Test of wills: Boeing CEO McNerney gambles on strike

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New York, Sep 14: Boeing Co chief executive Jim McNerney is betting his career that the world’s biggest-selling plane maker can survive a strike by its assembly workers and emerge stronger by holding firm on its right to outsource work on its aircraft.

The decision to play hardball with the company’s biggest union is a gamble for McNerney, 59, a star baseball pitcher at Yale, where he was a classmate of the US president George W. Bush. The outcome will dictate the direction of the most famous name in aerospace and one of the biggest US exporters.

“If it’s a choice between getting it (the strike) stopped quickly, or doing what is good for the company in the long run, he’s going to choose the second,” said Richard Aboulafia, an aerospace analyst at research firm Teal Group, based in Fairfax, Virginia. “To a certain extent, he has no choice. Compromising on the company’s competitiveness is a losing game.”

Simply put, Boeing wants to design and assemble planes, but leave the labor-intensive manufacturing to others. Its new 787 Dreamliner is being built by other companies in Japan, Italy, South Carolina and elsewhere, and only assembled by Boeing in the Seattle area.

The machinists’ union sees this as an attempt to destroy local jobs. But McNerney is committed to the new way of working and is calculating that the long-term benefits of outsourcing will outweigh the bad will, cost and delay caused by a strike. A week into the stoppage, he still has the support of Wall Street. The company’s share price is holding steady around its 12-month low, but most analysts expect a jump when the strike ends.

“Things could turn around here after the strike has been resolved,” said Paul Nisbet at aerospace equity specialists JSA Research, based in Newport, Rhode Island. “I would expect things to start moving pretty favorably in the company’s direction.”

Boeing’s 27,000 machinists walked off the job last Saturday after rejecting the company’s final contract offer, idling its massive aircraft factories in the Puget Sound area. The International Association of Machinists and Aerospace Workers (IAM), sensing the upper hand as Boeing reaps record profits, is holding out for a hefty pay rise and removal of contract wording giving Boeing almost unfettered power to use outside suppliers.