Legal Alert: Employer Strategies in a Changing Slow-Growth Economy – Dealing with Organized Labor: The Boeing Blueprint

Date   Mar 10, 2014

How are U.S. employers approaching the economic "recovery" from the recession and what strategies are being employed by them, particularly in relation to unionized workforces? 

How are U.S. employers approaching the economic "recovery" from the recession and what strategies are being employed by them, particularly in relation to unionized workforces?  

Boeing Company's recent – and successful – manipulation of bargaining table "leverage politics" presents at least a partial answer as well as a fascinating case study.  The company's negotiations with its local Puget Sound, Washington-based District 751 of the International Association of Machinists ("IAM") and the District's International parent may very well signal a present-day shift in collective bargaining strategies and tactics from both sides of the table. This shift, at least in Boeing's case, is based upon a number of key factors.  These include: 

  • The perceived snail's pace of economic recovery from the 2007-09 U.S. recession;
  • The resulting job security issues extant with the U.S. workforce in general and Boeing workers in particular;
  • The age-composition of Boeing's production workforce (almost evenly divided between those both under and over the age of 50);
  • Market-share competitive issues with its chief global rival, European-based Airbus Industries;
  • Boeing's overarching desire to achieve a smooth (and strike-free) launch and entry into service ("EIS") of its new-technology 777X – the aircraft on which purportedly rests Boeing's future success for decades to come; and last but by no means least,
  • The reversal of what Boeing arguably views as a decades-long string of frustrating disappointments in collective bargaining with its militant, strike-prone Puget Sound local union.   

Accordingly, and although in the midst of recent and quite favorable production and stock market successes, Boeing – in examining both its past and its future – took a counterintuitive approach in negotiating strategies with its 2013 IAM "re-opener" negotiations involving the future production of the 777X. 

Those negotiations, taking place last November and December, resulted in widespread fallout on a number of fronts:  they firmly established a generational wedge between younger and older Boeing workers; fractured the bond (if one ever existed) between the Washington state local of the IAM and its international parent; drove the Washington state legislature – at Boeing's behest – to pass the largest ($8.7 billion) tax relief package for any employer in U.S. history; and finally – after two wildly divergent ratification votes – resulted in what is likely the most favorable contract in Boeing's 77 year+ strike-marred history with the IAM. 

How did Boeing manage to achieve these results?  The absorbing details surrounding this chapter on the exercise of labor leverage – and what it can mean in the negotiating process  – are discussed in detail in the whitepaper Employer Strategies in a Changing Slow-Growth Economy; Dealing with Organized Labor: The Boeing Blueprintwhich explores the events as they unfolded. 

If you have any questions regarding the whitepaper or other labor or employment related issues, please contact the author, Stephen Lueke,, who is a partner in our Los Angeles and San Francisco offices.  You may also contact the FordHarrison attorney with whom you usually work.