I’ve been saying for some time that the day Boeing moved its corporate headquarters to Chicago was the day the decision to ultimately move production out of the Puget Sound region became final. Amongst other things, Boeing execs and board members didn’t want to be bad corporate citizens; so they decided to give up their local citizenship.
So I’d be awfully surprised if Boeing doesn’t set up its second 787 assembly line in South Carolina, despite the fact that with 767 production coming to an end, its got the facility and the trained workforce in Everett already available to churn out both 787s and 777s on the same line. As Danny Westneat points out in the Seattle Times, Boeing appears intent on pursuing a cheap labor strategy Washington state simply isn’t able to accommodate. Nor should it.
Take away the heat, all the union-bashing or management second-guessing as Boeing now appears ready to move a major piece of its plane-building operations to South Carolina. At the core of this breakup drama is a cold statistic: 14.
As in $14. Per hour.
That’s the average pay of the local line workers who are building the fuselage of Boeing’s 787 Dreamliner in a Charleston, S.C., plant.
Average pay of a Boeing Machinist around here? $28 an hour. Now, these pay averages aren’t directly comparable, say people in the know. Many of Boeing’s workers in South Carolina are younger or less experienced (the plant is only 4 years old). So the average pay there tilts lower.
Still, the average pay at Costco stores around Seattle is $17 an hour. According to PayScale, a Seattle company that tracks wages, the average for a hairstylist in Seattle is $18.24 an hour.
So Boeing right now is paying less to build airplanes in South Carolina than we pay for cutting hair or shelving 3-pound jars of olives.
How can we compete with that?
Of course, we can’t compete with that if Boeing insists that labor costs are the bottom line value in its production decisions, as it apparently has.
Ironically, when Boeing does announce the new line in South Carolina, Danny’s colleagues on the Times’ editorial page will no doubt lambast the unions for driving Boeing away, oblivious to the fact that their own union-busting rants, and that of their publisher, helped grease the skids for Boeing’s union-busting strategy. But it’s hard to blame labor for the loss of high wage jobs that wouldn’t remain high wage if the union were to accede to the demands that Boeing ultimately wants.
No, none of this really makes much economic sense. But who needs to make sense when you have a globalist, free market ideology to fall back on?
I think we should begin phasing Boeing out of Washington’s economy, and we should begin by phasing out Boeing’s taxpayer subsidies and tax breaks.
Overnight is not too soon, but I’m willing to wait a little longer, say a week.
This state has bent over backwards for Boeing for decades, and if they screw us, we definitely should retaliate. It will cost them billions to move their plants elsewhere, and billions more to train a new workforce, and oh by the way we can let the airlines know that we’ll fly only on Airbus planes and they can forget getting any travel business from us if they buy Boeing planes.
Youre certainly spot on here goldy IAM is going to take the hit, and I’m guessing the righties are going to start singing, the old, were not a business friendly state routine.
with that said, i gotta say goldy, the phillies are about to destroy the yankees and as a proud son of camden i have to protest the fact that you as a proud son of the city of brotherly love dont have ONE post about the PHILLIES!
Fils in 6!
Those folks in SC are deluding themselves if they think those $14-an-hour jobs won’t eventually migrate to China where workers get $1 an hour. Maybe we can’t compete against their labor rates, but they can’t compete against China’s labor rates.
Someday China’s leaders will look at the fact they’re sitting on trillions of dollars of U.S. government debt, most of the world’s airplane production, most of its consumer goods production, most of its shipbuilding, etc.
And then they’ll invade Taiwan and dare us to do anything about it.
Wall Street’s obsession with labor costs is misplaced and ultimately destroys businesses.
What’s the cost of late delivery? Failed projects? Decreased quality? Increased rework?
I’m an expensive employee. But that cost is barely a round off error in the grand scheme of things.
I have friends in Kentucky. The coveted jobs are with Toyota. Better pay, better benefits, better work environment. And yet Toyota is more profitable. How can that be?
Costco jobs are also coveted. Better pay, benefits, and work environment. And yet Costco has stomped labor hostile competitors like Sam’s Club for years. How can that be?
And for the win, Wall Street always criticizes Costco for their high labor costs.
Wall Street lives in an alternate reality where there is no cause and effect. Everything’s make believe. Like castles in the sky.
pre-empting some very bad news for Dow I see.
You KLOWNS fail to acknowledge the damage done by the last strike.
That was the last straw.
Admit it.
This pretending it wasn’t the issue is ludicrous.
And Goldy…
You are welcome for the “would you like fries with that” bone I threw you.
Hey, maybe the Government can build more cost-effective airplanes?!!
Yeah, that’s it.
Barry controls Auto’s, Banks and soon Health Care…why not airplanes??
Why not EVERYTHING!!
Barry O’s Stupid Solution along with legalized dope….what a great ride we’ll all have!
Aerospace has a 7.6% profit margin….ranked 13th.
If Barry and his band of DemoLoons think a 2.2% Health Care Margin is a ripoff…just imagine all the good Barry can do in the Airplane business!
Yeah, you would have thought after this latest fiasco with the Dreamliner, that they would have figured that out. Those experienced people are worth it, even if they are more expensive!
Mr. Cynical, do yo have any data to back up the 2.2% assertion? I thought health care insurers’ profit margins were closer to 14%….
mark sanford is a genius.
hi tlaz
13. Tlazolteotl spews:
Fortune publishes this list every year–
http://money.cnn.com/magazines.....s/profits/
When you get your “facts” from HorsesAss, MSNBC, HuffPo and Daily Kos…you can expect huge gaps between propaganda and reality!!
Don’t be a sucker T-man.
SeMe complains about an absence of Phillies posts.
Goldy’s not the only Phan in these environs, you know. I’m sure thehim will have something to say about the Series, and I’ve already gotten started with what I expect will be a number of World Series posts. I’m in the midst of preparing one about retribution for the Whiz Kids.
Yeah, Clownical, that month-long strike is definitely what put the 787 more than two years behind schedule. It’s definitely what caused the supply-chain problems. It’s definitely what caused the myriad subcontracted components to be incompatible.
The IAM and SPEEA had warned Boeing about some of the potential difficulties their decision on distributed manufacture might cause, and they were spot on. But the execs went ahead and did it anyway. So of course it’s entirely the fault of the machinists and engineers.
What a logician you are.
You can pay production line workers $14 an hour in South Carolina partly because the cost of living is less (cheaper housing, etc.) and perhaps because people there are accustomed to some differences in quality of life.
If Boeing and enough other big employers move there, it’s likely that housing and other living costs will rise, and eventually the increased population and the problems that go with that will lead to increased taxation to pay for infrastructure and social services. That’s what happened here years ago.
Mr. Cynical @ Everywhere
Hey, buddy. Small request. I know you’re busy. But if it’s not to much to ask, can you use sentences? And, for the win, paragraphs.
That’d be great. Thanks.
N in Seattle @ 17
No good deed goes unpunished.
I don’t know why, but it reminds me of this: Timber industry plans to automate, workers warned, workers offered retraining, workers eventually lose jobs, workers get mad, timber companies redirect blame towards the spotted owl.
It’s too bad that propaganda works.
@19 It would appear that our Mr. Klynical has recently discovered dots…to go along with the KLOWN’s overuse of the caps lock key and his long-running obsession with the letter “K”.
Yes N in Seattle, these are the Phills of our childhood, the Phills of 1980 ( just take away Frank Rizzo and the memories are priceless)
Phills in 6 and yes Sabathia gets rocked tonight!
Of course Boeing is moving to China. Why not? SC is just a temporary stop for a few years. What theoretical reason would stop Boeing from moving to China? They already made their HQ virtual (just a few offices in Chicago). They parsed out the 787 to a hundred countries, including Pakistan. They’re looking for a virtual company, where production is just where ever the best cheap/slave labor exists. SC is cheaper than WA because of unions? Well, by that “LOGIC”(tm) China is cheaper than SC because it has no ‘real’ economy (Communist) and can tell the workers where they can work, and for how much. This is why everything in Wall-Mart is made in China now. Why are airplanes any different?
Union-busting is usually a prelude to going out of business. I am somehow unable to work up any sympathy for Boeing management.
As to China, let’s see our political leadership do something about their currency manipulations.
Westnut & others have been using the wrong wage rates to compare the relative labor costs. They keep pulling out the “28.00 per hour average IAM Boeing employee wage rate” to compare with S.C.’s $14.00 per hour.
But what they don’t figure in is that most of Boeing’s 787 line employees are new hires (less than three years on the job). Boeing needed to bring in new blood because all the layoffs over the years had left them with a very old work force, mostly with gray hair and within ten to fifteen years of retirement. Since the carbon-fibre bodies required new assembly methods, it made sense to bring in new people to train them on the new systems.
But the result is that most of them were hired in at $14.00 per hour, and most of them now earn (after the strike and after three or so years of seniority) about $18.00 per hour. Of course, the overtime pay is quite a bit higher.
But the base rate of $14.00 per hour in S.C. and $18.00 per hour for employees with three years or so of experience at Boeing isn’t that much of a wage gap.
And while they recognize that it’s gallows humor, most of the guys on the shop floor of the 787 line consider the prospect of Boeing trying to build the 787 line in Charleston hillarious. Boeing machinists, engineers, and Q.C. folks have spent the past two years trying to fix a multitude of mistakes coming out of Charleston on the 787’s currently in the shop – the first crop of airplanes has had to be disassembled, re-worked, and re-assembled several times as additional problems are discovered. Boeing Q.C. guys just shake their heads at the types of problems they are seeing, and wonder how the Charleston Q.C. folks could have ever bought off on the projects.
But what do you expect from former MD management in Chicago – the same guys which dove that company in the ground, and then used Boeing’s own money to buy Boeing, and is taking that company straight into the ground as well? Only this time there isn’t going to be anybody to bail them out by buying the company at the last minute. It might take another ten years or so, maybe fifteen, but Boeing is definately in a death spiral.
@18
Exactly.
Another good reason for a state to have a wide diversity of industries and businesses rather than relying on one or two major employers.
I would think that Boeing doing any production in China would definitely impede national security. Maybe it’s time to remove the CEO and Board and put some actual patriotic citizens in there.
While we are on the subject of South Carolina:
Another “family values” former state legislature there, a Republican and currently a state assistant attorney general, was caught in a cemetary during the daytime with a stripper in his SUV, along with sex toys and viagra.
http://seattletimes.nwsource.c.....ipper.html
He’s lost his job, but Stanford is still resisting calls for his resignation.
# 28: Actually, Mistubishi Heavy Industries reported last week in ATI (an industry newsletter) that a significant portion of the work Boeing gave to them is actually being produced in – Vietnam!
I was at a conference six months ago, which said that China is actually losing work to Vietnam, which has lower wage rates than even China!
@31,
My Nikon Cool-Pix digital camera was made in Vietnam, not Japan! How’s that for ironic?
@32
Same with my just-purchased Olympus.
It’s official, I just got the Boeing press release. The 2nd 787 line will go to Charleston.
Anybody want to loan Boeing the money to build this 2nd line?
Don’t they need to have a first 787 line before they can have a second one?
Seattle folks weren’t born with the ability to build airplanes, it was learned and perfected over two or three generations. However it will not take a fraction of that time to do it here, due in large part to your hard work. Knowledge and techniques can be passed on as can be seen in China where they already have a growing aircraft industry.
Boeing made a business decision based on the facts as they perceived them. It wasn’t personal, any more than when we were bumped out in sight of the finish line by three different auto manufacturers plus Home Depot and Wal Mart.
You are still the center of the commercial aircraft producing world. Find your weaknesses and fix them, and next time you will be the ones rejoicing.
Housing costs comparison…just for shits and giggles..
$150k will get you a 3 year old house of 2200sf on nearly an acre in the ‘burbs of S. Carolina
$150k in the Seattle area MIGHT get you a POS 750sf condo in a shitty crime-ridden neighborhood.