Friday, December 13, 2013

Labor and The Economic Jauggernaut

Not being an economist for the Federal Government I don't pretend to know the answers to our national economic policies. Taking the allotted number of economy during my University days only made me aware that a force with natural selection moves the economy around to a point of which it exist under the conditions that are presented. The government tries to influence those conditions for optimal political gravitas thus influencing the voters to keep them empower. The term macro economics and micro economics comes up only during final exams weeks. I remember that Macro economics are the result of forces applied to a open and free market throughout the world of making and selling stuff.. You know it as the basic supply and demand paradigm. The enters government again but in a more regional or local influence on its industry and taxpayers. This is called micro economic for the lack of a more precise idea.

Boeing and its union have a labor proposal on the the table. This proposal is a response built on economic principals and not Union hubris of getting more for less from Boeing. However, the Macro economics trump the union trum during the prior no vote on Boeing's offer last month. "Boeing could get it done elsewhere with less hassle" in a cheaper housing market. Yes the union has raised the price of homes in the Seattle market and costs, Through Boeing's more money to hire people to build its airplanes. You know it as $$ per hour, retirement and medical cost for its employee thing, in a market that has exclusive homes available for every worker who makes as much money in a New York minute than what they do in South Carolina. The union is now proposing a second look. Not with its labor force asking price, but the value it offers Boeing as compared to building a new production center, buying property and hiring "skilled labor" at a lower cost. You know it as "with enough people, with enough experience they can do it right." Board Room Momentum", in play.

James Bond came out with a song for one of its movies "Nobody Does It Better".

Carly Simon Union Plea Song.

Micro Economics is on display with this song. High Seattle Mortgages drive this sentiment because Unions have a preferred salary bench mark found in the area. Micro Soft and others around Redmond, Bellevue and Bellingham. Assembled a cost of living Juggernaut that propels the same players to ask for more in order to keep up with its own self induced cost of living increases. Minimum wage is a hot topic in the macro economical world. If all minimum wage fast food employees receive a $15 dollar an hour level of pay, which would knock against aviation workers around the country whether union or not. So those cities who think they can do it better, well ... better be careful as homes, raise in price and the local government increases its tax base. In the Northwest the workers already have an increased Tax Base, It increases cost of living every time they raise the Boeing benefit bar another five dollars an hour  within the package. This is a never ending cycle that both labor and Boeing are trying to dance with, without end!

A solution is needed on both parts of the the party of the first and second part. Boeing, no matter where they go with faces the micro economics  just showing up in a new state or even a new country. There are moving cost, local impact cost and a changing cost of living for just showing up at a new place. The Union argues they have paid that price in its NW area with micro economic pricing, they have the skill set, and Boeing has invested so much in real estate. That a move of the 777X is  "Board Room Momentum" (a thinking associated with body parts) that will ruin a sweet deal for all parties. The union says by eliminating all those intangible cost of moving, "We", the union give you the best value for the buck and a guaranteed result. Not being a Union fan it is a powerful takling point, worthy of Boeing's consideration.

Now Boeing is in a predicament they would like off its back. No More Union!!.  The problem I see with Boeing and the Unions is a lack of defined roles in this partnership. Labor wants more of Boeing and Boeing wants more of labor.

I say, "stop the nonsense and define your roles with great clarity". The union brings to the table its exceptional work force which can't be duplicated without a greater cost on a mature idea (777X). Boeing brings forward capital, sales and marketing, creating, " the demand" for its product.  Management is the the demand factor for the 777X, and labor is the supply factor. Boeing and labor need to choose how they they will balance these micro economic factors to optimum results. Moving is senseless, if you haven't delt with what really ails the relationship. The supply side of labor needs to make themselves available, and I think they are gaining ground in doing that today. The Demand side of Boeing's 250 777X's sales are on the table from management. It isn't worth moving only 250 777X for all the bother of moving. Think 1,000+ plus copies made with your best suppliers in the NW, the IAM.

The union needs to get over the 19th century strike mentality when shutting down everything every time it doesn't get its way. They are in the market  of offering the best labor supply you can find anywhere, and here is the price of quality! Negotiation is for the minutia, not the end all of an agreement. The offer on the table should not be from creating over stated promises to its membership as a  justification of union dues. It should be the sales job of providing the best value to Boeing for its skilled resources for building the best airplanes in the world. This is what is needed to do that job. If Boeing cheapens out, then Boeing go fish for warm bodies elsewhere.

The membership yells out, "what about cost of living increases?" The answer to that becomes the minimum wage economic syndrome . Raise the wage beyond value and you raise your mortgagee beyond its value. It then it becomes a 2008 housing market do over. Macro economics kicks in with government bail outs, ala king. Then a Manufacturer is seeking cover in China. Boeing must get real and not rip off its supply chain (Labor) in the NW. Boeing is talking to the unions this week because they got all the proposals on the table. They would have already jumped at one proposal, if it beat the NW situation by light years, and been assured of all risks of new manufacturing environment are completely retired.. They (Boeing) hasn't made a muster elsewhere, unless the Boardroom acts on peer pressure momentum, Taking it to new depths found during  1929.

Is the real problem with the Boeing Demand sector:, pride, Principal and paupers, or is it gratitude for where labor has brought the execution of its great corporate plan. I don't think elsewhere would do it better. If that is what Boeing corporate really wants is elsewhere, then so be it, mediocrity it is, and an undefined Charleston it will be.The company value was built with a superior supply side effort, and company success is made with with the demand side leadership.

You can make the best item in the world, but without the appropriate leadership at both home and in the market, that great item becomes a museum piece. However, demand needs making a perfectly made product  from its supply chain of labor.

The only time Labor should be dismissed only, if it fails in its mission. Unreasonable demands from labor is worthy of that dismissal, and unreasonable supply from the demand part is a corporate failure to do its job.