employers from here were over there trying to pimp our products to other countries with lower wage rates and more onerous labor laws.

"China has a big presence, and they want the work," he said. "But it's not just China. You have Vietnam, South Korea and Eastern European countries."

Additionally, some U.S. states tout their low unionization rates. At the Farnborough show two years ago, Buffenbarger anonymously visited a booth where South Carolina was seeking to lure aerospace companies, following Boeing's 2009 announcement that it would build a 787 assembly plant in North Charleston.

He recalled the scene. "I said to the lady, 'Why should I bring work to South Carolina?' and she said 'because we have a great environment,' and the second thing out of her mouth was 'we are a non-union state. We refuse to allow unions to exist in South Carolina.' I kept asking her questions until she said, 'What company are you with?' I said 'I represent the Machinists union,' and she shut up. She did not expect anyone from the labor movement at the air show.'"

Buffenbarger, recently elected a vic -president of the newly formed Geneva-based IndustriAll, which represents workers around the world, said various global union leaders will attend the air show.

Also attending is South Carolina Governor Nikki Haley, who is heading the state's 30-member delegation. "It's the most important marketing event we do," S.C. Commerce Secretary Bobby Hitt told The Charleston Post and Courier. "All the people we're interested in talking to are in one location."

Hitt said the air show meetings could eventually lead to new companies locating in South Carolina as Boeing steps up production.

Ironically, while Buffenbarger and Haley differ on the value of union labor, both want Boeing to gather orders at the show, which seems likely to occur.

"This union wants Boeing to be successful, to sell a lot of airplanes and to employ a lot of people, and we want those people to have the expectation that they will share a bit in the wealth they help to create," Buffenbarger said.

Boeing announced Monday that it has a firm order from Air Lease ( AL), for 60 B737 Max 8 aircraft and 15 B737 Max 9 aircraft, the first 737 Max order by a leasing company. To date, Boeing has orders and commitments for more than 1,000 of the new 737 model, which is expected to be 13% more fuel efficient than its predecessor.

"The expectation is that this is Boeing's show," said aviation consultant Scott Hamilton of Leeham Co. "There is no way that Airbus can match its blowout performance at the Paris Air Show last year, when it announced orders and commitments for 1,200 A320neos. But I would never put it past (Airbus sales chief) John Leahy to pull a rabbit out of a hat. He has been tamping down expectations all year, but I wouldn't be surprised if he comes out with at least a couple of hundred orders." -- Written by Ted Reed in Charlotte, N.C.

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