Strike Two? Boeing's Safe.

Grand news out of Seattle, folks: We may see a 787 Dreamliner yet.

After several days of testier-than-expected negotiations, Boeing (NYSE: BA  ) confirmed last week that it has resolved its second big union kerfuffle in as many months. Coming off of a debilitating (if not quite as devastating as some still think) strike with its machinists union, as recently as Thursday it looked like Boeing was heading right into a new strike called by its engineers at the SPEEA union.

Suppliers breathe a sigh of relief. Investors, too
That would have been bad news for Boeing suppliers like Spirit AeroSystems (NYSE: SPR  ) , BE Aerospace (Nasdaq: BEAV  ) , Honeywell (NYSE: HON  ) , and United Technologies (NYSE: UTX  ) , each of which shared Boeing's pain as parts orders from the aeronautical giant dried up during the IAM strike. So it was good news when Boeing announced a "tentative agreement" with SPEEA on a four-year deal to grant 5% annual raises to the union's 21,000 members and offer improved health-care coverage.

Most important, however, are the terms relevant to outsourcing, where it seems management swept the field. According to Boeing's summary of the agreement, it appears that all SPEEA managed to win on this point was the right to: "timely opportunities to provide input on the use of non-Boeing labor." In other words, the right to be heard, but not necessarily the right to block any moves by management to outsource labor.

Thus, the SPEEA contract appears to contrast somewhat with the terms that Boeing's machinists negotiated last month. Where SPEEA won primarily pecuniary battles, the machinists struck over issues of outsourcing. The IAM strike ended only after Boeing gave assurances of job protection, even in the face of outsourcing.

Foolish takeaway
Pundits will argue over who won and who lost the SPEEA and IAM negotiations. From where I sit, though, it looks like everyone came away a winner. What IAM needed, it got. Likewise, SPEEA seems satisfied with the terms it wrung from Boeing.

And Boeing itself? It's given up some flexibility on outsourcing, true. Also, it's paying its workers a little more. But with $349 billion worth of backlog piled up, the simple fact of the matter is: It can afford to. Now, with contract negotiations out of the way, it's time for Boeing to get back to work, and start converting all those unfilled orders into shareholder profit.

Extra! Extra! Read all about Boeing's strike saga in:

Fool contributor Rich Smith owns shares of Boeing. The Motley Fool has a disclosure policy.


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  • Report this Comment On November 18, 2008, at 7:25 PM, BADonS wrote:

    Actually- the BA PR releases combined with the self serving SPEEA PR releases give a false picture to the press, the outsiders, and most of the pundits.

    Internally, the discussion from both the Tech camp and the Prof camp cannot be repeated in print or in a forum that is not x-rated and seems to center around some physically detrimental or impossible suggestions. Although the colonoscopy issue was settled, the general theme still applies

    http://www.youtube.com/watch?v=RdVnayPYZqU

    the 5 percent is a POOL - with a minimum of 2 to 2.5 percent.

    IOW not everyone will get the 5 percent - some will get more (very few) most will get less depending on how many get more. generally the newbies get the higher percentage and the older types get less- after all where will they go ?

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