Boeing, Union reach wage deal to end strike | Hacker News Reader

Boeing, Union reach wage deal to end strike

wsj.com

43 pointshhs72 comments

Article title jumps the gun. Union members still need to vote on whether to accept the deal Wednesday.

> The union announced the deal Saturday morning, saying, “it warrants presenting to the members and is worthy of your consideration.”

> The union plans to vote on the deal on Wednesday. Nearly 95% of workers voted to reject the last tentative deal, which the union’s leaders recommended.

I hope the workers reject and continue the strike, forcing Boeing into bankruptcy will be a very good thing for the country even if it leaves investors and banks unhappy.

How is forcing one of its largest employers, one of its largest manufacturers, and leaving the commercial airliner market dominated by foreign companies good for the country?

Free market, it will open up a lot of opportunities for new companies

It is incredibly expensive to develop large airliners.

As I understand it, the only peer companies that do so are Airbus, COMAC, and Embraer (Edit: Bombardier ended with the A220).

Which one of these should replace Boeing?

There is also Bombardier. But none except Airbus makes planes in the same class as Boeing.

Airbus purchased the Bombardier program

Ah, thanks.

COMAC will succeed. Embraer is sort of boxed in and made the bad decision under Lula of making a deal with China that includes local manufacturing and technology transfers. They’re segmenting the market between them. Bombardier got killed by Boeing’s games with them and yes the remnants are the A220.

COMAC just had its first order from the Americas:

https://www.reuters.com/business/aerospace-defense/brazilian...

Four planes.

Airbus of the ones listed.

However, Northrop Grumman could also buy out Boeing's large aircraft bits and (re)enter the commercial airliner market.

I doubt Lockheed Martin would be interested, they're into smaller aircraft these days.

There is no free market for something like this. You need so much capital and there are better places to invest. Venture won’t do it. Government would have to and they simply have no understanding or appetite for funding startups for such spaces. Yes we could do so much better than Boeing but it’s more likely the government will repeatedly bail them out than do something about this.

So perhaps the free market doesn’t really exist. Only various sized barriers to entry

Because Boeing is too big to fail and will be parted out by the US government if management does not get it together. Management and equity will be wiped out, the manufacturing infra and workers will not. The demand for the product will still exist (civilian and military aircraft, space vehicles, etc), but the economic configuration will be forced to change by bringing the system to failure.

Based on all available evidence, Boeing is failing because of its management (since the McDonnell Douglas deal), its board, and its shareholders not pressuring for sufficient change.

https://aviationweek.com/air-transport/aircraft-propulsion/d...

Can you point to a bankruptcy where what you described (management wiped out, manufacturing infrastructure not) actually happened and didn't fail within 5 years?

The reorg of GM by the Obama administration does not tick all the boxes [1], but is the most recent example that would come to mind of government support via BK management and recapitalization. The administration did this to save jobs and the manufacturing supply chain [2].

Capital is made up, management is fungible, manufacturing supply chains and systems are the hard part (which is why, after incredibly aggressive financialization, Boeing is having to acquire Spirit AeroSystems, which had previously been spun out for cost savings...which went to management comp and shareholders). If you are optimizing for a specific outcome, it is important to understand the malleability and limits of the components that make the whole.

Even Elon recognized this during Model 3 production hell [3]. I suppose we must always learn the hard way for the lesson to be of value. If management is the problem (and it is very clear Boeing management is the problem), it must be replaced so that the people who do the actual building can build. This is no different than the tech culture of "employ great people and get out of their way."

[1] https://en.wikipedia.org/wiki/General_Motors_Chapter_11_reor...

[2] https://obamawhitehouse.archives.gov/economy/jobs/rescuing-t...

[3] https://x.com/elonmusk/status/984882630947753984 ("Yes, excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated.")

If interested, Charlie Munger had a special take on the failure of old GM and several other things, including what was said about unions:

"General Motors, out of the profits of their good years, they could have bought, every year, for many years, a big company. They could have bought Eli Lilly one year and Merck the next, and United Technologies. General Motors could own the world. Instead, what they declared to their shareholders was a goose egg. They took the common equity to zero. And they would say it was all somebody else’s fault. The climate was bad, the unions got powerful. Those damn Asians and Europeans were too competitive.

The truth of the matter is, their very prosperity made them weak. The dealerships got in the hands of inheritors, and the executives on the sales field go around and drink martinis with inheritors, and didn’t pay enough attention to defects in their vehicles. And one thing led to another, and when they were all done the shareholders’ equity went to zero.

And that was in a company that at its peak was one of the most admirable companies in the world. Take the stuff that Boss Kettering (Charles Kettering – head of research at General Motors from 1920 to 1947) had invented in the early days. Kettering was one of the most useful citizens that ever lived in America.

A self starter on a car is a wonderful thing. Under the old system, you frequently broke your arm. You would give it a crank and it would answer back by spinning backwards and breaking your arm. I would much rather push a button than have my arm broken. Nor do I have the opportunity to go and crank in the sleet and snow." [0]

[0]: https://fs.blog/worldly-wisdom-from-charlie-munger/

It’s not solely management or shareholders. If you have worked for Boeing or with them as a contractor or supplier, you have probably experienced some of the cultural issues with their workforce. A lot of the companies biggest failures have a mix of people who caused them. Remember, the door plug was meant to be secured in final assembly by an IAM worker. And even if you go back to the two 737 Max hull losses, the design of it and choices like having no redundancy on a cheap sensor were done by SPEEA workers (the union for technical staff). Boeing is also failing due to the low quality workers it has, their demands, and the inability to freely replace them. It’s not just bad executives.

Well, a problem with company culture is still absolutely the fault of management, so I think it's fair to lay the blame at their feet. If your workforce is underperforming, invest in training them or finding a better workforce. If you can't find a better workforce for what pay you're offering, offer higher pay. And if you can't afford to do that and keep your business profitable... Sucks to suck; you don't have any guaranteed right to profit.

When I said “cultural issues with their workforce” I didn’t mean general “company culture” but the “union culture” specifically. Is that still a responsibility of management? Sure, for some aspects. But unions remove a lot of the control and tools management usually has to deal with some problems effectively.

The problem isn't Exec vs. Union or McDD vs. Engineers or any specific bit of Boeing, it's all of Boeing as a whole from top to bottom including the striking workers and that's why a bankruptcy will be a good thing.

A bankruptcy will force Boeing to either restructure from the ground up or be cut apart and distributed to companies who can hopefully conduct business better.

Absolutely still a responsibility of the management. Management can find other, different tools to deal with problems if they're feeling like they're being hampered by the union. Management is not entitled to anyone's labor and if said labor collectively tells management "our way or the highway", well, c'est la vie.

Unions provide a form of power symmetry between the general workforce and the upper management of the company, and while it's not always balanced with the power of the company itself, the alternative is even more asymmetric. And ultimately, if the union is behaving in such a way that none of their members can find employment, the problem will tend to correct itself.

The union mindset is being exhibited in your comment here, where you scapegoat the management for everything. Even things where the unions aggressively fought for and have now mandated into law at the expense of management's contract freedom.

> where you scapegoat the management for everything.

Well, that's sort of their job -- to be the ones responsible for the actions of the company. If I hire you to do a job, and you don't do it, I'm not 'scapegoating' you if I complain that you didn't do the job I hired and paid you to do.

> Even things where the unions aggressively fought for and have now mandated into law at the expense of management's contract freedom

Most of these are the 'FO' part of 'FAFO' historically, so I have little sympathy there.

The laws unions had passed give legal control over significant amounts of company operations over to unions. They put a straightjacket on management by restricting the contract freedom of the employer. The employer cannot fire workers for unionizing or striking, and cannot negotiate with any party but the union if the majority of a work unit votes to unionize. Property/control get transferred to the unionized employees under unprovoked duress — by prohibiting the employer from entering into any other contracts.

It's not a free market and yet you want to place all blame for the failings of companies with unionized workforces on the employer.

You justify all of this with a faux victim ideology that is anti-capitalist in its roots and vilifies the employer for exercising their property and contracting rights in ways that a critical mass of employees, constituting a mob, don't like. Well, anti-capitalism begets a loss of capital and with it prosperity. And that's all we've ever seen from it.

And many of those rights and abilities that you deride of unions have been hard won with literal blood and death by workers. Because the alternative to unions isn't a free market, it's a massive power asymmetry where individual employees have more or less no negotiating power. Those employees that do have comparable negotiating power are largely a rounding error.

> They put a straightjacket on management

Maybe we have vastly different life experiences here, but I've worked with and under managers who absolutely should be put in a straightjacket and shipped off to the looney bin.

> the employer cannot fire workers for unionizing or striking

Right, because the alternative is being subject to the capricious whims of management who play with your livelihood like it's a game. Most people do not have the luxury of being able to afford to lose their job for even a short while.

How about instead we make at-will employment work both directions? My manager can fire me, but I can also fire him, for any reason. Seems only fair that both sides have about equal power.

> You justify all of this with a faux victim ideology that is anti-capitalist in its roots and vilifies the employer for exercising their property and contracting rights in ways that a critical mass of employees, constituting a mob, don't like.

And you're vilifying employees for exercising their rights to negotiate their contracts instead. Why should I be restricted from banding together with my fellow workers? After all, you're wanting a free market, which should mean freedom to associate or not.

> Well, anti-capitalism begets a loss of capital and with it prosperity

We've got quite a large population of people who would argue that it doesn't, because they don't have any capital or prosperity anyways. Can't lose what you don't have.

Unions don't always do things well, and sometimes they do hurt their own interests in the long run, but that's not because they're unions, but because they're human organizations. Non-union companies do the same, management does the same. But as long as management wants to have all the power and control over their employees, they need to also take on the responsibility from said employees, even if it means accepting responsibility for someone else's fuckup. After all, if you had the control, why didn't you prevent the fuckup?

>And many of those rights and abilities that you deride of unions have been hard won with literal blood and death by workers.

Unions provided no rights or abilities that I'm aware of. Laws restricting employment contracts to those that provide overtime pay are not rights. They're restrictions. People don't need a government telling them they can't work 10 hours a day at some given rate.

And no, it is completely irrelevant how large a company is: the worker has absolute negotiating power to reject any offer the employer makes. The only power the employer has in a free market to compel someone to work for them is to offer the employee terms that are better than anything else the employee can find in the market.

But what this ideology you espouse does is scapegoat the employer for the dismal options available to the worker, which would compel the worker to accept wages that you consider too low. On the basis of this scapegoating, you try to justify coercing the employer to provide a higher wage than they would choose to in a free market.

>And you're vilifying employees for exercising their rights to negotiate their contracts instead. Why should I be restricted from banding together with my fellow workers? After all, you're wanting a free market, which should mean freedom to associate or not.

I as an employer can choose to not associate with you and your band in a free market, and choose to only negotiate and employ workers who are not part of a union. But you don't want a free market. You want the government to commandeer the employer's assets and dictate to them who they choose to negotiate with.

>We've got quite a large population of people who would argue that it doesn't, because they don't have any capital or prosperity anyways. Can't lose what you don't have.

That's not how it works. Wages go up when capital increases, irrespective of how much capital the wage earners themselves personally own. Greater amounts of capital is why the US provides wages that are so much higher than the EU average. The EU's greater embrace of anti-capitalist ideology — which consists of the kind of authoritarian demands you're making here — harms workers.

Wiping out the investors does profound downstream harm because it means that future investors will be less likely to invest in these kinds of companies, or smaller companies striving to occupy similar roles.

Moreover, union obligations cannot always be petitioned in bankruptcy proceedings. This has resulted in company assets being dissolved altogether, instead of sold off and used, in some cases in the past.

To be clear, there won't be a "wipe out" at least in the "floor fell out from left field" sense.

If a bankruptcy becomes likely, investors will start selling Boeing stock to recover what they can. Creditors will start calling Boeing bonds, if applicable. Remember, "the market has priced it in" is a meme for a reason.

So far we haven't seen anything like that yet, just otherwise normal reductions in stock valuation following lackluster business performance.

However, Boeing is courting the possibility of having their credit ratings reduced to junk bond status by Moody's[1] and S&P[2] and that would certainly be a potential sign of the end times coming. Getting slapped with junk bond status literally means lenders should not consider Boeing reasonably solvent.

[1]: https://www.marketwatch.com/story/boeings-bonds-are-being-sn...

[2]: https://finance.yahoo.com/news/boeing-biggest-ever-us-fallen...

The economical benefits were already laid out by another commenter, so I will lay out the cultural benefits.

Namely, seeing an American darling like Boeing go under could finally destroy the idea of American Exceptionalism(tm). Like it or not, the country as a whole is stagnant and losing its grip on the title of Superpower with fierce competition from China.

America was great and it can be great again, but we will continue to fall into irrelevance if we can't first accept that we aren't the same America that won World War II, took mankind to the Moon, and created the internet. Boeing going under could finally force Americans to accept our current place in the world.

Realistically they’ll get bailed out. In other words, taxpayers will subsidize the failures of the company and the deals struck by unions. Ideally we would instead fund more competitors from an early stage.

They haven't reached a deal. This article is bought by boeing interests to try to force the narrative. I can't believe I am typing this

You’re right, it still has to go to vote. But union representatives in the negotiating position have approved of the deal. On the other hand they approved of the initial Boeing offer that got nearly universally rejected. So who knows what will happen. I suspect this vote will not be nearly as skewed.

I don’t know the situation with Boeing. But unions are sort of cancers of economy, which will grow and rotten healthy institutions. Their demands will grow indefinitely, as they become more and more powerful. At some point, there is no way back.

Look at their outcomes in France! The problems seem to be increasingly spreading to US.

Union membership has been declining since the 60s. In 1983 membership was 20% in 2015 it was under 10%.

https://www.bls.gov/spotlight/2016/union-membership-in-the-u...

Factor 2 might be roughly the decline in the size of the manufacturing sector/GDP in that time frame. At least that’s a contributing factor.

In other words, some of them were expensive and outsourced.

The most important thing that unions do is raise safety standards.

"Decreased unionization rates in the United States have been linked to an increase in occupational fatalities."

https://en.m.wikipedia.org/wiki/Trade_union#Health

"The Local Average Treatment Effect of a 1% decline in unionisation attributable to RTW is about a 5% increase in the rate of occupational fatalities. In total, RTW laws have led to a 14.2% increase in occupational mortality through decreased unionisation."

https://oem.bmj.com/content/75/10/736

A union worker forgot bolts on the door plug on the Alaska plane, and workers from the other union (SPEEA) designed MCAS, which was one of the causes of the two 737 Max crashes.

So?

These were procedural errors - the company cut back on previously enforced protocols to check and double check work.

In general unions are pro health and safety procedures and have no objection to work quality procedural checks either.

It's the cost cutting culture imported from the non-Boeing crowd imported post merger that is at fault here.

You're simply having a cheap shot at unions here rather than making any observation of depth.

> In general unions are pro health and safety procedures

Management and non union workers at Boeing would make the same claim.

> You're simply having a cheap shot at unions here rather than making any observation of depth.

I could be wrong. The part we do have evidence about is who did the work - it’s the union workers. It seems to me like some think the people doing the problematic work somehow don’t share in accountability at all. I think it is unlikely that only management or executives or the “company” or whoever is solely at fault.

My recollection is that some European countries have better union laws where competition between unions is allowed rather than giving each union a legally protected monopoly where others cannot work. The lack of competition makes American unions especially bad and leads to corrupt union leaders or unnecessarily hostile relationships with their company. But it doesn’t have to be that way. There might be better balanced approaches.

Yes, unions in Germany are more decentralized and less malign. In France, unions are nationwide, and the same across the entire sectors. Having worked in that system, it’s horrible. Trust me, it may look cool on paper, you don’t want that malignant tumor.

I have written a few detail posts on my experience in that system in HN. I will see if I can find them.

Update: Here is one

https://news.ycombinator.com/item?id=26598155

Oh no, god forbid the people doing the actual work get any benefits for doing so and that they have a voice for how they're being treated! No, the managerial class who do nothing but sap resources are for sure not the cancers.

Oh, this is wishful thinking about unions (enabling workers get fair compensation and benefits for the work that they do, etc). The reality of the unions can be quite different, and counterintuitive, especially as they evolve over time.

I have written on my experience, see for example

https://news.ycombinator.com/item?id=26598155

I think Americans read its theory on paper and fantasize it. I don’t think they appreciate how it will look like in practice, 3 decades later.

The original offer was a 25% raise over 4 years. Then Boeing offered 30% and went to the public with it. And now this deal is at 35%. The union originally asked for 40%. I know there are a lot of other details mixed up in here around bonuses and retirement benefits and job security and so on. But does this mean the union “won” this process since the number is close to what they wanted? The one big thing it looks like they aren’t getting that the original deal had is that the next model won’t be guaranteed to be built in Washington.

Also, is it actually good for the union workers in the bigger picture? Presumably they lost one month of pay. And a lot of other (non union) people are getting laid off, who probably view the union as a bad actor. Also those tired of the union work culture in Everett may continue to leave, continuing a drain of the best talent. Boeing probably is in a more precarious position than ever before. They will likely stick to the smaller plane lineup and diversify manufacturing away from Washington and automate more. So is this really good for the union or is it just really good for the workers who are there now, since they will get the most of what they could get out of the company before they retire? To them it may not matter what the future of Boeing is past their retirement.

Union X post: https://x.com/IAM751/status/1847641501637247081

Deeper details of deal: http://www.iam751.org/2024StrikeProposal/

This kind-of-anti-union post would be a lot more interesting if it attempted to answer the questions it raises with facts instead of speculative “maybes”.

As far as I’m concerned, higher compensation is a long term win. If new hires are offered less, they will know they are being taken advantage of.

Higher comp is not a win if it comes with enough strings attached.

For instance, they could tie pay / layoffs to seniority (all your coworkers are unfireable incompetent union “good old boys” that don’t bother pretending to work any more, creating a hostile workplace and tanking company revenue), or the contract could make it unprofitable or infeasible to continue ramping up production in the union controlled facilities.

Since Boeing managed to remove the clause saying they’ll keep making planes in Washington, I’m guessing the latter happened with this deal.

The "good old boys" stereotype is a stereotype for a reason: it doesn't actually happen in meaningful numbers.

If you get paid well, have good benefits, and can't get fired arbitrarily (union still allows for firing based on performance), it turns out your workers will be happier and more productive.

Also, if labor costs (paying a decent wage) tank a massive jet company, they already had many other problems under the hood. Your argument is also proven to be false, because Airbus (heavily unionized) has been eating Boeing's lunch for years since they didn't greedily spin-off everything nor slacked on quality control for the shareholders for short-term gain.

> Also, is it actually good for the union workers in the bigger picture? Presumably they lost one month of pay.

It depends on the details of the contract but often the company has to pay the workers for wages lost while on strike unless they went and got a temporary job during the strike. It makes the bargaining eaiser because the company has more of an incentive to bargain in good faith since it's harder for them to "just wait it out".

But on the latter points, Boeing is a strategically important industrial company. The federal government has an incentive to ensure their long term stability, or at least the appearance of it.

> Also, is it actually good for the union workers in the bigger picture?

What's the alternative? Wait forever for Boeing to give workers a decent raise, which absolutely will NOT happen? Workers just got a big pay raise by demanding for it.

But yes, you're right that Union leadership is also spineless. Modern union leaders tend to appease the big bosses by giving in to what they want, trying to convince workers that the lower offers is the best they can get, and then trying to get the workers to vote for it. Stronger leadership would have rejected it because they know that workers are the soul of a company: without workers there is no company.

Among a certain people, the executive class is nearly worshipped as the good guys. God for forbid they get held accountable for anything not related to shareholders

> without workers there is no company.

Is they gradually move production to non-union factories in other states then there would be a company but no [union] workers...

Boeing already tried doing this. Several big Customers rejected deliveries from the non union plant because they were unacceptably poorer in quality.

I'd guess that has more to do with the incompetence of Boeing's management than with some inherent properties of union workers. Presumably they could fix that.

It’s probably worth asking if the deal was good for the union leadership’s personal finances and/or political ambitions.

If you look at the University of California contract negotiations (different union), you’re likely to conclude that the campus and most employees are on one side, and union leadership is on the other side.

>Presumably they lost one month of pay.

A new grade 4 hourly worker at Boeing made $19 an hour before the strike. $3,040 a month before taxes. https://www.iam751.org/docs/2024/FRONTMar24.pdf

There's a reason they went on strike. $36,480 a year doesn't go far when you have to pay Seattle area rent.

The Harbor Freight Tools store 2 exits from the plant has a sign saying that they are hiring cashiers at $22.50/hr. No exaggeration, sign is in the window, Edmonds WA location.

Benefits?

Sold out 2 contracts ago in return for a clause guaranteeing work placement in Washington state, which Boeing promptly moved to South Carolina as soon as the contract expired.

So what's stopping them from jumping ship to supposed greener pastures in Edmonds[1][2]?

That a IAM union machinist would even consider a voluntary career pivot to the retail antithesis of "Buy Union-Made & American-Made products" because of a window sign says a lot...no exaggeration necessary.

[1] https://harbor-freight-tools.careerarc.com/job-listings/harb...

[2] https://harbor-freight-tools.careerarc.com/job-listings/harb...

Unfortunately, landlords do not accept Union Pride as rent payment. We live in a society.

Being offered the next airplane is a bit of a red herring since the non union South Carolina plant has a track record of bad deliveries and some sales contracts forbid aircraft being delivered that are built there amongst larger quality issues. https://en.wikipedia.org/wiki/Boeing_South_Carolina

So yes this is a win for them. Being paid properly for your time is likely an issue everyone here agrees with when it’s their pay on the line.

Boeing has huge contracts and is the go to for the US Military Industrial Complex. They have plenty of contracts on hand to bring in revenue as they figure themselves out. Their ability to create problems has been clearly shown to be a tone at the top problem combined with bad management decisions that has lead to poor product delivery, regulatory missteps, and the design shortcuts that lead to accidents that brought on their most recent cycle of pain.

A lathe operator has no impact on those decisions whether she is paid $20 or $27 per hour.

Being told that customers won't buy your airplanes unless you build them in your union shop must sting for management there.

One month of pay vs years of stagnant wages, concessions in regards to health care, as well as pensions getting axed. https://fortune.com/2024/09/13/boeing-machinists-vote-strike...

Hmmm. I wonder if you have a bias here.

> Also those tired of the union work culture in Everett may continue to leave

Yeah, they won't leave for not getting salary increases in line with inflation (at the very least) in 16 years, but they will leave because the union is fighting for their benefit.

What are you on? It's appalling how people will justify poor treatment of workers and argue against workers fighting for better treatment and pay.

> To them it may not matter what the future of Boeing is past their retirement.

of course they don't, and why should they? Boeing doesn't give a f*k about its employees

> probably view the union as a bad actor

based on what? rather they seen the benefits of unionizing as otherwise you get nothing (and get laid off); this sounds like FUD

What's amusing is the union negotiated the last contract, which was rejected by membership.

So maybe the union should reject that contract too just to see if they can get a better deal.

It's great that the subcontractors and executives and day traders who own the stock for a few seconds care so much about "what the future of Boeing is past their retirement".

Yes. This is absolutely a win.

It must be lonely being the only person in the world defending Boeing management

I bet you could buy as the friends you wanted.

I didn't know about this situation, but I know in some strike situations there is a backpay or signing bonus that is negotiated

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