Boeing CEO admits ‘we went too far’

SEATTLE — The Boeing Co. went too far with its 787 outsourcing scheme and plans to bring more work in-house in the near future, Chief Executive Officer Jim McNerney told representatives of aerospace workers’ unions Thursday.

“We lost control of it, both at the supply chain and engineering level,” McNerney said. “With the benefit of 20/20 hindsight, we’d have done more of it ourselves.”

McNerney also said he wants a better relationship with unions that represent the workers who build his company’s products.

“I want to find better working relationships,” he said. “I don’t want another strike. It’s not what I wish for at all.”

McNerney spoke to a meeting of the International Metalworkers Federation, an umbrella group for unions representing aerospace workers in North America, South America, Europe, Asia and Australia. About 70 delegates were in Seattle this week for the two-day IMF conference. More than 30 Machinists District Lodge 751 staffers attended the speech as well, along with a contingent from the Society of Professional Engineering Employees in Aerospace.

McNerney’s presentation was closed to members of the independent news media, but communications staff from both District 751 and SPEEA took pictures and notes, and Boeing released a copy of McNerney’s prepared remarks to the press. Reporters also waited outside the meeting room, to talk with those who attended.

In the prepared speech that he read to the conference, McNerney stressed free trade and the need for Boeing to remain globally competitve in the face of new challenges. He said that Boeing’s drive to increase efficiency and productivity had allowed the company to remain profitable, despite the well-publicized problems with the 787 and 747-8, and said that will have to continue.

“There is a direct link between driving competitiveness today and investments in the future,” McNerney said.

But labor relations and outsourcing issues dominated the question-and-answer session that followed.

Responding to a question from District 751 President Tom Wroblewski, McNerney was frank in saying “we went too far” when it came to designing the 787 business model, and said that Boeing would do less outsourcing on the 787-9 derivative. “More of the engineering is back in-house, and more of the production is coming back in-house,” he said.

However, McNerney was clear that he sees outsourcing as a part of Boeing’s future.

“We are already deployed very globally,” he said. “In the short term there will be a little more done in the United States, but the global stance will not change.

“I don’t see us building 777s in China,” McNerney added. “But will we use Chinese capabilities as part of accessing their market? As part of developing a 777? Yes.”

McNerney stressed his desire to keep Boeing’s costs down, but added that “does not mean we need dramatically lower wages … it does not mean dramatically lower benefits.”

Instead, Boeing must continue to press for “steady progress on efficiency and productivity,” which he says will free up cash for further innovation.

“We will win because our workers are more efficient, because our engineers are more creative and because our airplanes can do things that the others’ can’t,” McNerney said.

In terms of labor relations, McNerney said Boeing must improve its communication with its unionized work force, quipping “we’re in the bathtub together.”

Looking back on the Machinists’ strike in 2008, he said that “last time around there were some honest differences of opinion, but we also didn’t interact effectively.” McNerney said his goal is to “try to produce a longer-term relationship,” adding that “my pledge is to work very hard to do that.”

Wroblewski noted that McNerney didn’t commit to any specifics, particularly in regards to anything long-term, like where a potential 737 replacement airplane might be built. Those kinds of specifics could make a great difference in how Machinists union members might view what the CEO had to say, Wroblewski added.

Still, the union chief said he was “cautiously optimistic” at the tone of McNerney’s remarks. “He’s left the door open for moving foward.”

Wroblewski also said he was glad to hear from McNerney himself that “they will be bringing back some work and making better use of our skills and abilities.”

“Our workers here are an invaluable resource that can’t be duplicated anywhere else,” he said. “Boeing would be much better off if it would realize and take advantage of that.”

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4 Responses to “Boeing CEO admits ‘we went too far’”
  1. Glenn Miller says:

    Boeing has an ageing work force and if Boeing tries to “dramatically lower benefits” it will get a third strike.

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