Thursday, November 21, 2013

The Dubai Exhale

The Dubai Exhale:

Recently Boeing received orders for twenty-five 777X (Big Bodies or BB's) from Etihad and one hundred and fifty BB's from Emirates and another 50, in a Letter of Intent or (LOI) from Qatar.  The LOI is a sale, and because you can't tip-over this LOI apple cart or dump it, since Qatar would have to go Bankrupt or Boeing does not meet its proposed configuration successfully, becomes very unlikely. So count the 50 Qatar LOI as a purchase for conversations sake. All they have to do is drill a few more oil wells and the LOI pumps-up into a Qatar order. 

Having made that observation, then Boeing has about 259 such orders where they need a home for this order book in development or production. The IAM, Seattle WA, jug heads refused to work under Boeing's new terms offered. Boeing answers the IAM, by saying, "and your point is, IAM?" just after the IAM voted “No" on Boeing's proposal, it won't renegotiate, but will seek out people who want meaningful work somewhere near a Boeing property, even if it resides on some US high desert location.

Boeing has time for constructing a Lego like manufacturing plant under two years, as they did in Charleston, SC, (18 months).

Boeing would need a workforce of at least 5,000 on the floor and its supporting engineers for the project. Modular teams are the new way for pulling together projects. Design teams from Russia, Japan and the US meet 24 hours a day on super computers throwing Ideas on the screen, as if in the same building. Modular workforce makes unions not relevant when considering the thinking level of design world. 

The floor staff; as machinist, builders or other specialties can be assembled together with the latest processes and computer controlled manufacturing. The union workforce is greatly endangered by smarter and more accurate processes and tools, rather than the actual workers. Yes, there is a critical need for trained eyes and skilled inputs on assembly. 

However, the advancement of automation tooling and assembly is closing the gap on each reiteration of a model. The unions are becoming irrelevant by progress. When self-importance places a higher worth than its replacement in process, the workforce becomes endangered. Unions are still needed, but are not irreplaceable. That is what Boeing knows and is in position for executing an all new opportunity of controlling its own destiny without a traditional Union workforce.

They will contract a highly mobile and trainable work force that can operate an assembly procedure when a workforce maturity is obtained. This is the Union challenge. They must overcome and execute, "a how to make themselves relevant again effort". Boeing wants a covering for its company's back from labor strikes and disruption, as that union dog doesn't hunt anymore.

Labor has been excused from this 777X adventure, Boeing will build quickly and train a workforce simultaneously for operating its tooling, assembly process and manufacturing components. The union has abandon it purpose a long time ago and focused on getting more from Boeing and giving less from the workforce mind set. Hind-sight should have taken a Pyrrhic victory and voted yes and then started looking for the plan "B" for the next 8 years. Now they have nothing, tell your children how that works. A lot of talk is on Long Beach, Texas and Charleston. It is easy to speculate about those three regions as the 777X location benefactor.

Everett isn't over, but it’s on life support for its future as a 777 builder. Long Beach has United Auto workers to think about and Charleston presents a greater reliance on its yet unproven experiment even though Charleston grows closer to obtaining manufacturing chops reserved for Everett, WA. When Charleston puts five 787 out the door a month, builds barrel components, and the does design work with manufacturing implications. Then Everett loses relevancy at that time.

The Charleston site is just about too emerged as a reliable replacement for SPEEA and IAM. Everett will stay involved into the future for massive projects. Its involvement should be more ancillary than primary for its models. The 737 is bonded to Renton. The 747-8 is on life support, the 777-300ER has a final day. Well you look at the 767 with its outstanding orders and the tanker project, and you get the feeling the Union acted as a surrogate for all of the NW's future, even though they were just one faction not representing many hundreds of thousands of people being affected. Who Lost: The State of Washington, The IAM, Boeing's 3rd party partners. Not to mention the trickle-down effect on everything else in the region. The IAM was voting for everybody in Washington and now they will eventually look for work elsewhere. Good Luck Washington!

100 billion from Dubai is a lost order for the NW not Boeing. Even though there were 111 737 booked. The majority of the billions was a vote no for the NW by the IAM. Boeing was done with the IAM before the vote. They believed they paved the way for the IAM with Washington State cooperation. They said they were committed to Washington for the next 8 years if the IAM said yes.

Even though the contract would be a great sacrifice for the union workers, it is a greater sacrifice now facing those workers in finding any situation down the road. Some will be metal workers, others will work for small business, but they won't reside in an ever evolving business with world implications as they did with Boeing.  

If the Dream could not go beyond the Union contact, then the members didn't think beyond the contract offer. A great workforce can't be ignored, unless it focuses on the bad deal and then walks away. A vote yes and then broadcasting the reality of Boeing's objective, marches against Boeing's offer, has more power than the "no" and a walk away result. Family, community and friends come first and that sacrifice a union member makes for those values, by voting "yes" puts Boeing into an unwanted spotlight that Boeing has created and the world abhors. The workers could have stuck it to Boeing's image with a Yes nod and kept themselves for the people of Washington.