...It was bound to happen after the union strike that shut down a Boeing
commercial aircraft assembly line in Washington State. Some began asking if
labor issues could make the right-to-work South an appealing alternative for a
company like Boeing.
...A story in September in the Puget Sound Business Journal said business
and government leaders in Alabama, Mississippi, Georgia and the Carolinas
watched the machinists strike “with rapt attention, wondering if Boeing’s
frustration might prompt it to someday bring an airplane plant to the South.”
...The article quoted a recent interview with a Boeing executive, who said the
Chicago-based company is not actively looking at any other site for plants.
But he didn’t rule it out.
...“Clearly there’s frustration over the labor situation in Washington, and
frustration about being able to be held hostage by a single bargaining unit,”
said Boeing Commercial Airplanes CEO Scott Carson. “Will it increase
pressure to find another place to do manufacturing in the future? Perhaps.”
...In another story by the Associated Press about the recent labor agreements
won by union negotiators, the article pointed out that unions still have muscle
in the aerospace and steel industries. But there’s a downside.
...Peter Morici, an international business professor at the University of
Maryland, said Boeing’s outlook now is strong, but machinists can push their
case only so far and for so long.
...“This is a good example of why manufacturing is leaving the country,”
Morici said about the contract the unions won from Boeing. “This is like the
UAW in the ‘50s,” when members of that union became one of the best paid
industrial workers in the country.
...The implication in Morici’s comment is that if unions push too hard, if the
cost of doing business becomes too high, companies will set up operations
elsewhere. They’ve done so before, and there’s no reason to think they won’t
in the future.
...The South has been a viable location for years for companies looking to
reduce the cost of doing business. A large part of that lower cost is due to the
lower wages paid to workers in the South, along with the smaller footprint of
unions.
...In years past, relocations by and large were for unskilled positions and jobs
where a strong back was important. But in the increasingly technological
economy, those qualities are a minus. Today the need is for an educated
workforce that can do more than just learn a monotonous routine. Much of
the South has learned that lesson.
...What happened in the auto industry is instructive. In the 70s Detroit
benefited, at least in part, from the preference of Americans to buy U.S. made
products. But foreign-owned companies began to chip away at that argument
by setting up plants in the United States beginning in the 1980s. Mississippi
and Alabama have added five auto plants since 1993.
...Significant is that the plants are non-union. Part of the reason is because the
wages paid are not that far off from the wages paid at union-represented
plants - $24 compared to about $27. The big difference is in benefits - $44
compared to about $70.
...It would be no surprise if politicians and business leaders in the South see
the same thing in the aerospace industry. All the big names in the aerospace
industry have operations in the South. Boeing, in fact, did look to the South
when it was considering a new plant to build the 787. Gulf Coast sites ended
up being finalists for that project before Boeing – enticed by incentives –
opted to build the planes in Washington State.
...Much has changed since then, most notably the decision by Boeing’s arch
rival, Airbus/EADS, to set up operations in this region. It already has a
Eurocopter plant in Columbus, Miss., and Airbus engineering center and
EADS CASA maintenance center in Mobile, Ala. If the Northrop/EADS team
eventually wins the tanker competition, the company will set up an assembly
plant in Mobile. One can only surmise whether EADS, which deals with
unions in its European operations, found the weak union footprint in this
region appealing.
...“It’s been a big factor for other companies and other industries in the state,”
Gray Swoope, executive director of the Mississippi Development Authority,
told the Puget Sound Business Journal. “Companies today that want to
maintain a nonunion work force, that’s important to them.”
...Tom Captain, a senior principal in aerospace and defense at Deloitte
Consulting, told the Seattle Post-Intelligencer earlier this year that he’s
working with aerospace companies and “Washington is not on their top 10
list” of locations. The high cost of living and high wages make it harder to
compete, despite incentives, he told the newspaper.
...Swoope has said Mississippi’s strategy, in addition to a right-to-work
environment and financial incentives, is to refine the training and knowledge
base. And for manufacturers who are feeling hard-pressed to attract and retain
a dedicated, talented, tech-savvy workforce, that may strike a chord as a
winning combination that will give them competitive advantage. - David
Tortorano, Tcp
January 2009
commercial aircraft assembly line in Washington State. Some began asking if
labor issues could make the right-to-work South an appealing alternative for a
company like Boeing.
...A story in September in the Puget Sound Business Journal said business
and government leaders in Alabama, Mississippi, Georgia and the Carolinas
watched the machinists strike “with rapt attention, wondering if Boeing’s
frustration might prompt it to someday bring an airplane plant to the South.”
...The article quoted a recent interview with a Boeing executive, who said the
Chicago-based company is not actively looking at any other site for plants.
But he didn’t rule it out.
...“Clearly there’s frustration over the labor situation in Washington, and
frustration about being able to be held hostage by a single bargaining unit,”
said Boeing Commercial Airplanes CEO Scott Carson. “Will it increase
pressure to find another place to do manufacturing in the future? Perhaps.”
...In another story by the Associated Press about the recent labor agreements
won by union negotiators, the article pointed out that unions still have muscle
in the aerospace and steel industries. But there’s a downside.
...Peter Morici, an international business professor at the University of
Maryland, said Boeing’s outlook now is strong, but machinists can push their
case only so far and for so long.
...“This is a good example of why manufacturing is leaving the country,”
Morici said about the contract the unions won from Boeing. “This is like the
UAW in the ‘50s,” when members of that union became one of the best paid
industrial workers in the country.
...The implication in Morici’s comment is that if unions push too hard, if the
cost of doing business becomes too high, companies will set up operations
elsewhere. They’ve done so before, and there’s no reason to think they won’t
in the future.
...The South has been a viable location for years for companies looking to
reduce the cost of doing business. A large part of that lower cost is due to the
lower wages paid to workers in the South, along with the smaller footprint of
unions.
...In years past, relocations by and large were for unskilled positions and jobs
where a strong back was important. But in the increasingly technological
economy, those qualities are a minus. Today the need is for an educated
workforce that can do more than just learn a monotonous routine. Much of
the South has learned that lesson.
...What happened in the auto industry is instructive. In the 70s Detroit
benefited, at least in part, from the preference of Americans to buy U.S. made
products. But foreign-owned companies began to chip away at that argument
by setting up plants in the United States beginning in the 1980s. Mississippi
and Alabama have added five auto plants since 1993.
...Significant is that the plants are non-union. Part of the reason is because the
wages paid are not that far off from the wages paid at union-represented
plants - $24 compared to about $27. The big difference is in benefits - $44
compared to about $70.
...It would be no surprise if politicians and business leaders in the South see
the same thing in the aerospace industry. All the big names in the aerospace
industry have operations in the South. Boeing, in fact, did look to the South
when it was considering a new plant to build the 787. Gulf Coast sites ended
up being finalists for that project before Boeing – enticed by incentives –
opted to build the planes in Washington State.
...Much has changed since then, most notably the decision by Boeing’s arch
rival, Airbus/EADS, to set up operations in this region. It already has a
Eurocopter plant in Columbus, Miss., and Airbus engineering center and
EADS CASA maintenance center in Mobile, Ala. If the Northrop/EADS team
eventually wins the tanker competition, the company will set up an assembly
plant in Mobile. One can only surmise whether EADS, which deals with
unions in its European operations, found the weak union footprint in this
region appealing.
...“It’s been a big factor for other companies and other industries in the state,”
Gray Swoope, executive director of the Mississippi Development Authority,
told the Puget Sound Business Journal. “Companies today that want to
maintain a nonunion work force, that’s important to them.”
...Tom Captain, a senior principal in aerospace and defense at Deloitte
Consulting, told the Seattle Post-Intelligencer earlier this year that he’s
working with aerospace companies and “Washington is not on their top 10
list” of locations. The high cost of living and high wages make it harder to
compete, despite incentives, he told the newspaper.
...Swoope has said Mississippi’s strategy, in addition to a right-to-work
environment and financial incentives, is to refine the training and knowledge
base. And for manufacturers who are feeling hard-pressed to attract and retain
a dedicated, talented, tech-savvy workforce, that may strike a chord as a
winning combination that will give them competitive advantage. - David
Tortorano, Tcp
January 2009
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