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<< Previous   of   Next >> Associated Press file  (click to enlarge) Chief Executive Jim McNerney, shown at a 2008 news conference in Seattle, came to Boeing in 2005 after previous posts with 3M and GE. At GE, McNerney spent years being groomed by Chief Executive Jack Welch. There, he picked up the GE mindset of “no loyalty to place,” aerospace analyst Richard Aboulafia said. Associated Press file  (click to enlarge) Boeing President and Chief Executive Jim McNerney addresses a business conference in Seattle on May 5, 2008, in Seattle. Herald file  (click to enlarge) The 2008 strike by Boeing Machinists made an impression on McNerney, analysts say. “McNerney is so pissed with the IAM that he wanted to do it,” Scott Hamilton of the Leeham Co. wrote of the choice of Charleston.   ADVERTISEMENT   Related Stories • The Boeing buzz in South Carolina 11/1/09   CONTACT THE HERALD Robert Frank, City Editor frank@heraldnet.com   Published: Sunday, November 1, 2009 Signs were clear Boeing isn't tied to location By Michelle Dunlop Herald Writer EVERETT — The age of loyalty is dead. People in the Puget Sound region may have learned that the hard way last week when the Boeing Co. announced its preference for South Carolina over the company's historic base for commercial airplanes. “Boeing has betrayed our loyalty once again,” said Machinists president Tom Wroblewski, in a statement shortly after Boeing's announcement. Betrayed, disappointed, angry: It wasn't just Boeing workers here that described their reactions to the company's decision in those terms. Local, state and congressional leaders did, too. “Even when they moved their headquarters to Chicago, Boeing's Washington work force remained dedicated to the quality product they make,” said Sen. Patty Murray, D-Wash., on Wednesday. “Now, Boeing has decided to take their second 787 line to South Carolina. It's a shortsighted decision.” Beyond the initial feelings of betrayal, there were those who say the writing was on the wall. Last year, as Boeing Machinists headed back to work following a 57-day strike, Richard Aboulafia, an analyst with the Teal Group, predicted Boeing's eventual departure from the Puget Sound region. Although Boeing had not yet bought out its 787 parts supplier, Vought Aircraft Industries, in South Carolina, analyst Aboulafia suggested in 2008 that the jet maker would flee to the South. The South has “weaker unions and right-to-work laws that diminish union power. As the car companies realized, it's easier to train flexible workers than it is to work with experienced but inflexible workers,” Aboulafia said then. On Thursday, the day after Boeing announced it would set up a second assembly line for its delayed 787 Dreamliner in South Carolina, Aboulafia said he wasn't the least bit surprised by Boeing's choice. “That strike had a strong impact on management,” Aboulafia said. Aboulafia isn't the only analyst who viewed the strike as a thorn in the side of Boeing management. “Boeing CEO Jim McNerney is so pissed with the IAM (Machinists) that he wanted to do it,” Scott Hamilton, with Leeham Co., wrote on his Web site just before the announcement was made. McNerney himself may have telegraphed the decision when speaking a couple weeks ago after announcing the company's third-quarter financial results. After mentioning that the 787 second line choice was between Charleston and Everett, McNerney noted there would be “some execution challenges” in getting the work done in South Carolina. “Diversifying our labor pool and labor relationships has some benefits,” he said. Noting that the company and the Machinists union have had trouble working together during recent contract negotiations, he added that the challenges in Charleston are “certainly more than overcome by strikes happening every three or four years in Puget Sound. Our balance sheet would be a lot stronger today if we had not had a strike last year.” In April, like Aboulafia, Hamilton warned of a Boeing departure. At an Economic Development Council of Snohomish County meeting then, Hamilton detailed several reasons for Boeing's exit, including its troublesome relationship with the Machinists and complaints over Washington's business climate. Hamilton noted another reason: Boeing Chief Executive McNerney's commitment to outsourcing. McNerney came to Boeing in 2005 after previous posts most notably with 3M and General Electric. At GE, McNerney spent years being groomed by Chief Executive Jack Welch. There, he picked up the GE mindset of “no loyalty to place,” Aboulafia said. It's an attitude that's reflected in Boeing's board of directors. So, while Bill Boeing might have started his commercial airplane company here in the Puget Sound region, the board of the Boeing Co. doesn't feel an obligation to continue to make jets here. The board and McNerney's focus is not on place but on the bottom line. That reality began sinking in for lawmakers this week. Rep. Jeff Morris, D-Mount Vernon, a member of the Legislature's aerospace task force, said that one of the messages received by lawmakers by this week's decision is that “Boeing is bringing a low-bidder attitude for airplane manufacturing into the process. It's something we have to realize.” McNerney is no stranger to the low-bidder attitude. In his first three years at 3M, he began moving jobs out of the United States and into Asia. That company's U.S. staffing fell 10 percent at a time that 3M's work force in Asia grew by 5 percent. As with Boeing, McNerney said 3M's growing presence outside the U.S. wasn't about cost alone. “I'm responsible for keeping 3M a globally competitive company,” McNerney said in a 2004 BusinessWeek article. “Now, it's very hard to serve Chinese customers in a lot of our businesses unless we're manufacturing there. We don't do this to eviscerate U.S. jobs. We do it to be competitive.” Despite troubles with its global 787 supply chain, McNerney stands behind the business model of expanding the company's presence worldwide and not putting too many eggs in one labor basket. Boeing's move South gives the company labor stability for its troubled jet and cuts costs, Aboulafia said. Besides removing a high potential for strikes in a state with a low union presence, Boeing also got the bonus of last minute tax incentives. Washington lawmakers point to the $3.2 billion in incentives the state passed in 2003 for Boeing and aerospace companies in order to land the first 787 production line. Many felt that deal and previous sacrifices should have weighed more heavily in Boeing's decision. The state, counties and cities “have all contributed to the Boeing endeavor by means of massive tax breaks, infrastructure development, job training and political support for decades,” wrote Rep. Jay Inslee, D-Wash., in a letter Wednesday urging Boeing and the Machinists back to the table. When Boeing shunned further labor talks and snubbed Everett, Inslee sounded scorned. “The citizens have put out big- time for Boeing management, and I'm disappointed that they are pulling the rug out from under them with this decision,” Inslee said. However, the reality of McNerney and Boeing's new business demands is sinking in for some, including Rep. Morris and Deborah Knutson, executive director of the EDC of Snohomish County. Knutson said she hopes Boeing's South Carolina choice serves as a wake-up to how important the company is to the region. “We were just complacent,” she said. READER COMMENTS Log in or register to post new comment | Log out The Union Victims How many times during the strike did the Machinists brag about the money they were costing Boeing? They were proud to announce to anyone that would listen how the strike was costing Boeing hundreds of thousands of dollars per day. Please don't expect the public to believe the poor, poor machinists are the victim here. It was you that made the choice to scream for more and go out on strike when so many in this country were losing their jobs and houses. Scrappy Jr | Nov 5, 2009 7:11 am | 0 replies | View all | Post reply | Request removal Strike-proofing Boeing choosing SC was a smart business decision...it's called diversification. In 3 years when the IAM is contemplating a strike, they'll be wondering how much leverage they really have when SC is slowly turning out planes. Building a few planes is better than none from an economists point of view. Boeing is setting up an internal competitive rivalry to mitigate the wage wars in the Puget Sound. If the PS is so much better, then they'll be able to show it - SC will be viewed as the weaker division and the work flow will be adjusted. I can see why this situation is offensive to the union members, since a union promotes mediocrity and this new competition changes the dynamic. Offering a 10 year no-strike clause is a band-aid to the larger issue, so Boeing wanted to see if the IAM would even consider it...I was surprised to see they did. Even so, what would happen after the no-strike clause is over...a 9 month strike to make up for "lost privileges". If you read what the financial analysts are saying now, you'll see the future direction. Adaptation is survival. Information is Power | Nov 5, 2009 5:42 am | 0 replies | View all | Post reply | Request removal Truth about Boeing Jim McNerney and Doug Kight are lying weasels. That is the truth. They blame the Machinists for a strike they wanted and forced. Doug Kight lied continually to the workforce about the contract, assuming we are too stupid to use a calculator. Then they forced the strike to allow suppliers to catch up, which also failed. They blame the Machinists strike for program delays on the 787 and 747, yet this is the truth: The 787 was already over 18 months behind due to a failed outsourcing business model, and because management wouldn't listen to their engineers who told them the designs from the suppliers had fundamental flaws. The strike had no effect because most of the workers assigned to the program had been idle for nearly a year because the planes that were delivered were unworkable junk. The 747 program was delayed primarily because all the engineers got yanked to figure out the 787. It wasn't even being built yet, so how can they blame the Machinists strike?! The 777 was experiencing huge delays due to late interiors packages from those vendors. That is why Boeing forced a strike. I hear people saying things about how Boeing can't make deliveries, but I can tell you from first hand knowledge none of the deliveries is ever late because of the Puget Sound workforce. They are always late because of vendors, or terrible management decisions. Where does a newby like McNerney get off trying to tell anything to people who spent the last 30 years building this company. How dare a newby walk in and sell out what we all have invested our lives in?! McNerney has stated that he wants to move production to China. That is treason. This company and the technology we developed doesn't belong to him, it belongs to America, and to the engineers and workers who created it. They need to fire this guy while there still is any company left for anyone. Joseph Baker | Nov 3, 2009 10:02 am | 1 replies | View all | Post reply | Request removal Unions Comments Laughable Business 101, your costomers must come first. Boeing was tired of hearing from their (Multi-Billion Dollar) client's about fear of a strike and non delivery of product. How many warnings did Boeing give? Boeing gave the union many warnings and the union ignored their warnings. Boeing finally called their bluff. The union dosen't get it and never will.... their comments are laughable and show arrogance and ignorance. You can not expect your customers to put up with such B.S. The union put their own interests ahead of the customers and the Boeing company and lost. Phillip Day | Nov 1, 2009 9:47 am | 5 replies | View all | Post reply | Request removal Plain and simple --- McNerny is a back-stabber! First off, as for the last Boeing strike, Boeing welcomed it, because they had a whole ramp of 777 planes sitting outside that couldn't be delivered because of a lack of parts,(vendor related, interior items). The planes were completed, ready to go, but couldn't because of the vendor issues. At the time, this was a big problem and Boeing knew it so their 'out' was the strike. The strike 'down-time' would allow the vendors to catch up. A plus for Boeing, yet Boeing would use the strike and the union members as their scapegoats for the company's current heartaches and setbacks! I'm so sick of McNerney and his upper management blaming the company's problems on that one thing -- 'THE STRIKE!' There were a lot more factors involved. Fess up McNerney -- tell the truth! As for the current Boeing decision to send the 2nd 787 line to South Carolina, I believe this to be the grand scheme of things in breaking the union. McNerney made it his big game -- he played all of our state and local politicians. He played our union and it's leadership! As for all of the union employees, he just as well slapped our faces. Sorry, but as Boeing employee, I no longer find it easy to hold my head up high, with pride, especially when upper management acts like grade school kids, only caring for themselves and the shareholders. Lastly, Mr. McNerney, the MD/Boeing merger of ten years ago had a serious impact on employee morale -- and now, after this latest debacle, employee morale is as low as it gets! Ahhh... the games we play! Hope your happy, Jim! D M | Nov 2, 2009 11:49 pm | 0 replies | View all | Post reply | Request removal Lack of Respect? I've seen machinists talk often about a lack of respect and loyalty from Boeing management. This is the same group that talked of wanting to punish Boeing management in the recent strike (in the end they also punished themselves and many within and outside of Boeing). So, why would Boeing management be interested in directing more work to IAM? Let's say a machinist buying a new car has the choice of remaining loyal to an established dealership that has good quality of work, but charges more and is frequently late against a newer dealership a bit down the road that offers a more competitive price. Do you already remain loyal to your original dealership or at some point do you shop around? It is the right and obligation of Boeing management to act in the best interest of their shareholders - not in the best interests of a particular union. Union members may consider how to set aside their anger and work with Boeing to show that it is in management's best interests to choose to work with IAM. This is a global economy and yes that does mean you'll have to accept "takeaways" in your future contracts just like rest of the American working force over the years. Frank Johnson | Nov 1, 2009 2:29 pm | 2 replies | View all | Post reply | Request removal Good Job Boeing I do not know why all the Boeing workers are complaining, they all brought this on themselves. Greed, just like the auto workers and look what happened there. If you run a business no matter how small or large you do what is best for the business. The state of Washington lied to Boeing, the employees betrayed the company and so I would move the company also, which in 20 years I for see very little of the Boeing company left in the over-priced western Washington area. Cory Carlson | Nov 1, 2009 5:36 am | 1 replies | View all | Post reply | Request removal (No heading) The MAN running the company is the reason why the balance sheets are off. Lets look at what may be an average day on the 787 line. Mechanic arrives to work 2 hours early because he/she is on required overtime. The mechanic is assinged a job to do for the day, they clock in on the job look at job requirements and find that the job is not workable because A. parts not avalible B.vendor made parts incorrectly C. where the parts go in the aiplane are not correct, on and on day after day. A mechanic could go to work every day and get nothing done because of globle partner mistakes. If anything the 57 day strike helped Boeing. Members of the I.A.M. go to work everyday wanting to build airplanes. The 787 is not the only airplane with problems. Look at the 747 they have people standing around everyday because of vendor errors or vendors have not delivered parts needed, late drawing releases from the out of country engineers. Last summer the 747 line had mechanics doing very little around the shop and I mean very little. Why you ask, "GLOBAL PARTNERS OF COURSE" todd christensen | Nov 1, 2009 10:25 am | 1 replies | View all | Post reply | Request removal Boeing Leaving Boeing's choice to start its second assembly line in Charleston and its ultimate choice to leave the northwest will be made along wise business lines. The company can survive better in an area that is supportive of their efforts. Here we have organizeed (unionized) short-sighted voters, electing short-sighted politicians with short-sighted ideas and goals. Our current group of elected officials cannot even balance a budget without cutting into basic necessary services. Why would any large company want to stay in an area where the local government thinks so highly of the citizenery that it will not fund necessary basic services? You can put the blame directly on the Governor and Legislature for forcing Boeing's decision. Gene Miller | Nov 1, 2009 10:29 am | 1 replies | View all | Post reply | Request removal Hmmmmm,.... If Jim McNerney's role is to keep this company in business and meet the expectations of the stockholders (Hey, that's the reality of a publicly traded company. I don't like it any more than the next person: more, more, more,), then perhaps it would behoove the IAM to participate in the employee incentive plan. TheRiver | Nov 1, 2009 11:11 am | 0 replies | View all | Post reply | Request removal Unions never got it and won't. Don't worry, the politicians are right behind you. Stand in line for a job in the rice paddies. K Dog | Nov 1, 2009 10:12 am | 0 replies | View all | Post reply | Request removal (No heading) Wow, there's a whole DUH factor here that is quite obvious. Boeing execs took their show to Chicago to distance themselves from workers for a reason. And anyone who continues to blame the workers for this is very short-sighted, since a 57 day strike has never equated more than two years of delays and a far flung, "global" program that the company failed to keep tabs on. McNerney should have been booted for his failures w/ this company, the only reason 3M still survives is because he managed to make them one of the Boeing company's leading suppliers...DUH... For those of us who work on the floor every day, we don't make a killing, we do get paid decently for the hazards we are exposed to, for the inherent dangers that come w/ working around caustic fluids, heavy metals, live energy sources. And it certainly would be something for even ONE news source to maybe focus on just what has happened to workers over the years; the amounts of cancer and other illnesses that they suffer, the other disorders their children and members of their families seem to suffer...anyone who seems to think they can do a better job, cheaper, more power to them, but in the end, it's all about cheap now for the executives and the people of South Carolina may have won a contract, but they will find out just what the real costs become and that is nothing to blame workers for. CC At the Big B | Nov 1, 2009 8:03 am | 0 replies | View all | Post reply | Request removal

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