McBoeing's dumb flight plan

The company is spending $900 million to save $9 million a year in wages. But we shouldn't get mad or succumb to the blame game. We should outsmart Boeing.
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Good thing we'll have some of these to sell.

The company is spending $900 million to save $9 million a year in wages. But we shouldn't get mad or succumb to the blame game. We should outsmart Boeing.

Boeing'ꀙs decision to place a second 787 production line has launched the usual squadron of handwringing, blame-laying and introspection. Handwringing, as in Boeing is going! The sky is falling! Sound the alarm! Blame'ꀓlaying, as in Democrats/liberals/unions, etc., have made this such a horrific place to do business that Boeing had no choice — no choice I tell you! — but to move to the welcoming arms of the business-friendly south. And introspection, as in 'ꀜWhat else could we have done? Where did we go wrong?'ꀝ

Here'ꀙs what I'ꀙve learned from the whole misadventure:

First, McBoeing'ꀙs board of directors remains rather short-sighted.

Next, some people in South Carolina are a bit insecure. In a TV interview Wednesday I said that Boeing was essentially assigning production of its most technologically advanced jetliner to 'ꀜthe functional equivalent of Wal-Mart greeters.'ꀝ Some folks down there took that personally, judging by the e-mails I'ꀙm getting. They needn'ꀙt have. I don'ꀙt have anything against South Carolina or its people; I was talking about the relative wages that will be paid.

Boeing will pay workers around $14 an hour to a do job that pays more than $26 here. Think about your job: If they cut the pay for your position by almost half, what level of talent would your employer attract? As it turns out, the starting machinist's wage here for a comparable position is only $15; the $26-an-hour figure is for someone with 20 years of experience.

So here's the problem with moving to South Carolina, now. Having essentially junked the careful, collaborative process that made the 777 such a success, Boeing has collected a fleet of trouble trying to sort out the problems of the even-more complicated 787. So the answer is opening up a second production line for a jet that still isn'ꀙt ready to fly? And staffing it with new hires? In a state where you'ꀙve already had considerable production problems, problems so bad, your evil, unionized Washington workers have had to fix them?

It'ꀙs not about the quality of workers in South Carolina. Frankly, it wasn'ꀙt fair from the start to ask a lot of recently trained workers to put out parts of the precision and quality required for jetliners.

Yes, they make BMWs in South Carolina, and they'ꀙre just dandy. But automobiles are not airliners. (As one aerospace CEO once told me: 'ꀜSure, we could build dashboards [instead of composite parts]. But it would be more dashboard than you'ꀙd ever need.'ꀝ) Automobiles never run the risk of just falling out of the sky.

So getting a second line up and running in South Carolina seems like a potentially expensive gamble for Boeing, at a time when they'ꀙre still trying to fix the original product.

As for who to blame, there'ꀙs only person: Phil Condit. Condit was CEO when Boeing made the unfortunate decision to become McBoeing by merging with McDonnell Douglas, which had essentially failed at the commercial aerospace business. It was McDonnell Douglas holdovers who managed to bungle the Air Force tanker contract; it was McDonnell Douglas holdovers who managed to lose the Joint Strike Fighter competition.

And it is, to some extent, McDD holdovers on the board who have brought in the General Electric style of management, in which workers are interchangeable parts of no particular value. They let Alan Mulally escape to rescue Ford without federal bail-out dollars, and brought in Jim NcNerney. This is now a company with a short-term focus in a long-term business. They'ꀙre about to spend around $900 million to save $9 million a year in labor costs. Condit, who was plenty smart, should have smelled a lemon and walked away when McDonnell Douglas offered itself up for sale. Boeing hasn'ꀙt been the same since.

Don'ꀙt blame the unions. McBoeing clearly had no interest in negotiating, only using the machinists to pry a better deal out of South Carolina. The union offered what Boeing wanted, but asked for something in return.

Don'ꀙt blame state government, unless you think Washington can become a state with taxes so low we have to be bailed out by the feds. Because that'ꀙs where South Carolina is. Its unemployment taxes (a frequent complaint of McBoeing'ꀙs with regard to Washington) are so low that their unemployment fund went bankrupt last year, and had to be bailed out by the feds.

The final irony here is that your federal tax dollars are effectively subsidizing McBoeing'ꀙs move to South Carolina.

The question shouldn'ꀙt be what could have done? The right question is what should we do now? If Boeing is going (and I don'ꀙt want to chase them out the door), let'ꀙs go after somebody else — Airbus, Bombardier, Embraer. We have the talent and infrastructure for world-class aerospace work. Let'ꀙs use it.

Want to get really radical? Get the pension funds and port districts together, buy Boeing'ꀙs abandoned facilities, hire the laid off workers and put them back to work in employee-owned enterprises that, free of the McBoeing board'ꀙs globaloney agenda, could compete for work all over the world.

The point is we can'ꀙt compete on being cheaper than the rest of the world. We should compete at being better.


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About the Authors & Contributors

T.M. Sell

T.M. Sell is professor of political economy at Highline College.