Boeing labor contract is opportunity for overdue culture change

You know a company is in deep trouble when comedians and stock analysts take similar jabs.

With almost every day bringing more negative headlines about the quality and airworthiness of its products, Boeing is both a punchline and a cautionary tale. In response, the company has made a series of moves to reassure nervous airline customers, investors and the flying public. Much of it has been deemed too little, too late.

Something bigger is in order — something to restore faith that the company is serious about reversing its slide, will restore the priority of safety over stock price, and treat its workers and partners well.

The opportunity for change is at hand.

As of March 7, Boeing opened contract talks with its largest labor union. The International Association of Machinists and Aerospace Workers District 751 represents more than 32,000 Boeing workers in Washington.

For Boeing, there is more at stake than what it pays for in salaries and benefits. It is no exaggeration to say the future of the 107-year-old manufacturer hangs in the balance.

Boeing must do right by its workforce. It must reinforce its commitment to the women and men who work in its local factories by making the unprecedented declaration that its next plane will be made in Washington. It must move its corporate headquarters from Virginia back to Seattle — a symbolic but meaningful return to the community that once made aerospace history, in a good way.

So far, Boeing’s attempts to manage the reputational turbulence after a piece of fuselage blew off an Alaska Airlines flight in January has not met the moment.

Last month, Boeing announced a management shake-up, including the creation of a new position of senior vice president for quality.

On a Feb. 25 podcast, aviation expert Richard Aboulafia was unimpressed. “I think there must be maybe 1% of the customer and investor community that thinks something has changed,” he said. “You’ve got to reverse decades of damage both to how they treat their workforce and their supply chain and their supply chain’s workforce. … So the idea that this couple of superficial changes means anything is just completely bizarre.”

Culture change is more than a new poster in the break room. It’s about changing the structure of the company and what it values above all else.

Earlier this month, The Wall Street Journal reported that Boeing was modifying its bonus pay, making safety and quality metrics a top priority. In the past, hitting financial targets earned the most rewards.

“Why did anyone ever think weighing financial metrics over safety and quality was a good idea?” wondered Ronald Epstein, an analyst with Bank of America, on social media.

“If you truly are too big to fail, that should mean that you are big enough to spend the time and resources required to fix the culture that you have destroyed,” quipped comedian John Oliver as he ripped into Boeing on his show “Last Week Tonight.”

Which brings us to the upcoming full contract negotiations, the first in 16 years.

Where once Boeing could take the entire state hostage and demand tax concessions and worker givebacks, the tide has turned.

Politically, one wonders: Who are Boeing’s allies? President Joe Biden has made his long support of big labor a centerpiece of his reelection campaign. Given his predilection for harboring grudges, former President Donald Trump is not likely to forget that onetime rival Nikki Haley once served on Boeing’s board of directors.

When he was running for president in 2019, Gov. Jay Inslee reflected on the $8.7 billion in tax breaks the state awarded to Boeing six years before. “If you’ve ever been mugged, you understand what it feels like,” he told “The Daily Show” host Trevor Noah.

The goodwill is gone.

In a recent interview, Jon Holden, president of IAM, told the Times’ Dominic Gates that the union “must stand up and save this company from itself.”

On the table: wage increases, the restoration of its traditional pension and a commitment to build the next all-new airplane here, among other issues.

For the company’s part, Boeing Commercial Airplanes President and CEO Stan Deal told employees via video: “As we sit down at the bargaining table, we believe there’s a path to a new deal, a deal that addresses your needs while allowing our company to remain competitive so we can bring home new business for all of us.”

For decades, Boeing fought its unions, outsourcing work across the globe and opening a new factory in labor-unfriendly South Carolina. The results can fill business textbooks of what not to do.

Boeing’s top leadership is a rogue’s gallery of mistakes and malfeasance. Phil Condit left in 2003 during a Pentagon procurement scandal; Harry Stonecipher was forced to resign over an affair; James McNerney launched the 787 Dreamliner, which suffered from massive cost overruns associated with outsourcing production; Dennis Muilenburg drew condemnation for his handling of two 737 MAX crashes.

That leaves current CEO Dave Calhoun with a lot of responsibility and not much public confidence.

Since January, Boeing stock has tanked, losing about $45 billion of market value so far this year.

“Boeing needs a top-to-bottom change of culture, and it can start by rebuilding its relationship with its touch-labor union,” wrote Leeham News and Analysis, which follows aerospace.

It took a long time for Boeing to tumble to its reputational and financial depth. It will take a long time to return to respect and admiration, let alone assurance that the plane you’re about to board has been put through the most rigorous safety assessment and maintenance.

Boeing cannot do so with a cadre of bean-counters and Wall Street suck-ups leading the charge. It is the people who design and manufacture these technological marvels who ought to be valued above all others.

Boeing must begin its recovery by mending fences with its own workforce. There is no other path forward.