It's tough to have a good feeling about how the dispute between the Machinists and Boeing gets solved based on the tone of the union members in the P-I and the Times.
They have a fair rhetorical point about getting a fair share of Boeing's profits, but they ignore the fact Boeing has already made huge concessions in the negotiations by shelving plans to have future hires move off of the legacy costs of retiree health care and traditional pensions that have wrecked other major domestic industries. And of course there are the sizable increases in wages, pensions, and lump sum bonuses Boeing currently has on the table.
One gets the sense that there are two ways this gets resolved based on the magnitude of the strike vote:
1) Boeing holds firm on it business model and suffers through a long strike, even with the related costs of delayed deliveries, including the critical 787 program. That will be painful to their bottom line (and leave less profits for the Machinists to partake of in any event).
2) Boeing caves on its business model of trying to avoid becoming the 21st century version of the domestic auto industry in order to dodge a strike at what is obviously not a good time for that to occur. In return, the probability that final assembly of future replacements to the popular 737 and 777 models ends up outside Washington state goes way, way up.
The former is heavy on short-term pain that is not insignificant for the region. The latter is ominous indeed.
Posted by Eric Earling at September 06, 2008 08:13 PM | Email ThisThe cost of living here is impossible for a workingman...you must be upper middle class or rich to participate in life...own a house in a good neighborhood and so on.
The average Boeing person would thrive in Omaha or Cleveland, but here they are nearly lower class!
Seattle has gone out of control in pricing and cost of life. Sorry, but the balloon needs to burst...
Posted by: John Bailo on September 6, 2008 08:28 PMBoeing is run by grafters and the Union is run and populated by grafters who wouldn't file a "whistle blower" action because they were both eating at the gubmnt trough.
It's a tough call. BOEING hasn't changed - the Union and it's membership hasn't changed. They are both a local embarrassment.
So a crooked company is being extorted. Do I care? Not really.
Posted by: JDH on September 6, 2008 08:31 PMHow so? Well my own brother plays games, and since poker is a game he plays - and kept a spread sheet wherein he took HOME an average of $185 for every night he played for a year. He has a friend who is "good," (by my brother's estimation) and he has a half million $ in chips in his trunk of his car that he cashes in
Posted by: JDH on September 6, 2008 08:43 PM
I also think that more jobs will have to go overseas. The largest carbon fiber manufacturer is in Japan (Toray industries). There are none in the Northwest. I don't think there are any aerospace grade manufacturer of carbon fiber in the US. Countries with carbon fiber industries will leverage its position against Boeing by saying if they don't build part of the jet in their country, they will not only buy Airbus jets, but they will give Airbus better deals on carbon fiber.
Posted by: Thomas B. on September 6, 2008 08:50 PMI find it interesting that unions want a cut of the profit, but none of the risk for losses.
Posted by: Thomas B. on September 6, 2008 09:26 PMA 13% increase in pay would put them at $73,450 a year, without overtime. That's a lot of money. If you can't put money aside in an HSA account and IRA account to cover for your retirement, then there is something wrong. That's more than the median household income in Washington.
If you look at LBloom.net, a machinist makes as much as an attorney working for the state. I don't think they make overtime. Hmmm...
Posted by: Thomas B. on September 6, 2008 09:45 PMIt's one big ruse. Let Boeing leave here for parts unknown and we will all be better off - unless we are Boeing employees.
Detroit would be a GREAT place for the whole G'damn production to play out.
Don't go away mad, just go away.
Posted by: JDH on September 6, 2008 10:26 PMThe Unions that represent Boeing employees business model is making sure that they get "their share" of "federal" dollars.
Neither of them represent the interests of Washington residents in any way.
Let us take this opportunity to rid ourselves of this pox on our existence. Support the strike so that Boeing leaves Washington, for other victims, for good. They are not an asset and their employees wages do not offset that dynamic.
Posted by: JDH on September 6, 2008 10:43 PMSays a lot about this country and who your neighbors are.
It's all about celebrity here in the USA of today. .
Posted by: JDH on September 6, 2008 11:01 PMThe union, which believes in a workers non-existent right to a job, is engaging in class warfare and is attempting a shakedown of Boeing with the machinists as their willing accomplices.
If Boeing was a principled company, which it isn't, it would try to break this strike, which it is too cowardly to do, by holding out until the union caves or by hiring new machinists.
Posted by: Bill K. on September 6, 2008 11:10 PMProof?
In the entire modern history of the Boeing company, Boeing has failed to make a profit in one and only one quarter. With union labor. And that quarter was a mismanaged production ramp up in the late nineties.
If Airbus is a threat, it is a threat because Boeing let it be so. Years of anti competitve subsidies went to airbus and Boeing remained silent, even as unions sounded the alarm bells.
By the time Boeing wised up a little, it had to make it's case not in a U.S. court, not before the state department, but in the WTO. It's now pending but there is significant doubt as to what kind of treatment a United States corperation is going to get.
How does one compete with a government backed multinational corperation that doesn't even have to make a profit?
But back to profitability. There is no case whatsoever against the machinist's union.
Boeing Income Statement
Revenue (ttm): 66.95B
Revenue Per Share (ttm): 90.096
Gross Profit (ttm): 13.28B
Sure, the stock price is on it's back, but that's because investors rightly do not trust in Boeing's executive branch, and always factor in even more downside.
I would also caution against focusing on superficialities of a proposed contract, and try to get some understanding of the real issues underlying this labor dispute.
Eric seems to have come around to the seriousness of this strike, and the implications. It would appear he's looking more closely at it. I hope he continues to dig deeper into it.
But with a six year backlog, 13 billion dollars in profits, a new program deeply behind schedual, and an ongoing push to ramp up to record production levels, Boeing's strategy seems suicidally inept. Like it or not, the machinists have all the cards in their favor. There will be other contracts. Boeing needs to settle.
A long strike isn't going to sit well with Boeing's supporters in congress and the state legislature either. And Boeing still need their support.
And a word about penalties:
It's widely thought that Boeing has protective clauses in customer contracts regarding labor disputes. This may be so. But customers have many options to make life difficult for Boeing.
And there are no such agreements that are known with suppliers. Boeing is going to have to compensate many suppliers if for no other reason than some could incur irreperable financial losses as Boeing postpones their vendor's deliveries.
Posted by: Steve on September 6, 2008 11:24 PMThat's not the whole offer:
11% raise over 3 years
Annual cost of living increases (in addition to the 11%)
Annual performance bonuses
Increased pensions
Contract ratification bonus
It all adds up to an average of $34,000 extra income over the next 3 years.
Apparently that is a slap in the face and not a good offer. It's stingy and an insult.
Boeing's NET profit was just over $2.8 billion, not the $13 billion you're trying to portray.
Additionally, increased profit typically increases share price (especially when the profit appears to be stable). Considering the stock purchase plan at Boeing, the machinists could make a LOT of money with an increased stock share.
And so could all the other owners of the company. But apparently making an extra $34,000 over 3 years and risking stability and production timelines is more important...
Posted by: Shanghai Dan on September 6, 2008 11:44 PMI hope you enjoy your impending unemployment.
Posted by: Kato on September 7, 2008 12:26 AMThose events would definitely solve the traffic problems and make housing affordable. (Plus they would induce intense whining from the King County elite left!)
And gross vs. net?
The cost component of labor is widley thoguh to be around 4-5%. And thats not just hand labor. Besides, no savvy investor plays that game.
The name of the game is P/E, ROA/ROE and cash on hand, as well as the historical stock price. All of which under most circumstances should have Boeing at 120.
But Wall St doesn't trust them.
Crusader is essentially correct on ROI, but I think we disgree on how to get there.
We KNOW from history that problems on the development of 777 caused the break-even point to balloon from 200 to 400 units.
Boeing's outsourcing strategy on 787 will probably make that look insignificant.
So I suppose it's your own personal viewpoint of the worth of a skilled workforce. Judging by the "knuckle dragger" comments, some don't place much worth in the American worker in general.
As to competitivness:
Airbus is the only real threat. Any others such as china or Japan are creations of Boeing itself.
I'll paste these words for Aviation anaylst Scot Hamilton at Leeham:
"If the IAM didn't have enough reason before to be concerned about out-sourcing, here's another: Mitsubishi just announced it's entered a deal with Boeing for its support in building the MRJ regional jet.
The so-called Japanese Heavy is an industrial partner with Boeing on the 787 program, building the composite wings. The 70-90 seat MRJ regional jet will have composite wings. Boeing is shying away from planes with less than 150 seats in the future. If the MRJ is a success, we think it likely Mitsubishi will grow the airplane up to 150 seats, particularly since Kawasaki Industries, another 787 partner, has announced plans to create a 100-150 seat jet.
From there it's only another step to grow into 200 seat jets and a full family. It took Airbus 14 years to create a family and 34 years to have a full product line.
This is not good for American industry. And in our view, Boeing is creating its own future competitor."
If Airbus is a threat, it is a threat because Boeing let it be so. Years of anti competitive subsidies went to airbus and Boeing remained silent, even as unions sounded the alarm bells.
By the time Boeing wised up a little, it had to make it's case not in a U.S. court, not before the state department, but in the WTO. It's now pending but there is significant doubt as to what kind of treatment a United States corperation is going to get.
How does one compete with a government backed multinational corperation that doesn't even have to make a profit?
Posted by: Steve on September 7, 2008 07:44 AMSince they always has before, the Union is energized.
Boeing needs to hunker down, if they are concerned with long-term in WA (which they probably don't), and keep them out until they come back for LESS than their last and final offer.
This works, as I did it in CA, and they never struck again........
Posted by: Norm on September 7, 2008 09:11 AMSince they always have before, the Union is energized.
Boeing needs to hunker down, if they are concerned with long-term in WA (which they probably don't), and keep them out until they come back for LESS than their last and final offer.
This works, as I did it in CA, and they never struck again........
Posted by: Norm on September 7, 2008 09:12 AMThat should drain it's entire cash reserve in about three months.
I'm not sure, but I think most of the Machinists can outlast that timeframe.
It's going to be interesting to watch Boeing's stock price this week. Traditionally, strikes have had little effect on it. I think it could be different this time. I'm not sure the downside was already factored in; Boeing had been telling god, the shareholder and everybody else negotiations had been going well....right up until the train wreck occured. Wall St isn't going to cotton to the lack of candidness. Niether are they going to react well to to the potential annihalation of Boeing's cash reserves. Then again, the stock is already crippled, and the major holders might believe it too cheap to sell. Many of them got trapped by the precipitous decline since january.
I know I'm stuck with some shares that have lost more than a third of their value. I'm long because I have no real option.
Posted by: Steve on September 7, 2008 09:56 AMYou're not too bright are you? The longer the machinists are out on strike, the more it weakens Boeing. There may not be much of a company to come back to work for when all is said and done.
Unions have driven all the US automakers into near insolvency. They will do the same for Boeing too.
When China starts making its own planes, that will be the final nail in Boeing's coffin.
Posted by: Observer on September 7, 2008 10:05 AMAs far as china, I wouldn't ride in a chinese made car much less airplane.
But if we are going to give away key technology to a communist police state as national policy, oh my.
As to the automakers, they chose to make cars nobody wants. I mean really, they don't stand up well against their japanese and european equivalents very well. I mean really. Live axles and pushrods....
Posted by: Steve on September 7, 2008 10:51 AM1.2 billion Chinese might take the opposite view. That is a huge market Boeing loses and China gains.
As for the automakers, they have to produce a car at a pricepoint the market will accept. Given they are burdened with huge liabilitiy payments to the unions (healthcare and pensions) they are forced to scrimp on other things. Add to this the poor workmanship of the union auto workers, many of whom didn't even finish high school, and you have a recipe for a crappy car.
It is interesting that even you, the big union advocate, admits that the best cars are made by nonunion Japanese worker, not the undereducated, bad attitude, over paid lazy sloths slapping crap together in Detroit.
They directed the design, they directed the assembly. They are consitently late to the party on technology.
Rack and pinion steering? Late.
McPherson struts? Late.
Independent rear suspension. Dear me. The New camaro will have it, a first, but then again the whole chassis is designed by Holden of Austrailia.
Traction control late.
Stability control late.
Overhead cams, late.
The litany goes on.
Japan has the prius, we have the Hummer H-2.
Brilliant prescriptions for sucess and utter failure. Now GM plays the game: Will they run out of money before the volt comes to market? I dount it. The taxpayer will be bailing out GM just like Fannie, Freddie, and Bear.
Let's not kid ourselves here, The death of the big three began in 1973 with pinto, and vega.
And Japanese and european automakers abroad are heavily unionized.
In the states their plants tend to be non unionized. Perhaps it's because they treat their employees well?
What a novel concept. Fairness equals no union.
Posted by: Steve on September 7, 2008 11:36 AMFairness equals no union.
The Boeing contract - what's not fair about a ~17% increase in pay over 3 years, a $2500 signing bonus, and annual performance bonuses? An average income increase of $34,000 per machinist over the next 3 years? That's not fair?
Posted by: Shanghai Dan on September 7, 2008 12:35 PMIn some areas they have been slow in technology but in others they have led.
Who else in the industry has OnStar? What Japenese or European car can I purchase that has anything close to it? Name me the models specifically.
Quadrasteer. Who else has it? Can I get a Toyota Tundra with it?
Many automotive innovations have been American made.
The automatic transmission was invented by GM.
Hill-Holder is a name for the mechanism invented by Studebaker that holds the brake until the clutch is at the friction point, making it easier to start up hills from a stop in manual transmission automobiles. It was first introduced in 1936 as an option for the Studebaker President.
Traction Control?
1971, the Buick division of GM introduced MaxTrac, which used an early computer system to detect rear wheel spin and modulate engine power to those wheels to provide the most traction. A Buick-exclusive at the time, it was an option on all full-size models, including the Riviera, Estate Wagon, Electra 225, Centurion, and popular LeSabre family sedan. Cadillac also introduced the ill fated Traction Monitoring System (TMS) in 1979 on the redesigned Eldorado. It was criticized for it's slow reaction time and extremely high failure rate.
Pontiac had overhead cams back as early as 1966.
Hemispherical combustion chamber - Chrysler.
Power/Electric Windows - Lincoln - 1946
Power Steering - Francis W. Davis and George Jessup - 1920s
Automatic Climate Control was another Cadillac inovation, in 1964.
First transverse FWD V6 passenger car - GM/1980
Composite body panels.
Memory seats.
Fuel injection - Chevrolet introduced in 1957.
If US automakers didn't have the benefits burden they do, perhaps we'd have had a Chevy Volt in 1982. But when at least $1500 of every car must go to paying benefits for workers that don't even make product, only a socialist wouldn't agree that US automakers are at a severe disadvantage from the get go.
How many of the Japanese plants in the US are unionized? Is the Prius plant unionized?
Let's suppose you are out for a new car. You want a Prius, know the model, color, options etc. Dealer A has it for $21,000 and Dealer B has it for $22,500. Would you buy it from Dealer B if he told you the extra $1500 was for the union pensioners?
What Japan doesn't have is a burdensome retiree liability that adds $1500 to the price of every new car.
Considering they recieved 4.5 percent between 2002/2005, and zero between 2005 and 2008, well yes, perhaps 11% spread over three years is a bit skimpy.
It appears that the on shot bonus isn't their preference.
It also appears that they might accept a performance bonus, based on their staements, if it was the same one other employees get. But it's not the same, and the entire program as stated in the proposal could be cancelled at any time, even the day before payout.
Iv'e bothered to read the document, it's a rather drab thing.
Posted by: Steve on September 7, 2008 12:50 PMAs to quality and efficiency, there was a chap by the name of Deming who tried to explain the way to accomplish it to detroit...and Boeing as well. And was shown the door. So he took his briefcase to japan.
The rest as they say, is history.
Posted by: Steve on September 7, 2008 12:55 PM
Shouldn't happen, like say, medical malpractice shouldn't. But anytime humans are involved.....
Do you want to blame the recent 777 crash landing on Rolls Royce? Because the finding seem to only apply to trent powered 777's.
Is it Rolls' fault? Boeings? or just an unknown unknown?
Or one could point out that most air crashes are crew induced. By your logic all pilots are stupid.
So let's not get into a tit for tat on this, it really has nothing to do with this labour action, it's causes, or solutions. I think perhaps it's stiff backs like yours and perhaps the same attitude as reflected by Boeing's peculiar negotiating strategy that are at least partly to blame.
Posted by: Steve on September 7, 2008 01:06 PMI listed several cases where they did bring them to market. You simply chose to ignore them.
I totally agree with you about Demming. But that was in the 1950's.
But the fact remains the American workers in the US based Japanese plants are not unionized. Even you admit they produce the superior product. But they don't get near the compensation that the unionized workers get. Why is this?
There is no excuse for leaving a hammer inside an aircraft. NONE. And if management is denied the appropriate tools for managing due to intrusive union contracts, that is the fault of the union.
When you have a control in any experiment, conclusions may be drawn. In the US we have US automakers with US unionized workers and then we have US based Japanese auto plants that are non-unionized. The Japanese plants put out a better product. Is it because US workers are too dumb? Apprently not as they can successfully make Prius's and Camry's.
Is it the management? Well, most US based Japanese plants also have American managers. Maybe that's not it either.
Perhaps the Japanese are just such nice folks that the same worker who would make twice as much at a US auto maker decided they love working for the Japanese.
If you actually read my previous posts in this thread, you'd know the offer was 11% OVER AND ABOVE annual Cost Of Living increases.
Assuming the COLA - which is pegged to inflation - is only 2% per year, that's a 17% increase in compensation over a 3 year period.
So again, what's not fair about bumping wages by 17% minimum, a $2500 signing bonus, and annual bonuses based upon corporate profits?
You want more than that? Is $34,000 additional income over 3 years not fair?
Posted by: Shanghai Dan on September 7, 2008 01:38 PM"Last year, workers at the Toyota Motor Corp. plant in Georgetown, Ky., received more in pay and bonuses than UAW members averaged at domestic automaker factories for the first time, according to a recent Detroit Free Press analysis.
Sieger said Toyota management works hard to keep an open relationship with assembly-line employees.
"If we're doing our job right that way, then there's probably no need for third-party representation," he said."
Source: Japan Times and Detroit free press.
Nevertheless, The comaprison between aircraft workers and auto workers is a pointless one. Even more pointless is the idea that The IAM and the UAW are cut from the same cloth. The arguement is less an arguement than a non sequitur.
If you cannot see the uniqeness in the situation that has arisen between Boeing and the IAM, and instead choose to make an ideological stand, thats well and good.
Let's hope for the sake of my portfolio neither side in the dispute does the same thing.
Posted by: Steve on September 7, 2008 01:39 PMPrecisely! Thank you for making my very point! Pat yourself on the back Steve. Clap clap clap clap!!!!
No pause for a moment and engage the gray matter. How many years has Toyota Motor Corp been in the US using American workers? Hmmm.
Now ask yourself:
Were they unionized during that time?
How hard do you think it is for Toyota to fire a nonproducing worker as compared to say a unionized GM worker?
Now how did Toyota, using non-union (scabs I believe is what you union types call them) workers get to the point where they can offer compensation better than what the union workers get? Hmm?
What else can I say? You have proven my point. The non-union workers put out a better product and, by doing so gain market share for the company. The company benefits and so do the workers. The workers long term employment is protected as is the long term viability of the company - all without a single strike.
As for comparing the UAW and IAM, there are differences, but in general they have more in common that differences. Historically unions have been in opposition of adopting new technology. Just as the ILW who only recently agreed to allow the Port of Seattle in put in auto stacking cranes in order to compete with Singapore.
Grow up, guys!
Posted by: Single Mom on September 7, 2008 02:05 PMIf you want to bring it that up, i could just as easily make the same sort of non-point with this sad story:
http://www.mrsc.org/mc/courts/supreme/127wn2d/127wn2d0853.htm
"In response to the questions of the United States Court of Appeals for the Ninth Circuit, we hold the plaintiffs here have demonstrated facts sufficient to justify a jury in finding a deliberate intention by Boeing to injure them. Further, to the extent they allege that such deliberate intention to injure was outrageous conduct, they have stated an additional claim for the tort of outrage that is sufficient to reach the trier of fact."
So it would appear that Boeing tried to kill some machinists. That's one way to put it.
Maybe a bteer way to put it is a few incompetant managers deliberatly ignore the situation.
No justifaction here either. Does it reflect on Boeing's management to this day? Maybe, If any involved are still there.
But again, humans err. That's that and bob's yer uncle.
Dan, As to cola, it depends on wheter or not you belive that not losing ground is a raise. I would not. Especially in this instance where the cola is calculated on a lagging indicator, the CPI, which also runs considerably behind the local rate of inflation. The idea of only 4.5 percent in GWI's over the past six years also seems lost in the mud.
As to bonuses, there are implcations, the first is which 25% witholding immediately occurs, not to mention that such bonuses have zero impact on alternate pension formulae.
The machinists saw the $2500 bonus as simply giving back what the company wishes they bargain away by witholding the q3 cola, which would have paid more than the bonus over the life of a three year contract.
And besides, the cola of which you speak is only a projection made by the Boeing. It's hardly reality.
Apparantly, the "knuckledraggers" can do basic math.
I can't help but think that Boeing has the same sort of attitude. I remember vividly when closing on 2 different mortgages, with 2 different brokers, how each broker tried to slip in an addition 1/10th of a percent interest in the closing papers. A nice payday for them, I was a bit put out by that tactic so each time I got up and left without signing.
Sounds like what the machinists did.
Posted by: Steve on September 7, 2008 02:22 PMSure - the 11% is BEYOND COLA. Meaning they will have an increase of 11% beyond the "ground level".
As to bonuses, there are implcations, the first is which 25% witholding immediately occurs, not to mention that such bonuses have zero impact on alternate pension formulae.
Yes, taxation is excessive, and Boeing company should not be held responsible for that. Thank the Slavery Party members that the union supports.
The machinists saw the $2500 bonus as simply giving back what the company wishes they bargain away by witholding the q3 cola, which would have paid more than the bonus over the life of a three year contract.
I see. So not negotiating in good faith to push the contract dispute (which happens every 3-4 years) means the machinists feel the need to stick it to the company. They could keep working AND keep negotiating.
And besides, the cola of which you speak is only a projection made by the Boeing. It's hardly reality.
And the COLA will adjust based upon actual inflation. I used just 2% annually for the next 3 years; it may be 4% or 6% annually.
Bottom line: it's an incredibly generous offer for machinists. Will the machinists give back the gains if the company struggles? No - they get theirs and damn the company.
And they wonder why so many more jobs are moving out of state and overseas. Killing their own goose.
Posted by: Shanghai Dan on September 7, 2008 03:15 PMIf I had the same prospects for that size raises for me and my crew, including bonuses and not having to pay healthcare, I would take them out for beers to celebrate.
Posted by: Marmstro on September 7, 2008 03:42 PMIt will cost less for Boeing to build new plants in Alabama or Tennessee and side step the local economy.
So get what you can now, bleed Boeing dry, because you are not going to have anything to assemble in a few years.
And to the person who said he would not fly on a Chinese plane, I disagree.
You will fly on what ever flight is the cheapest offered to you when you buy a ticket. If the Chinese plane can stay in the sky, it will be purchased by the major airlines if it costs substantially less than the Boeing or Airbus plane.
And it will, by far.
Posted by: bigdawg on September 7, 2008 04:45 PMTo those that just like to hurl insults, I really fail to see what you hope to accomplish. It's a quite ineffective method of inducing any sort of shame. To the contrary, it would seem to me that all it will do is stiffen the machinist's resolve, and make them less amenable to compromise given the fact that they have every advantage in the current situation. You seem quite bent on elimiating the calming effect that a couple of weeks holding picket signs and missing paychecks might have on them.
A striking machinist may, over time become easier to bargain with. And angry striking machinist will simply find a way to stay on strike.
I doubt even Boeing would approve of the baiting. As a shareholder, I certainly do not. The level of spleen on display is going to cause more harm than good.
I can understand that many disagree with the machinist point of view, or my own. But the failure to recognize the merits of my positon that at this critical and profitable point in Boeing's history, that Boeing should settle, can only mean that you are willing to see the company and its sharholders damaged further to suit a political idiology.
That's not standing on principal (with other people's money no less)
That is high order folly.
Building aeroplanes, right now, as quickly as possible, is the imperative. If it's confrontation that you want, I'm sure, given the machinists current mood, they can deliver just that. But I really can't give you and credit for standing on any higher moral ground than they are.
Posted by: Steve on September 7, 2008 06:34 PMLook everyone wants a cheap flights, just like our cars, food & fuel. By the way guys... Everything that Boeing or Airbust does MUST meet FAA std's ( yep I'm pilot)
I have NO dod in this fight, but what I've read..... The union made a big mistake.
But hey, that's me!
A buddy of mine is a new hire at Boeing. After months of paid training he's making fantastic money and benefits for work that can best be described as simplistic. It's really unbelievable. The greed of unions continually amazes me.
One last thought on this. Is the president, officers and office staff of the engineer's union getting strike pay?
Oh, I didn't think so . . .
THANK YOU Machinist and my Mom is one of them.
I would love the chance to get 11% raise over the next three years. Plus not have to pay the $435.00 for medical coverage I pay. But I am happy to still have a job because no company owes an employee a job. You work you get paid and if you do not like it find another job.
Jim
Posted by: Jim on September 8, 2008 11:04 AMFor me the bottom line is economics. I need a vehicle that is reliable and cost effective to drive. I just can't afford anything else.
I have owned the following vehicles over the last 25 or so years:
1970 Ford Country Squire Station Wagon
1975 Chevy Malibu
1976 Ford Mecury Cougar
1981 Datsun Pickup (2WD)
1985 Chevy Citation
1994 Toyota Pickup (2WD)
All of these vehicles were purchased used. To be sure, I understand that this is not necessarily a fair way to rate vehicles, since a lot may depend on the previous owner(s) care for the vehicle.
Nevertheless, of all these vehicles, the two best were the Datsun and Toyota. The 1981 Datsun went 175,000 miles, with very little repair work needed. The 1994 Toyota I still own today, and it's at 202,000+ miles right now, very little repair work and gets about 26 MPG highway.
Both small trucks have gone off road extensively (the cars never did), and so have been subjected to more wear and tear from rough roads.
The American made vehicles just were not as reliable, and cost me more to maintain, and had lower longevity.
While this post hardly constitutes a scientific analysis, for me, my past experience has soured me on American made vehicles.
When I buy a vehicle, I can't afford to take any chances - I can only afford one, and it has to work reliably, and last a long time.
I would be glad to support the "Buy American" ideal, but I need assurance that my purchase won't bite me in the backside financially later on down the road.
Posted by: MB on September 8, 2008 12:22 PMWhere do you get your facts from G Jiggy? Seems to me raw materials would be the greatest cost of the $37 million dollar price tag that a typical 737.
Money is great, but if your health benefits are cut that money's not going to do you much good. People get injured/sick/old, it's a fact of life. No one wants a $200 co/pay every time they visit the doctor. I think the workers would happily pass on the pay raises for better quality health insurance and benefits.
I drive a 2003 F-150 Super Crew FX-4 Lariat and it has performed flawlessly through ~65,000 miles. I drive it off road, in fact I drive it anywhere I damn well feel like driving it.
Prior to that I had a 1988 Ranger XLT extended cab 4x4 and I put 496,000 miles on it (three engines, three transmissions and a couple of rearends). It gave me great service, but the 2.9 V6 and five speed simply are not as good a motor as the 2.3 four cylinder was. This truck was driven extensively off road as well and it was a great truck. I sold it with a blown head gasket and the new owner fixed it and drives it today, I saw it go by the other day up in Enumclaw.
Prior/concurrent with that I had a 1986 standard cab Ranger 2.3 five speed and got ~350,000 miles on it with about half of them on rugged off road. It was great when I used to hunt the "nastys" and it could be turned around on the ends of fire roads or anywhere, it was a great truck.
Ford trucks are good, Toyota trucks are also good - I have never seen anything else that is used offroad that wasn't a maintenance nightmare.
Posted by: JDH on September 8, 2008 01:37 PMA 747-600 is around 80,000 pounds. It sells for between $50 million and $57 million.
Aluminum is $1.18 per pound. Copper is $3.21 per pound. Nickel is $8.41 per pound. Silver is $144 per pound.
That means if you made the plane out of solid silver, the cost would be $11.5 million. Or no more than 23% of the actual sale price.
Considering a plane is predominantly aluminum, with small percentages of copper and nickel, and no silver, it's pretty simple to see the cost of the materials is a small fraction of the price of the plane.
It's labor, through and through. Taking a sheet of aluminum and turning it into a bulkhead or wing skin is not a cheap process. The price of the actual aluminum is essentially zero - it's the cost of the labor that matters.
Posted by: Shanghai Dan on September 8, 2008 03:01 PMCato, I think if you thought it through you'd come to the right conclusion as well. Like I said, labor is the biggest single cost. It's just basic business econ 101 and has been for as long as I can remember. Also, if you wonder where inflation comes from, look to labor increases. If labor costs never went up, there would be very little inflation but the Cost Of Goods goes up because labor costs more. The guys baking your bread want a raise and the bakery increases the price to cover the up-labor charge. You have to pay more for bread and you go to your boss to get more money to buy the expensive bread. That's called inflation. Once all of that is absorbed in the cost spiral, everybody is back to where they were before (relatively).
Beyond Cato, what disturbs me the most I think is that so many people don't seem to know these very basic facts or grasp these very simple concepts. I get it and I'm far from a rocket scientist. No wonder businesses (of all sizes) are so hated in this country. Every kid leaving school has been braced in liberal theology to hate "the man" and how businesses and corporations are killing workers to rape the earth for "obscene profit". This is the start of the death knell for our entrepreneurial society. At some point, as the schools pop out these little Marxists, they will get ahead of the curve and there will be more business haters versus business owners or sympathizers. At that point we will be a third world backwater. You go to China and the population there is so enamored with commerce and creating goods and services, the place just vibrates. India too. Japan too embraces business as we slide down the pipe, making excuses as we go. Politicians like Bag o' Nickels see the trend an do business killing stuff like closing off streets. Not that they want to do a business harm but they just don't care. No knowledge of what they contribute to society.
Very disturbing.
So here's the corker. If the Democrats would have allowed extraction of our domestic petroleum, the American auto manufactures wouldn't be in the spot they are in right now. They would still be selling high margin products and using the profits to build and invent future products. The Democrats short circuited natural market forces by not letting drilling to occur. There was no plan for that in the big three playbook. So, tell me this, why are the auto workers unions Democrat voters? Nancy Pelosi and Harry Reid screwed the whole industry with their no-drill policies as it is now GM, Ford and Chrysler on the ropes. One or two of them may not make it. Then where will those union jobs be? At Jack-in-the-box.
I'm not gonna get into the overhead cams stuff because you are parroting somebody else's view and a rebuttal would take a long time. Complex subject. Suffice to say they are expensive and don't deliver the kind of power Americans generally prefer plus a few other points.
You go to China and the population there is so enamored with commerce and creating goods and services, the place just vibrates. India too. Japan too embraces business as we slide down the pipe, making excuses as we go. Politicians like Bag o' Nickels see the trend an do business killing stuff like closing off streets. Not that they want to do a business harm but they just don't care. No knowledge of what they contribute to society.
SPOT ON. It's the single reason I closed up shop in the US and moved to China and Hong Kong. Over there, the countries I work with (China, Taiwan, South Korea, Singapore, Malaysia, Japan, Thailand) understand that Government and society benefit from business, not in spite of business!
Take China, for example. Minimum wage was raised 13% in January. But the Government knew it would impact businesses and their competitiveness. So what did they do? They gave additional tax breaks to companies so the burdened cost to the company increased by 2%. So I raised my prices 2%, clients didn't even see the change (exchange rate has been a bigger deal), employees make more, I make the same percentage.
Why did the Government do it? Simple: they are banking on the fact that KEEPING BUSINESSES HAPPY WILL BRING IN MORE REVENUE. More activity, more taxes. You can tax lower and INCREASE receipts, just like happened when Reagan and Bush lowered the capital gains taxes.
Let me tell you, it is so REFRESHING to have a business in a country that actually WANTS to see you succeed! Where the attitude of the Government workers is how to help your business thrive, not how to take a few more dollars from your wallet. Where they understand that businesses are the engine that drives the economy, not an after-effect of the Government.
And where, if you are successful, the average person on the street doesn't hate you because you have a nice car, wear a nice suit, and live in a great house and thinks it's only fair if you simply give some of that to them.
Rather, the average poor person may be envious of you, but you'll find they will want to learn how you did it so they can do it themselves, not use the Government to beat you up, take what you have, and leave you both miserable.
A walk through the New Xiang Yang market or down Nanjing Dong Lu in Shanghai would leave most Slavery Party Marxists here in the US physically overcome with the raw capitalism present. The overpowering presence of basic economic activity - raw, unbridled capitalism and free markets - would make their natural inclination to redistribute go into overload.
I'd love to see it!
Posted by: Shanghai Dan on September 8, 2008 07:24 PM1) The US Automakers aren't in deep sh!t because of any Unions. It's because, let's face it, they make crap. Aside from maybe the Corvette, there isn't an American car I would consider. And neither would most Americans anymore. P!ss-poor engineering and 15 LEVELS OF BOONDOGGLE MANAGEMENT to pay for.
2) Is BA going down the wrong road? In oh so many ways. The 787 has no external access for maintenance. Kinda like working on yer car's engine from under the dash. That ain't the IAM doing that. We all stood back and watched 'em develop the thing and kept suggesting. Management wanted to go down this road. It ain't a road, it's a toilet. Taking everybody along for the ride.
The Japs are bragging (BRAGGING!!!) about shipping their wings at 95% complete now. WTF happened there? They used to be ASHAMED if everything wasn't 100%. Either they got lazy or they got BA management running things over there.
Different companies using different processes in different places all around the world. To make the latest technology commercial plane. That ain't the IAM that told 'em it was a good idea.
We said "Hey, we've been doing this right for 73 years at BA. Don't try this, it may well ruin the company." The 787 might fly in 2009. Might. It is in deep sh!t. Should have been engineered here. Should have been built here. And, the 747-8 is, believe it or not, in even worse shape.
OFFLOADING IS KILLING BA!
Vendors lying about their quality and BA having no recourse since they've offloaded too much. (The problem isn't insignificant.)
IT TAKES YEARS AND YEARS of schooling, on hours and off, to acquire the knowledge to manufacture aerospace products. Far too many outside of BA can't begin to comprehend that we make missiles, rockets, UAVs, UCAVs, hundreds of different products. Not everybody bucks rivets.
So, is it the IAM or management that's the problem? Well, just how much time did Mr McNerney spend at BA before the BOD gave him NEARLY $100 MILLION just to WALK IN THE DOOR?!? Answer: Not a single second.
BA is doomed.
Posted by: cmiklich on September 8, 2008 10:00 PM