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Farnborough winds down; union talks ramp up Thursday, July 17, 2008 ·

By: Bryan Corliss

Jet Set

Things are winding down at Farnborough. Boeing's big news for the day was that it finalized the Air China order that was announced Tuesday in China, for 15 777s and 30 737s.  

But, for you fans of big military transports, Reuters is reporting that Boeing and the U.S. government are in talks with the Qataris about selling them some C-17 transports. The talks center on a deal for two C-17s, with an option for two more. Insiders tell Reuters that the Qatari government wants to be able to respond to humanitarian crises in the Muslim world with "something that has an Arab flag on its tail," rather than rely on the U.S. Air Force for lift.

The travails of the California-based C-17 program - the last surviving McDonnell Douglas jets built in southern California - nearly rival those of Boeing's tanker program, so a potential deal for even two of them is newsworthy.

Speaking of the Qataris, Airbus did not announce the expected mega-order from the national airline there, which has to be disappointing for Team Toulouse, which likes to make a big splash at the European air shows each year.

Still, it hasn't been a bad air show for either side. Airbus announced more business than Boeing at Farnborough - but then, it usually does. Yes, sales were down compared to last year in Paris, but then, last year's record sales were so far off the charts, they're unsustainable. Sales are likely to slow in the second half of the year, insiders are saying, but even so, Airbus reports that it's selling more jets than it though it would. As my friends at Flight International predicted before the show, secondary-market carriers that still have cash are coming into the market right now, looking to strike good deals for fuel-efficient planes at a time when the big U.S. and European carriers are sitting on the sidelines. 

A point of clarification: Wednesday's deal between Boeing and Malaysian Airlines was not new business. Turns out Boeing has been carrying it on its books for awhile as a sale to an unidentified customer. So we've got to subtract 35 jets from our rough running total of 120 sales for the week, and which would put Boeing's total for the year at 595 - slightly below its average annual sales (609) for the past 10 years. Even a slow second half, it seems, will make this an above-average year for the sales team at Longacres.

Back home, the Machinists union held its strike authorization rally Wednesday in Seattle. It's pretty much a pro-forma event in the run-up to next month's bargaining sessions. It doesn't mean a strike is likely, but it does hand the big hammer to union negotiators, who can show management evidence that they've got their members solidly behind them.

But for the union, Wednesday's rally was a big deal, and a key moment in its efforts to introduce to a lot of new members just what it means to be part of what's still Washington's most-influential labor organization, and inculcate some of its values.

This is a pivotal time for the Machinists, as the old guard that gutted out the strikes of 1995 and 2005 starts to retire. They've been joined in the past couple years by thousands of young people, newcomers to Boeing who are going through their first contract talks. The big challenge for new IAM District 751 chief Tom Wroblewski will be getting those new Millennial generation workers to buy into the notion of labor solidarity - the "It's Our Time This Time" t-shirts and the stirring "Power to Our Union" chants. Likewise, he's got to convince the soon-to-retire Baby Boomers to rise up for one last fight on behalf of the newbies.

The main reason, I think, that the International Association of Machinists won their 2005 strike against Boeing was that the post-September 11 layoffs had stripped union membership down to a hard angry corps willing to walk out the door behind then-president Mark Blondin. This time, that core group of veterans has been diluted by a lot of people who have only known good times at Boeing - record sales and backlogs, and just as much overtime as you want. A 99-percent response to a non-binding strike sanction vote is one thing; will they be as willing risk their paychecks to vote down a contract some old guys don't endorse?

At the same time, management's challenge will be negotiating with a workforce that knows Boeing can't afford a strike, if it's going to deliver on the 787 and the thousands of aluminum-hulled planes in the company's record backlog. The problems Boeing and Alenia have had down in Charleston have only underscored the value of having an experienced, highly skilled labor force in place, men and women who understand what it's like to work in an industry where the allowable variances are measured in microns. The Machinists want a bigger piece of Boeing's billions of dollars in free cash flow, and they're going to argue hard that Boeing can't afford to not give it to them.

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© Washington CEO Magazine 2008