Boeing’s message vs. big profits
"Here they're making record profits and doing millions in stock buybacks, and Boeing is crying poor house," said Scott Hamilton. "There's a real disconnect."
Hamilton is sort of our hometown aerospace analyst, based in Issaquah. He is the voice of Leeham News and Comment, and he planned to be at the Machinists District 751 headquarters in Seattle tonight to await the results of the union's vote on a proposed contract extension. If accepted, the revised contract would bring major changes in benefits for the men and women who build jetliners in Everett and Renton.
Hamilton said that while times might be good now, Boeing does have to keep an eye on controlling costs in the next decade as competition increases from China and Russia as well as Airbus.
A no vote by members of the International Association of Machinists and Aerospace Workers (IAM) doesn't mean the 777X wouldn't be built here, Hamilton said.
"Boeing is going to put this out to bid, and that's not to say that Washington isn't going to be one of the bidders." It could even be a top bidder, given its highly trained workforce and developed infrastructure. But right now, Boeing is offering a sure thing, albeit at a high price for workers, he said.
Union members "thought the threat to put one of the 787 sites outside Puget Sound was a bluff," Hamilton said. The outcome was a second 787 assembly line in North Charleston, S.C.
That gamble hasn't been without problems. A year after it opened, Boeing's factory there is struggling to produce one plane per month, well below the company's initial expectation of three per month, Hamilton said.
While "Everett is clearly the best choice" for 777X work, Hamilton said, the problems in South Carolina will be worked out "given enough time."
As for other Boeing cities:
- Aerospace blog: Analyst: 'It behooves both parties' to resume talks 11/14/13
- Aerospace blog: Another open letter, from a Machinists member to Boeing 11/13/13
- Long lines as Machinists vote today on Boeing offer 11/13/13
- Questions and answers on the Machinists vote 11/13/13
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