One of the best summaries of the issues in the Boeing strike appears in today's Wall Street Journal [$]. While the harrowing economic conditions of the nation and the world cry out to settle this strike, it's clear that Boeing and its Machinists aren't about to give. The showdown is momentous.
The article calls the strike "one of the country's last and most important battles over outsourcing." The outcome will have a lot of impact on other manufacturers, since Boeing is the nation's flagship manufacturer. Moreover, this key issue has been festering for more than a decade, ever since Boeing adopted from automakers the program of modernization and outsourcing that has cut machinists by 40 percent and cut the time to assemble a plane by 60 percent.
After losing ground for years, the Machinists union this time decided to take a firm stand, largely because Boeing's financial position is so strong, buttressed by three years of record orders for its jets. Perhaps the union also felt that it could risk a long strike without rank and file defections because the usual settlement package includes a "signing bonus" that makes up all the pay lost during the strike. A long strike might exceed the lost pay, however. And now the political pressure is building as the nation's economy reels.
So far, the strike has had little effect on the governor's race, but its effects could be significant on the local economy. First is the lost revenue in taxes and local retail sales. More ominous is the background music of threats by Boeing to shift future assembly from a state with a record of repeated work stoppages — or to ask for more tax concessions if Boeing is to stay in Washington state. The other issue that is coming to the surface is just how well managed the company is, given its record of Defense contract losses, a 787 with a serious weight problem, and worsening labor relations.