Tuesday, October 28, 2008

Where does Boeing go from here?

Ok now that there is a tentative deal with IAM 751 with Boeing let's take a look at what happens here on out. First the IAM membership has to ratify the contract that it's leadership has unanimously endorsed to it's members.

Look for ratification by the end of this weekend at the very latest and the return to production very soon after that. I would say that Everett and Renton would be back on line before election day. at the latest.

Next up...SPEEA and those contract negotiations. While it is hard to predict, I do think that since SPEEA and IAM were coordinating to a point there efforts against Boeing management that the contract that was negotiated with IAM will essentially be the same contract that is presented to SPEEA and will be likely accepted by SPEEA. With the financial markets and the global economy in a tailspin it will not be in SPEEA's interest to go out on strike especially when Boeing gave a very good contract to IAM. I think this contract was aimed at both SPEEA as well as IAM and it will probably be enough to avoid and engineers strike on December 1st.

Now looking ahead to the 787, it is a pretty much a no brainer that the 787 first flight will not take place before December 31st, 2008. There is still plenty of work to do but let's assume that the work stoppage is ultimately 60 days (2 months) and add in 10 days for unknown unknowns, then first flight can possibly take place 70 days after the machinists return to work. I'm assuming that they return around November 1st so it is possible for the 787 first flight to take place as early as January 10th, 2009. But this is all dependent on many factors:

1) Before the strike Boeing was looking at factory completion of LN 1 around early to mid November which is about a month off thus the first flight could take place as early as February
2) Despite the strike there was work being done on LN 1. There was the crossing of the lines by some machinists who came under severe financial stress though it's not known if any were 787 machinists
3) LN 2 needs to be completed and under go vibration testing prior to first flight of LN 2. I hear that power may not even be on in this aircraft yet though that is unconfirmed.

Boeing will probably give a new schedule and production assessment after the machinist return to work but I think that it would be reasonable to assume that first flight will not occur until January to February 2009.

Lastly one thing to think about. The labor actions of the last couple months and the continuing negotiations with SPEEA has probably left a sour taste in the mouths of all involved. I wouldn't be surprised if Boeing starts the process of moving out airliner production out of Washington State into area which is less union friendly like Texas, Arizona an the US Southeast.

I think it's a no brainer that commercial aircraft production is on its way out at Everett. It'll probably start with 787 production moving to San Antonio and then possibly followed by 777 and 737 moving to a state(s) where the unions are not highly regarded like Alabama or South Carolina. IAM has ultimately shot itself in the foot. Certainly the Yellowstone 3 (large widebody) and Yellowstone 1 (737 RS) will be built at another location.

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