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Originally published October 8, 2008 at 12:00 AM | Page modified October 8, 2008 at 11:41 AM

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Boeing exec says state gaining reputation as a 'strike zone'

A top Boeing executive warned a gathering of aerospace industry executives and legislators Tuesday that the state is becoming known as a "strike zone" and that the ongoing Machinists strike could drive assembly of Boeing's next airplane out of Washington.

Seattle Times aerospace reporter

EVERETT — A top Boeing executive warned aerospace executives and legislators Tuesday that the state is becoming known as a "strike zone" and that the ongoing Machinists strike could drive assembly of Boeing's next airplane out of Washington.

"It's ironic that I'm speaking at a conference entitled 'Cleared for Takeoff' when at the moment we are grounded," said Fred Kiga, Boeing vice president for government and community relations, at the Governor's Annual Aerospace Summit.

Linda Lanham, executive director of the trade group that organized the conference, kicked off the event by recalling how Lockheed Martin moved 10,000 manufacturing jobs from California to Georgia in 1990, beginning a downward spiral of the Los Angeles area's manufacturing base.

Kiga followed that theme when he recalled the 1991 speech in which then-Boeing Chief Executive Frank Shrontz warned that unless the state's support for business improved, the Puget Sound region could become "an aerospace rust belt in the 21st century, complete with padlocked factories, unemployment lines and urban blight."

Kiga said the state has made progress in improving the business climate since then, and "I don't think anyone would call this region an aerospace rust belt today.

"But we cannot afford to become known as the strike zone either. The stakes are much too high."

Shrontz was not the only Boeing executive to use an address to business groups to deliver a message meant to galvanize action.

In 2003, Alan Mulally, then-CEO of Boeing Commercial Airplanes, moved state lawmakers to grant Boeing more than $3 billion in tax breaks when he declared of the state's support for business: "We suck."

Kiga was chief of staff to then-Gov. Gary Locke during the legislative campaign that succeeded in keeping assembly of the new 787 jet in Washington.

Asked after his speech if he worries that Boeing's decision on its next airplane might go the other way, Kiga responded: "I am obviously concerned."

He said both he and commercial-airplanes CEO Scott Carson grew up in the Northwest. "We'd hate to lose a treasure like the Boeing Company," Kiga said.

Delighted with Kiga's forthrightness was John Monroe, a former Boeing vice president who now acts as a consultant to the Snohomish County Economic Development Council, working to attract aerospace suppliers to the region.

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"He's shooting straight bullets," said Monroe. "That's what the company thinks. It's serious."

Kiga's speech followed a keynote address by Gov. Christine Gregoire, who provided new statistics on the industry's importance to the state.

Gregoire said the latest data from the state Office of Financial Management show aerospace provides 87,000 direct jobs at an average annual pay of $90,000, as well as 157,000 indirect jobs.

"The strike is hurting the economy of the state," Gregoire said later in a brief interview. "I am hopeful both parties can get to the table."

She said she is "in fairly frequent contact with both sides" but that no direct talks are occurring.

Gregoire left before Kiga spoke.

After his address, Kiga said his remarks shouldn't be seen as a threat but as a warning of potential consequences.

"It's just ominous signs on the horizon," he said. "There are several factors that enter into where to build a new airplane. ... Yes, work stoppages play into that."

Both the company and the International Association of Machinists (IAM) have said the big stumbling block preventing a settlement of the monthlong strike is the union's insistence that Boeing reduce outsourcing and provide some guarantee of future local jobs.

Kiga said the company cannot give in on that point.

"We want to maintain our competitiveness on the outsourcing issues. The company has never backed from that stance," he said.

"Our guys are constantly running the numbers. They want to maintain that flexibility to decide where we site [assembly plants] and where we outsource to our suppliers."

Union officials attending the conference took Kiga's remarks as more than a warning.

"He threatened us five times in that speech," said Jesse Cote, an IAM organizer.

But Larry Brown, the union's political director in Olympia, said the threat of Boeing leaving is wearing thin.

"We have 20 percent fewer jobs on the 787 Dreamliner than on any prior program," Brown said.

"It's a diminishing threat. They are already leaving the state."

Referring to Lanham's remarks on the decline of aerospace in the Los Angeles area, Brown said that's already happening here as Boeing pulls back.

"Just look at Renton, where manufacturing buildings are flattened and retail stores go up," said Brown.

"We're trying to secure jobs not just for our members but for the state and the community."

Stan Sorscher, research director with the white-collar engineering union SPEEA, said Kiga's focus on the strike was misplaced.

Sorscher said Boeing has let down customers with serious delays on the 787 and other programs due to production problems from the outsourcing the company insists is essential.

"Now suddenly, it's the strike that has caused the customers to be unhappy," said Sorscher. "If Boeing has a competitive problem, they created it."

Issaquah-based aerospace analyst Scott Hamilton wrote on his Leeham.net Web site that through outsourcing, the company has helped create "its own new competitors that [chief executive Jim] McNerney now uses as a club over the unions," he wrote.

"It's time to rethink the whole issue of outsourcing," said Hamilton. "There must be some middle ground upon which Boeing and its unions can agree."

Dominic Gates: 206-464-2963 or dgates@seattletimes.com

Copyright © 2008 The Seattle Times Company

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