⇒ All Things Boeing ... Machinist Union Rejects Latest Boeing Contract Offer

Old_Joe

10/18/24:

Here are excerpts from a current report in The Guardian:

The Federal Aviation Administration (FAA) said on Friday it will open a three-month review of Boeing’s compliance with safety regulations, continuing the agency’s closer oversight of the company since a panel blew off a Boeing jetliner during an Alaska Airlines flight in January.

The FAA said its review will examine key areas of safety processes at Boeing to make sure that they “result in timely, accurate safety-related information for FAA use”.

An FAA spokesperson said the review was not triggered by any particular event or concern but rather is part of the FAA’s oversight of safety culture at the huge aircraft maker.

Boeing did not comment immediately on the new review.

The FAA administrator, Mike Whitaker, has ordered special audits of Boeing and other steps to examine the safety culture at the company since a panel called a door plug blew off a 737 Max during the Alaska Airlines flight.

However, the inspector general of the transportation department, the FAA’s parent agency, said last week that weaknesses in FAA oversight are limiting its ability to find and fix problems at Boeing.

The auditor said the FAA has failed to ensure that Boeing and its suppliers make parts that meet engineering and design requirements and to investigate claims that Boeing puts improper pressure on employees who are authorized to conduct safety inspections. The FAA has closed only 14 of 34 reports of undue pressure, with the others remaining open for more than a year on average, according to the report.

Last month, the National Transportation Safety Board issued an “urgent” recommendation to the FAA about a problem that surfaced in February with rudders that pilots use to steer certain Boeing 737s after landing. Two weeks later, the FAA later issued a safety alert to airlines about the matter.

Old_Joe

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hank

Thanks for the update @Old_Joe.

I happened to watch the NASA press conference late last evening. Five reps from across the spectrum, including Launch Alliance and Boeing. That relief valve you mention was detected “buzzing” (apparently by other sensors). A buzzing sound indicates a “flutter” condition. Going further - the flutter could cause premature wear on the valve so that it might not operate throughout the flight. Doing a valve reset or test would have required some type of “fuel transfer”. Perfectly acceptable on non-crewed missions. But LA rules are stricter when humans are aboard. There was a mild “dig” at SpaceX from the Launch Alliance engineer. He noted that “others” continue fueling their rockets with people aboard, but their own rules don’t allow this, as it is seen as too dangerous.

Geez. This really is ”rocket science”. Difficult to imagine the complexity of these things.

Crash

For BA: Just another brick in the wall. One thing after another. After another. Ya, rockets are complicated. Oxygen relief valve. Yes, sounds dangerous.

Reminds me of Apollo I, but after that horrible fire, NASA stopped using a pure oxygen atmosphere in their space vehicles. I don't suppose the scrubbed current mission was using pure oxygen, either.....
https://en.wikipedia.org/wiki/Apollo_1

Old_Joe

Some 96 percent of union members voted in favor of the strike, rejecting a proposal that would have boosted pay and benefits even as it fell short of other demands.

Following are edited excerpts from a current report in The Washington Post.

SEATTLE — Boeing workers picketed outside the company’s plants in Washington state early Friday morning after voting overwhelmingly to strike. Tens of thousands of machinists voted Thursday to reject a proposed deal between the company and the union that would have significantly boosted pay and benefits even as it fell short of other union demands.

Some 96 percent of members of the International Association of Machinists and Aerospace Workers District 751 voted in favor of the strike — far more than the two-thirds needed to launch the work stoppage.

The walkout is a stinging rebuke for Boeing and could represent the most disrupting challenge yet for a company that has spent much of this year in damage control as it careened from crisis to crisis.

The strike risks derailing the aerospace giant’s recovery from ongoing financial and safety challenges and could cost the cash-strapped company an estimated $1 billion per week, according to analysts. The union plays a key role in assembling some of the company’s best-selling aircraft.

The most direct impact is on Boeing’s assembly plants in Washington, especially in Everett and Renton. An extended work stoppage could also impact Boeing suppliers and possibly shrink its share of the aerospace market.

Machinists in Seattle said the strike was long coming: “We just want to be treated right and they’re not doing it,” said mechanic Charles Fromong, who has worked for Boeing for more than 37 years. “So I guess we’re going to get it done.”

Boeing said early Friday that it would return to the bargaining table: “The message was clear that the tentative agreement we reached with IAM leadership was not acceptable to the members,” the company said in a statement. “We remain committed to resetting our relationship with our employees and the union, and we are ready to get back to the table to reach a new agreement.”

After a string of tense, marathon negotiating sessions over the last several weeks, the IAM and Boeing announced Sunday that they had reached a tentative four-year agreement, including a 25 percent pay increase over four years and enhanced health and retirement benefits. Also significant: If workers had voted to accept the deal before the current contract, Boeing committed to building its next new aircraft in Washington state, a key union demand. Both sides and investors had cheered the deal.

“Four years is not enough to make up for the last 16,” Boeing worker Roger Ligrano said before he voted. He said he was voting to strike, in part, to give union members more time to understand a deal.

Harold Ruffalo, who has worked for Boeing for 28 years, said after the vote results were announced that too much corporate greed is impacting the company, and workers need more money to live as inflation hits paychecks.

The Biden administration was monitoring the situation; acting Labor Secretary Julie Su has been in contact with both sides.

Leading up to the strike deadline, analysts said they were worried about how long a strike would last. They said that many workers have not forgotten previous rounds of negotiations in which Boeing pushed for concessions — including the end of the traditional pension program — to keep aircraft production in Washington state.

Michael Bruno, Aviation Week Network’s executive editor for business, said in previous rounds of negotiations Boeing threatened to move airplane production to other states to extract concessions from the union, which soured relations.

The last time IAM members struck was in 2008, a 57-day day walkout that Moody’s estimated cost Boeing about $1.5 billion a month. Boeing reopened negotiations on that contract twice, in 2011 and in 2013, and won significant concessions from workers.

Crash

"...significant concessions from workers."

Time to pay them back!
Nurse's Union here is striking again, for a single day. Admin. says anyone who doesn't show up for work will be locked out. They simply refuse to hire enough people to do the work--- though the offered pay increase is legitimately large. The Union is asking for binding arbitration.
Yes, this is tangential, sorry. But it's all about the same sort of situation:
https://www.hawaiinewsnow.com/2024/09/13/strike-set-after-negotiations-between-nurses-kapiolani-medical-center-end-without-deal/

Mitchelg

The unions will bust Boeing. The stock is not investible.

BaluBalu

If those news reports are correct, it seems BA union workers do not trust their own union leaders who negotiated their deal. BA should bypass the union leaders and take the terms directly to the employees; however long it takes to get it done.

Companies with heavy blue collar workers see the disproportionate comp difference between the workers and the management. The discrepancy in Europe is not as severe and it is not as severe in the US Tech industry (for a different reason). Congress can fix some of these issues by penalizing RSU grants and encouraging stock option grants.

Except for its history in Seattle, I do not see why BA needs to move some of its operations back to Seattle. I think the company should organize itself to operate most efficiently, notwithstanding what unions want. My sense is, in the final deal, workers will get what is most important to them and the company will get what is most important for the company's operations. Hopefully, the union leaders lose out.

gman57

I just read a little blurb on AP. In the contract there is a 25% salary gain over 4 years. Dang, doesn't sound bad to me. Cola is key.

Crash

Healthcare, healthcare, healthcare. Pension, pension, pension. "Significant concessions in the past." Time to catch up. Time for a corporate reckoning.

Crash

Space & Defense Chief leaves.
https://finance.yahoo.com/news/boeing-defense-head-ted-colbert-205610533.html

Observant1

"Meanwhile, the rolling furloughs Boeing announced Wednesday for non-unionized employees — requiring one week off unpaid out of four to conserve cash — are being applied widely across all divisions, including Commercial Airplanes, Defense and Space, and the aftermarket services unit."

"And one particular set of nonunion employees were surprised to learn they will be among those subject to the rolling furloughs. That’s those in Boeing’s Chief Aerospace Safety Office — responsible for the company’s implementation of Congressional legislation that raised safety standards and setting up a new companywide safety management system."

"As Boeing makes these moves to conserve cash, the International Association of Machinists and Aerospace Workers insisted Thursday 'this strike is going to last as long as it has to.'"

Boeing Furloughs

Crash

737-Max rudder Safety Alert.
https://thehill.com/homenews/4921992-faa-warning-boeing-737-rudder-system-may-jam/
"...a sealed bearing was incorrectly assembled during production, leaving the one side more susceptible to moisture which can freeze and limit rudder system movement...The news comes just four days after lawmakers urged the Department of Justice (DOJ) to investigate Boeing executives for putting profit over safety. The company has been under intense scrutiny over the last year following an incident in January when a door panel flew off mid-flight during an Alaska Airlines trip."

Old_Joe

It should be noted that the defective part was sold to Boeing by Collins Aerospace — an aerospace manufacturer that supplies Boeing. Given the nature of the defect there is no suggestion that Boeing could have or should have been aware of the defect, which went unnoticed until some 737 rudder control systems became compromised after being in service for an extended period of time.

Collins Aerospace is an American technology company that is one of the world's largest suppliers of aerospace and defense products, and is not owned or controlled by Boeing.

hank

Boeing would be ”Biggest Ever Fallen Angel” - if cut to junk.

”On Tuesday, S&P Global Ratings said it’s considering downgrading the planemaker to junk as strikes at its manufacturing sites persist, hurting production. Last month, Moody’s Ratings said it’s considering a similar move.”

Considered adding this to a couple of other running threads dealing with fixed income / bond investing. The ramifications of the Boeing story are very far reaching.

BaluBalu

Today, BA preannounced their Q3 earnings and also announced a cut of 10% (17,000) workforce (at all levels) plus a delay of the introduction of 777X (passenger plane). That should preserve its investment grade rating.

New CEO has to start with cleaning house!

Old_Joe

Here are excerpts from a current report in The Guardian:

The Federal Aviation Administration (FAA) said on Friday it will open a three-month review of Boeing’s compliance with safety regulations, continuing the agency’s closer oversight of the company since a panel blew off a Boeing jetliner during an Alaska Airlines flight in January.

The FAA said its review will examine key areas of safety processes at Boeing to make sure that they “result in timely, accurate safety-related information for FAA use”.

An FAA spokesperson said the review was not triggered by any particular event or concern but rather is part of the FAA’s oversight of safety culture at the huge aircraft maker.

Boeing did not comment immediately on the new review.

The FAA administrator, Mike Whitaker, has ordered special audits of Boeing and other steps to examine the safety culture at the company since a panel called a door plug blew off a 737 Max during the Alaska Airlines flight.

However, the inspector general of the transportation department, the FAA’s parent agency, said last week that weaknesses in FAA oversight are limiting its ability to find and fix problems at Boeing.

The auditor said the FAA has failed to ensure that Boeing and its suppliers make parts that meet engineering and design requirements and to investigate claims that Boeing puts improper pressure on employees who are authorized to conduct safety inspections. The FAA has closed only 14 of 34 reports of undue pressure, with the others remaining open for more than a year on average, according to the report.

Last month, the National Transportation Safety Board issued an “urgent” recommendation to the FAA about a problem that surfaced in February with rudders that pilots use to steer certain Boeing 737s after landing. Two weeks later, the FAA later issued a safety alert to airlines about the matter.

Mark

@Old_Joe who said "It should be noted that the defective part was sold to Boeing by Collins Aerospace — an aerospace manufacturer that supplies Boeing." It is however a subsidiary of RTX Corporation not usually known for those types of issues.

Old_Joe

My intent was only to note that sometimes it isn't possible for a manufacturer/final assembler to realize that a part supplied by another company will fail in the future because of a manufacturing defect, and to differentiate that situation from one where the final product fails because of indifference to safety by the final manufacturer.

In this instance I believe that the defect was a bearing with an improper internal seal from Collins, a usually reliable supplier, and which was not observable by Boeing employees as they assembled the rudder components.

It's my understanding that over a fairly long period of time the improper internal bearing seal allowed moisture to accumulate inside the bearing, which under certain environmental conditions could then freeze, making the rudder controls very difficult or impossible to actuate.

Crash

Boeing re-bought Spirit, right? Bring it under the same tent? Maybe that is still in the works, but pending? More control over things, that way. I was re-reading the Guardian excerpt. Sounds like at least two bad things continue to go on: Regulatory capture, and a financially starved Regulator's office at FAA. The Inspector General's words are ringing alarms for ME.

The USA used to be the untouchable Gold Standard.

Old_Joe

@Crash- Yes, Boeing bought (re-acquired) Spirit in July.

The FAA has been under significant regulatory capture for many years, much to the continuing irritation of the National Transportation Safety Board (NTSB), who are the U.S. primary investigators of aircraft accidents. Over the years there have been quite a number of situations where the NTSB has issued recommendations after an investigation, only to have those recommendations watered down or even ignored by the FAA.

It has not been uncommon for the FAA to issue regulatory safety measures only after being forced to by critical publicity after repeated problems of a particular type, and well after prior NTSB recommendations on the problem.

Have you ever seen the size of the FAA building in D.C.? It's hard to understand what all those people are doing if they "don't have enough resources".

BaluBalu

Seems like overlapping regulatory bodies with neither of them being held accountable for the ultimate outcome. When parents bicker, kids take advantage, which is what BA is doing. May be the bigger problem is our non-functioning / non-effective Government and not Boeing.

Six years after those crashes, I do not see any real progress. Break it up. It has a rotten culture and it needs to start as a different company.

Disclosure: I own BA.

BTW, RTX had some product problems in the past 12 months and it fixed the issues enough that its stock recovered very well. If a company has a good culture, it can recover well from mistakes.

I agree with Old Joe about ascribing the issue to the supplier and not to BA in that one instance. Thanks to him for the detailed and objective reporting.

Old_Joe

"Seems like overlapping regulatory bodies with neither of them being held accountable for the ultimate outcome."

"Truth", as @Crash would say.

Crash

In Senegal:
https://cdn.britannica.com/38/5038-050-F7CFE2C9/Elevation-Africa.jpg
https://finance.yahoo.com/news/nyc-bound-boeing-767-makes-224137827.html

Old_Joe

Wonderful. Just F...ing wonderful.

BaluBalu

I would mandate all BA Board meetings and executive meetings to occur only in the mid air on 737s or 767s. I do not care where they fly to.

BaluBalu

and finally,

"Boeing, Union Reach Tentative Deal to End Strike. Wages Would Jump 35%."

https://www.barrons.com/articles/boeing-union-tentative-deal-strike-b8023738?mod=Searchresults

yogibearbull

First the port workers, now Boeing: 1.35^0.25 = 1.078 or +7.8% wage growth annualized, not counting other goodies. Powell won't be happy.

msf

What matters for inflation is unit cost. As labor becomes more productive, increases in wages are (or can be) counterbalanced by increased productivity.

Boeing is having such design and manufacturing problems that simply building a plane that can be counted on to fly right might constitute a significant increase in productivity.

https://www.reuters.com/business/aerospace-defense/boeing-delays-suppliers-737-max-output-goal-by-6-months-sources-say-2024-09-09/

Crash

Ryanair or Boeing's issues, here?
https://www.accuweather.com/en/weather-news/184-passengers-and-crew-evacuated-as-ryanair-boeing-plane-catches-fire-on-runway-in-italy/1705397

BaluBalu

As a shareholder, I am fine with the wage increases. Co initial offer was 30%. They recently announced 10% layoffs across the board. So, there should be enough productivity gains. I am happy they will be back to work soon.

I just need the execs to get back to fixing the culture.

Side bar, There is a possibility, it is going to be M Bowman and not Powell’s world. In any case, Powell term ends in a year or so.