Boeing Uses Negotiation To Dodge Yet Another Strike

by drjim on November 17, 2008

Boeing Used Negotiation To Avoid A Strike With Its Engineering Union

Boeing Used Negotiation To Avoid A Strike With Its Engineering Union

Boeing’s commercial aircraft division just wrapped up the longest strike that Boeing has had in over a decade. Its Machinists have agreed to go back to work after 57 days off of the job. The press was saying that the strike was costing Boeing over $100M a day because of delays in the 3,000+ orders that they have for new aircraft from their customers. Coming on the heels of that was the ugly fact that Boeing’s contract with the 21,000 strong Society of Professional Engineering Employees in Aerospace was running out as of December 1st. Needless to say, it was time for Boeing to start to do some fast negotiating…

Already pre-negotiating posturing had started. On Thursday the engineering union had stated that it wanted its members to vote to authorize a strike. The purpose of this was to raise the pressure on Boeing’s management. Things had started to get hotter as the engineers accused Boeing of stalling the talks. In all honesty, this is probably correct because Boeing was focused on trying resolve the machinists strike and probably had dedicated only minimal resources to starting talks with the engineers. However, things had gotten so rocky that a federal mediator had already been brought in. It’s not known if this mediator was the same one that was helping out with the discussions between Boeing and the machinists.

In negotiations, timing is everything. The engineering union had started their negotiations with Boeing last month AFTER the machinist’s strike had already halted production at Boeing. There were differences between what the two unions were negotiating with Boeing for. The machinists were most concerned about having their jobs replaced with contract workers. The engineers on the other hand realized that they had more specialized talents that could not easily be replaced. This meant that their major concerns revolved around pay and benefits.

Boeing was most interested in negotiating to create a four year contract instead of the traditional three year contract. The reason for this is because in three years they are going to be at the peak of their production schedule for their new 787 Dreamliner airplane and they didn’t want to have to worry about a strike crippling their ability to deliver planes to their customers – that would damage their reputation and hurt their bottom line.

I’m quite surprised that considering that the union was preparing to take a strike vote on Thursday that they were somehow able to resolve their differences with Boeing so quickly that they were recommending to their members over the weekend to accept the tentative deal that had been reached (apparently on Friday). What the heck happened? Details are not currently available; however, the union’s negotiators were getting ready to present the deal to union management on Friday evening.

Since the union had such a strong hand and since Boeing was still reeling from the machinist’s strike, I can only guess that Boeing basically gave in to the engineering union’s demands. If that is true, then there is a big question as to if the union was truly asking for enough? This is a unique time in history for Boeing – they’ve got more orders for planes than they know what to do with. From a negotiating point-of-view the unions are in a much stronger position during this round of negotiations than they will be in four years when there is not such a large backlog of orders. As a confirmation of this, Randy Tisseth who is Boeing’s VP of commercial marketing has announced that the company “will probably feel downward pressure in terms of orders next year…”. Only time will tell if everyone got what they were looking for out of this negotiation.

What do you think: should the engineers have held out for more? Do you think that it was wise of them to agree to a four year contract instead of the standard three year contract? Do you think that asking for a strike vote was a good idea or was it too heavy handed? Leave a comment and let me know what you are thinking.

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{ 4 comments… read them below or add one }

Zan November 19, 2008 at 11:58 pm

Asking for a strike vote is definitely a negotiating technique for putting the other side on alert. It is common with many labor unions for there to be rumors of a strike around contract negotiation time. It gets everyone fired up – but it’s so common that I don’t think it would even be considered heavy-handed.
Sounds like the 4 year contract makes the most sense. No need in cutting off your nose to spite your face. Even though labor unions threaten a strike I think most parties involved will agree that a strike ends up hurting both parties.

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Dr. Jim Anderson November 20, 2008 at 9:08 am

Zan: you bring up a really good point. Perhaps a good way to look at a call for a strike is to view it as a communication tool between the negotiating teams. In the case of Boeing, perhaps it was a signal for the Boeing executives to be brought back to the negotiating table in order to resolve the last few open issues…

What do you think – effective way to get your message across or too common labor relations tool?

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Zan December 13, 2008 at 10:08 pm

Jim: Good question. It made me think. Threatening a strike may be the main tool labor unions have to get their point across. But it’s too common… yada, yada, yada, they are threatening to strike again. Of course they are – that’s all they know to do to get their point across. I’m in favor or unions, for the most part, so I’m not trying to be glib. Unions give members negotiating power.

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Dr. Jim Anderson December 14, 2008 at 11:53 am

Zan: you bring up a really good point – used too much and any negotiating tool starts to lose its effectiveness. If you were a union, you’d have to be careful to use all of your available tools: work slow down, sick-out, pickets, talks with the press, etc. I view a strike (or threat thereof) as sorta being the weapon of last resort.

Times are changing and union memberships are falling. It should be interesting to see how this changes the negotiating tactics that unions use going forward.

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