Labor Winning Some : Contract With Boeing Helps Save Aerospace Jobs in U.S.

By EVELYN IRITANI and STUART SILVERSTEIN

Dec. 14, 1995 12 AM PT

TIMES STAFF WRITERS

American workers are winning a few battles lately in the long-term war to keep aerospace industry jobs from flying off to foreign lands.

The latest example is the four-year labor contract approved Wednesday by Boeing’s union machinists, by an 87% majority, after a nearly 10-week-long strike. Although it is based on the understanding that new foreign customers will demand that some production be performed on their own soil, the pact also is designed to prevent an exodus of jobs overseas.

Leaders of the International Assn. of Machinists and Aerospace Workers called it a significant victory for aerospace workers, whose ranks have been savaged by slowdowns in the domestic aviation industry, defense cutbacks and fierce global competition. At Boeing, employment has dropped from a peak of 165,000 in 1989 to 105,000 today.

Elsewhere in the aerospace manufacturing industry, job security provisions also have been included in recent labor contracts signed with Hartford, Conn.-based Pratt & Whitney and GE Aerospace Engines in Evendale, Ohio.

Some analysts predict that such measures would spread to other industries, as business leaders and politicians face growing concerns about the loss of American jobs to low-cost foreign competitors. Job security provisions “may be the path of the future,” said Gary Hufbauer, a trade specialist at the Washington, D.C.-based Institute for International Economics.

With a presidential election coming up in 1996, the Clinton administration and its political opponents are particularly sensitive to influential labor unions such as the machinists union. Shortly after the Boeing strike began, the U.S. government agreed to investigate the union’s complaint that the transfer of technology and jobs abroad threatened the future competitiveness of the U.S. aerospace industry.

The recent concessions extracted by U.S. aerospace workers, however, continue to be overshadowed by the growing globalization of the American economy--along with losses by unions in other industries that have fought unsuccessfully to prevent jobs from going overseas. Organized labor lost its high-stakes battle in 1993 to defeat the North American Free Trade Agreement, which union leaders continue to assail as a massive drain on manufacturing employment in this country.

Some labor economists say aerospace equipment manufacturing, as one of the last big export industries that is widely unionized in the United States, is an exception to the rule.

And even in other segments of the aerospace industry, unions fear losing U.S. jobs. Labor contracts coming up for negotiation early next year for flight attendants at United and Northwest airlines--both of which are largely owned by employees--will focus on stopping or stanching the exodus of jobs.

Patricia Friend, president of the Assn. of Flight Attendants, most of whose members work for United, estimates that the carrier has moved at least 1,000 jobs to foreign bases in the last several years. When contract negotiations begin, “the issue of job security will be at the top of the list,” she said.

Meanwhile, in the ongoing labor dispute at Federal Express, the pilots union is resisting efforts to expand the company’s use of lower-cost foreign pilots to staff its fast-growing international routes.

Even with its Boeing contract, the machinists union recognizes that some production will need to take place overseas for U.S. aerospace firms to win contracts in foreign countries interested in building up their own manufacturing base.

Foreign buyers, who now account for 70% of Boeing’s aircraft sales, are in the driver’s seat. Last year, China alone accounted for 20% of the company’s aircraft sales.

“You’re generally not going to get [foreign customers] to make a multibillion-dollar purchase unless you have some manufacturing there. China has been adamant about that,” said Robert T. Keller, a University of Houston management professor who specializes in international technology transfers.

Still, at least in the aircraft industry, unions can throw their weight around.

The agreement at Boeing gives the union unprecedented access to the subcontracting process, including an agreement to give the union three months’ notice of any proposal to subcontract “significant” amounts of work, said machinists union spokesman Matt Bates. It also gives the company incentive to keep business in-house by increasing the benefits to laid-off workers and providing new jobs and retraining for workers displaced by subcontracting.

Some labor experts caution that these types of provisions are far from iron-clad safeguards. “The [contract] language is nice, but it’s no guarantee. It’s only a victory to the extent that a company follows through on what it says,” said Gregory Woodhead, a trade economist with the AFL-CIO. He said that General Motors Corp., while paying lip service to U.S. workers’ concerns, also closed nearly two dozen U.S. plants while opening two new ones in Mexico during the early 1990s.

On the wage front, the union’s 32,500 members at Boeing facilities in Washington, Oregon and Kansas will get an average lump sum signing bonus of $4,200 and a boost in their average hourly pay from $20.37 to $23.20 over the life of the contract. They are given the option of sticking with the present health-care plan or shifting to lower-cost plans in exchange for monetary payments of up to $1,200.

The strike has taken a toll on Boeing’s bottom line, where it is expected to reduce this year’s production by an estimated three dozen planes.

But Wolfgang Demisch, managing director at New York-based B.T. Securities, believes the company will profit over the long haul by giving its work force a bigger stake in the company’s success at home and abroad.

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Jobs and Trade

A significant portion of 1,000 voters responding to a nationwide EPIC/MRA/Mitchell telephone poll in early November blamed international trade and overseas competition for the stagnation of industrial wages, a key issue in the Boeing strike. A large portion of the respondents also said they would approve of tariffs being imposed on goods coming into the U.S. from other countries. Margin of error is 3 percentage points.

Question: Industrial wages in the U.S. have remained stagnant for a decade and a half. Which of the following reasons for stagnant wages that have been cited by experts comes closest to your view?

New technology and machines replacing workers: 19%

Trade and increased competition from overseas: 37%

Immigration laws allowing people to enter the country and work for less: 32%

Don’t know: 12%

Question: Would you approve or disapprove of a proposal to impose tariffs on products from countries that have a trade imbalance with the U.S.?

Strongly approve: 38%

Somewhat approve: 31%

Somewhat disapprove: 13%

Strongly disapprove: 9%

Undecided / don’t know: 9

AEROSPACE JOBS

Loss of government contracts is the chief reason for the loss of aerospace jobs, but trade has been a factor as well. In millions: