Boeing HQ
It has been a busy weekend for Boeing news, most of which is good, but some generating concerns. On Friday, the Starliner safely returned to the New Mexico desert, unfortunately without the astronauts that will be stranded on the International Space Station until January. While this appears to be vindication for Boeing, that program could quickly have a “for sale” sign quickly, as the company is facing a cash flow and quality crisis as it attempts to ramp-up production amid FAA restrictions and scrutiny.
While the safe return is good news, the bad news is that the Boeing corporate culture has resulted in a significant number of employees jumping to SpaceX and Blue Origin. Retaining experienced engineering talent is critical for Boeing, as it take years to bring a new hire up to speed to replace an experienced engineer. The company is experiencing the same issues in commercial aircraft, where it takes more than a couple of years for new employees to be able to work unsupervised. Ramping production is nearly impossible without the right mix of employees, as the industry in general, not only Boeing, now clearly understands.
The other good news is that Boeing has reached a tentative agreement with the IAM that will hopefully avoid a strike. A ratification vote by the rank and file is scheduled for Thursday, and if the deal is approved, the potential strike will be averted. The tentative deal fell short of union demand of a 40% pay increase and restoration of a defined-benefit pension plan, but did include a provision to build Boeing’s next model in the Seattle area. With a 25% increase over 4 years, a signing bonus, and a net of about 33%, the new deal has significant concessions from Boeing. The question now is what the rank and file feel, as the union employees have been quite militant during the negotiations.
Boeing cannot afford a protracted strike, and the union members are quite aware of the company’s precarious financial situation. After years of Boeing being in the driver’s seat, the rank and file understand that they have leverage over the company, which cannot afford a long shut-down. The rumor mill indicates that a full ratification is not a slam dunk and may be a close vote on way or the other. We will find out on Thursday.
In the interim, Boeing’s management is hurrying production at Everett’s 777 production line, rushing airplanes out that require “traveled work” due to not all items being completed in preparation for a strike. Traveled work was the major problem in the 737-9 door plug interest, where replacing the bolts fell through the cracks in the production process. Has Boeing’s management not learned a basic lesson from that interest, and understand that haste makes waste? Mr. Ortberg clearly has some work to do on changing Boeing’s toxic culture! Let’s hope we don’t see a 777 quality problem emerge as a result.
Links to today’s key news items follow:
- Boeing reaches deal with union after marathon weekend talks – BNN Bloomberg
- Boeing said it’ll build its next plane in Seattle – Quartz
- Vindication for Boeing as Starliner returns home safe – Australian Aviation
- Why the return of Boeing’s Starliner is a hollow victory for crisis-hit company – iNews
- As strike looms, Boeing pushes 777 jets through chaotic production in Everett – Seattle Times
