Strike idles Boeing’s Long Beach plant
As if layoffs, cuts in production rates and dwindling orders weren’t enough, Boeing Co.'s C-17 cargo jet plant in Long Beach got another obstacle thrown its way Tuesday when 1,700 assembly workers went on strike, halting production lines indefinitely.
Members of the United Auto Workers Local 148, unhappy with Boeing’s contract proposal, traded their drills and soldering tools for blue-and-white picket signs shortly after midnight.
Officials at the local said the company’s offer called for too many concessions, primarily a lower company contribution for pensions and higher co-payments for medical plans.
Hundreds of workers lined Lakewood Boulevard and adjacent streets, shouting their disapproval as they cluttered parking lot entrances. Union members took turns on the picket line around the clock in eight-hour shifts.
“We’ll be out here as long as it takes,” said John Hobson, 62, a maintenance mechanic who has worked at the plant since 1980. “It could take two weeks or it could take two months.”
A lengthy work stoppage could ripple through company plants in California and 43 other states and frustrate Boeing’s recent efforts overseas to generate business for the Long Beach facility, industry experts said.
“For a program that’s facing extinction, this is not a smart move,” said Loren Thompson, a defense policy analyst with the Lexington Institute.
“As a customer, any time you see a workforce walk out on a program it makes you think about how reliable and how punctual delivery dates will be,” he said.
But for Hobson and his co-workers, whose average age is 52, according to the union, the concern should be about loyalty to longtime employees approaching retirement.
“I’ve been with this company for 25 years, and our union has given so many concessions to Boeing in my time here,” said maintenance mechanic Ray Luciani, 60. “For a lot of us who made the C-17 a cash cow, time is winding down. We’ll be retiring soon, and we just want a fair shake for our work.”
Boeing’s last offer Monday would have provided employees’ pensions $79 a month for every year of service. The union asked for $80.
The company’s final offer also would have employees pay 15% of their medical costs under health maintenance organizations and 5% under preferred provider organizations. It also would reduce retiree benefits. The union wanted healthcare benefits untouched, with co-pays at 12% for HMOs and 4% for PPOs.
“The company said take it or leave it,” said Joseph Pointer, vice president of UAW Local 148. “We left it.”
Under the proposed 46-month contract, workers would not get a raise this year but would get a 3.4% raise over the remaining life of the contract. The Chicago company and the union have been in talks since mid-April, when the prior contract expired.
Last week, about 80% of the union turned down Boeing’s contract offer. When the company came back with a similar offer Monday union officials informed Boeing they would strike.
“It’s unfortunate, because the company wanted to avoid all this,” Boeing spokeswoman Cindy Anderson said. “The production line is at a critical point right now.”
In February, Boeing said it was cutting the production rate of its massive, four-engine cargo plane from 15 aircraft a year to 10 next year in an attempt to extend the life of the line. At the current rate, the plant would fill its last order and close in mid-2012.
The plant, adjacent to Long Beach Airport, employs about 5,000 people and is one of the last remaining aircraft plants in Southern California. At its peak in the 1970s, the plant employed more than 50,000 workers. The C-17 program accounts for about 14,000 jobs throughout California.
The C-17, in production since the early 1990s, has been a workhorse in the Iraq and Afghanistan conflicts, hauling tanks, troops and medical gear across continents. It also is important in humanitarian missions because of its ability to land on short, bumpy runways.
The Pentagon stopped ordering new planes, which cost around $240 million apiece, four years ago. But Boeing has been able to garner congressional funding to build additional aircraft because C-17 parts come from more than 650 suppliers in 44 states.
And the company has turned to foreign markets, selling C-17s for fleets in Britain, Australia, Canada and Qatar. The Long Beach plant is working on an order for six planes for the United Arab Emirates to be delivered in 2012.
But the foreign orders have been small — averaging roughly five planes at a time, not enough to sustain the production line, Boeing said.
Now, though, the Indian government has started the diplomatic process of seeking U.S. government approval to buy 10 planes, a year’s worth of work under Boeing’s new schedule.
The C-17 remains a “critical revenue stream” for Boeing, accounting for about 8% of total sales last year for the company’s defense unit, said analyst Peter Arment at the research firm Broadpoint AmTech.
“Clearly it’s in Boeing’s best interest to keep production lines moving,” Arment said. “But it’s too early to tell what the long-term effects will be.”