Posts Tagged ‘Boeing’

Letter from Ralph Nader to Boeing CEO

Monday, February 3rd, 2014

Dear Mr. McNerney:

The squeeze that you and Boeing are putting on your machinist workers’ pensions, pay scales and your stance on other labor issues regarding the assembling of the new 777X airliners is unseemly for several reasons.

First, consider your pay this year of $21.1 million, a 15 percent increase from the previous year, and much higher than your predecessors. That sum does not demonstrate a moral authority to require sacrifices from your workers at a time of rising Boeing sales and profits, dividend increases, cash hoard, and another notorious $10 billion stock buyback. I say notorious because stock buybacks per se do little for shareholder values and a lot for the enlarged stock options of top executives.

Second, you’re holding an auction for your long-time workers’ jobs in other states, inciting a bidding war whereby states are giving away taxpayer assets to lure your 777X assembly factory with huge tax holidays and other subsidies. Washington State outdid itself with a new law, signed by Governor Jay Inslee with the largest state business tax break package for Boeing in history. The tax escape law “will give Boeing and its suppliers about $8.7 billion in tax breaks between now and 2040,” according to the Citizens for Tax Justice (CTJ) calculations. CTJ adds that “Boeing has managed to avoid paying even a dime of state income taxes nationwide on $35 billion in pretax U.S. profits.” Boeing also received tax advantages from the federal government, including $1.8 billion in federal income tax rebates on its $35 billion in U.S. profits between 2003 and 2012.

Third, in 1997 the Justice Department allowed Boeing to merge with McDonnell Douglas, making Boeing the only manufacturer of commercial jet planes in the United States – a domestic monopoly, justified by the only other foreign competitor – Airbus Industries in Europe. Another valuable gift by Uncle Sam brought about by your company’s Washington lobbyists.

Fourth, recall Boeing’s contract with the Department of Defense for the initial phase of Air Force’s KC-46 aerial tanker program that provoked sharp criticism by Senator John McCain in July 2011 for the excessive burdens on American taxpayers from cost over-runs in a supposed “fixed price” contract. In a letter to Department of Defense Undersecretary Ashton B. Carter, Senator McCain wondered “why under a fixed-price, relatively low-risk contract, taxpayers may have to pay 60 percent of any overrun within that band – up to $600 million.”

A book could be written about the Boeing company’s strategy for externalization of a variety of its costs onto innocent, defenseless people – whether workers or taxpayers. Boeing’s systemic campaigns for corporate welfare are shameful. Your company is one of the major corporate welfare kings in America, running a close race with the champion – General Electric. As CTJ wrote: Boeing “employs an army of site location and tax consultants, whose job has been to blackmail states into giving Boeing lavish tax breaks.” These include sales and property tax breaks which drain communities’ ability to provide for school and other public facilities.

Fifth, there is the gigantic subject of your outsourcing to foreign suppliers, in particular Japan where your technology transfers, damaging the longer term viability of U.S. competitiveness in the aerospace sector for short term gains favoring Boeing, merit thorough examination by the Congress. As you know, Boeing’s foreign outsourcing brought your company considerable quality control and delay troubles with the Dreamliner.

You need to read the 2005 report by the Defense Science Board about the hollowing out of domestic capability in the electronics industry from this kind of overseas outsourcing migration by U.S. companies.

For starters read the current copy of The American Conservative magazine’s cover story titled “Japan’s Plan to Unmake Boeing,” describing the full assistance of Boeing. No doubt, if your further cruel downward pressure on your machinists culminates in your destroying their union local and their jobs by leaving the state of Washington and going for example to the anti-union state of South Carolina, there will be further public inquiries. Such as how perverse incentives provided by your suppliers in Japan and elsewhere have furthered job losses here, and accelerated your company’s technology transfers, perhaps beyond the tipping point against the U.S. national interest.

Sincerely yours,

Ralph Nader

What Kind of Country Do You Want to Live In?

Friday, January 3rd, 2014

By Mark McDermott, Chair of PSARA’s Education Committee 

“I hope we shall crush in its birth the aristocracy of our moneyed corporations which dare already to challenge our government to a trial of strength, and bid defiance to the laws of our land.” – Thomas Jefferson, 1816.

“Corporations, which should be the carefully restrained creatures of the law and servants of the people, are fast becoming the people’s masters.” – President Grover Cleveland, 1886 State of the Union Address.

Masters issue ultimatums. Masters threaten severe punishment to their servants.

For more than two centuries we the people have struggled over fundamental questions of corporate power over us and our government. Boeing’s unjust threats of massive job losses and economic devastation brings this issue home once again.

Between 2003 and 2012, Boeing pre-profits totaled $35 billion. They received $1.8 billion in federal income tax rebates (a negative 5% tax rate) and $96 million in state income tax rebates. My wife and I paid 22% in federal taxes in 2012.

In 2013, their stock price is up 73%; fourth quarter dividends up 50%. Boeing has so much spare cash that they are spending $10 billion to buy back stock, further benefiting shareholders. This should be a wonderful time for the company, its dedicated workers and the communities that have supported the company for the past 96 years.

In the midst of this enormous success, Boeing threatens our state, its workers and our communities with massive job losses. They demanded $8.7 billion in tax breaks and that union machinists give up a defined benefit pension and many other hard won gains that build the middle class in our region. Does Boeing really need this money? No! But why not make these demands?

On November 12th Governor Inslee signed the largest state business tax break in 237 years of American history. The debate lasted three days. The lightning quick response of Governor Inslee and most of the Legislature clearly shows that they believe that Boeing is their and our master.

The union machinists refusal of Boeing’s unjust and unnecessary demands is a profile in courage and a powerful statement that they are a free people and not the servants of Boeing. They stood up for themselves, their families and our communities. They stood for a future in which powerful corporations have real responsibilities to their workers and generations to come.

Having said this, I ask: What kind of country do we want to live in? What kind of future do we want to give to our children and future generations? Have corporations become our masters?

Imagine a foreign country threatening our state and its workers, unions and communities in the following way: “We demand $8+ billion in ransom. Your workers give up much of their financial security for their old age. You must accept a reduced standard of living and less affordable health care. You have 10 days to decide. If you do not submit, we will punish you for many years. Thousand will lose their jobs. Your children’s futures will be diminished. Your communities will be damaged by the loss of jobs, income and stability. We will take away what you have fought for over the past 90 years.


No foreign country would do this. But Boeing would and has. It is considered a good business practice and responsible management by some.

Is this the kind of country you want? A country with very wealthy corporations legally extorting an entire state, workers and communities with impunity. Corporations with no loyalty to those who build their success. Workers and communities more expendable than the machinery. A country of throwaway workers and communities. Growing retirement insecurity amidst fabulous wealth. Is this the best we can do as a people and country?

I ask again, Is this the kind of country we want to live in? I say no! This is our country but we live in fear of our corporate overlords. Enough of this economic tyranny. I challenge all of us to begin to think about what kind of country we want. What is our vision of a better future with greater economic security free from unjust corporate threats? What values anchor our positive vision? How do we build a new future in which we have growing security as we become wealthier as a nation?

We don’t have to accept this type of world. We must dare to dream and begin building a more just and sustainable future. More on this later.

Build it here!

Monday, December 2nd, 2013

By John Burbank, Executive Director, Economic Opportunity Institute and a PSARA member 

So how about that $8.7 billion tax give-away Boeing just received to build the 777X? We have been here before. In 2003, the Legislature excused Boeing from $4 billion in taxes, in order to build the 787 in our state. What happened to that $4 billion? Over $1 billion was used to construct a copycat 787 facility in South Carolina. The other $3 billion? Some went into outsourcing construction of 787 parts all over the world, which were then shipped back to Everett, there to be snapped together. Only the pieces did not snap together, and the Everett machinists and engineers had to re-jigger the pieces in order to make the 787 fly right.

The result of this brilliant outsourcing strategy is that the 787 is about $14 billion over budget. And several years late. And how about those batteries?

Is Boeing management inept enough to do this again with the 777X? Its own customers would not appreciate that. “All we said to [Boeing] was, ‘Please don’t do to 777X what you did to the [787]… Don’t do that to us.’” Those are the words of Emirates CEO Tim Clark, the 777X biggest customer. Or how about Qatar Airways Chief Executive Akbar Al Akbar, the second largest 777X purchaser: “Frankly, we would rather everything was built in one place, and I think Boeing from the 787 experience have learnt a lesson.”

Boeing has given itself three months to decide on a 777X assembly location. When you put all the pieces on the table, there shouldn’t even be a competition. Everett machinists and engineers produce 100 jets per year. No other state has this experienced and dedicated workforce. No other state can match our aerospace training and transportation infrastructure. No other state has our network of aerospace contractors. And no other state has offered such a plum in tax giveaways, for better or worse!

The Legislature stated that “the people of Washington have benefited enormously from the presence of the aerospace industry in Washington state…” The Legislature could have also stated that Boeing has benefited enormously thanks to thousands of engineers and mechanics in the aerospace industry, the transportation infrastructure, the state’s investment in engineering schools at the University of Washington and other universities and community colleges and our focus on workforce development specifically for Boeing.

But is Boeing profitable? Is the pope Catholic? $1 billion in 2003, $3 billion in 2006, $4 billion in 2010, $5.6 billion last year. So Boeing has the profits, they have the infrastructure, they have the intellectual and engineering know-how, they have the machinists’ expertise. And they just got a huge tax giveaway. So it is a green light for Washington state…except for those pesky Machinists. Should the Machinists just bow down to Boeing? Should they agree to break up their own labor force into two or three tiers? Should they agree to a 30% increase in health care costs? Should they abandon their pensions, which deliver decent, not extravagant, but dependable checks, in retirement?

Here is the thing – the Machinists don’t need to approve a new contract. They already have one that runs for another three years. It is a legally binding agreement between the Boeing Company and the Machinists. It was the Machinists, after all, who proposed a ten year contract a few years ago. It was Boeing that ran away from that proposal for labor peace and productivity. It was the Machinists who exposed Boeing’s breaking of federal labor law, when the company actually wrote that it was moving production to South Carolina to undercut the union. And it was the Machinists who agreed to drop this unfair labor practice charge in exchange for the current contract.

What Boeing needs to do is focus on building the best airplanes in the world, instead of taking away hard-won benefits, defunding the Boeing pension, and seeking out a “union-free” environment. We have helped Boeing enough. Now it is time for Boeing to get to work on the 777X, right here in Washington.

That would be a productive partnership.

Boeing bucks marriage equality

Wednesday, January 16th, 2013

By Mike Andrew, Associate Editor

In the first challenge to the state’s Marriage Equality Act since voters approved it in November, Boeing says it will deny pension survivor benefits to same-sex spouses. The company’s contract talks with SPEEA, the union that represents some 23,000 Boeing engineers and technical workers, broke off on December 5 without an agreement on the pension issue.

The pension controversy began on November 21 when, according to SPEEA spokesperson Bill Dugovich, the union asked what appeared to them to be “a simple administrative question” – how would the company handle benefits for new Gay and Lesbian spouses?

“We were shocked,” Dugovich said, when Boeing negotiators told them the company had no intention of paying survivor benefits for same-sex spouses, even though the new state law gives them equal standing with opposite-sex spouses.

Boeing officials walked out of talks November 29 while SPEEA’s team was presenting their pension proposal. A federal mediator reconvened the talks December 4, but they broke up on December 5 without any agreement on the pension issue.

SPEEA member Kenneth Aphibal posted a petition on calling on the company “to honor the people of Washington State by extending survivor benefits to employees of same-sex married couples at Contract Negotiations and show equality for all Boeing employees.” The petition now has 76,802 signatures.

Pension survivor benefits are one way that married couples – same-sex or opposite-sex – can make sure at least one of the partners enjoys a secure retirement even if the other one dies.

The SPEEA team was taken aback when Boeing asserted that they were not required to offer survivor benefits to same-sex spouses because their benefits package was administered under ERISA and not under state law.

ERISA – the Employee Retirement Income Security Act of 1974 – is a federal law enacted to regulate employee benefit plans, including health insurance and pensions. Many union benefits plans are administered under ERISA rather than state laws.

Because ERISA is a federal law, and DOMA forbids the federal government from recognizing same-sex marriages, Boeing said it was not required to offer same-sex couples equal benefits. SPEEA is not so sure, Dugovich said.

“We’re consulting our attorneys,” Dugovich said. “Discrimination is discrimination. At some point discrimination laws come into play.”

SPEEA secured medical benefits for same-sex domestic partners in 2000, Dugovich added, and those benefits will remain unchanged, but the union expected Boeing to accept the state’s new marriage law.

SPEEA says that The Boeing Company wants to eliminate all defined benefits pensions, beginning with new hires, and eventually terminate their pension program altogether. In addition to pensions, outstanding issues in the talks include wages, medical insurance, family leave, and the company’s use of outside contractors.

To date, SPEEA has emphasized it is “doing everything possible to avoid the need for a work stoppage,” but barring some movement in the negotiations it may be impossible to avert a strike. At SPEEA’s request, the Martin Luther King County Labor Council granted the union strike sanction on December 5.