Boeing's Unions Are Worried About Job Security The Ceo's

A brawl could cost the boss his job-and bring in a hard-liner

Boeing Co. workers have plenty of reasons to strike. They're clocking scads of overtime to help the aerospace giant churn out a record number of planes while the company is laying off 48,000 employees. Still, when talks begin on June 28 between Boeing and the International Association of Machinists (IAM) over a labor pact that expires on Sept. 1, union leaders will be just as eager as management to ward off a strike.

Why? Privately, IAM officials worry that a brawl like the 69-day strike in 1995 could cost CEO Philip M. Condit his job, leaving them to deal with hard-liners such as President Harry C. Stonecipher, or one of his proteges. So far, Condit has avoided the ax despite board dissatisfaction over Boeing's production-line snarls and the resulting losses. But the snafus forced his one-time heir apparent, Ronald B. Woodard, to resign last fall as head of the Seattle-based giant's commercial aviation unit.

CHOOSING SIDES. "We like Phil. He's the least of our concerns," says Dick Schneider, the IAM's chief Boeing negotiator. Union leaders appreciate Condit's efforts to solicit their opinions on recent production problems. In contrast, they distrust Stonecipher, who has been vocal about Boeing's need to cut costs. Jerry Calhoun, Boeing's union relations vice-president, won't discuss Condit's precarious position, but says that it "frames the reality we have to deal with" in the labor talks.

The mounting labor tension stems from member anger about layoffs that are coming just as they finally managed to meet overly ambitious production goals. Boeing is set to crank out a record 620 planes in 1999. But it's still slashing payroll by 20%, from a peak of 238,000 last year, cuts that will hit the IAM's 48,000 members, too. The reason: a need to boost efficiency and bring down costs, coupled with an expected production downturn in 2000 because of a sharp falloff in orders from Asia.

To avert a walkout, Calhoun and Schneider have been meeting regularly even before formal talks open. The IAM wants Boeing to set guaranteed employment levels, tied to revenue growth. This wouldn't prevent cyclical job swings, but it could prompt management to moderate hiring and layoffs. Calhoun says the idea hasn't been ruled out.

The two sides are also grappling with subcontracting. Boeing has been outsourcing more parts and even bringing workers from suppliers onto Boeing's factory floors, where they do work previously done by union members. The same issue helped provoke the 1995 walkout. To settle the strike, Boeing agreed to advise the union of subcontracting involving 50 or more jobs. The IAM could then try to match the supplier's costs to retain the work. However, the union says it has lacked the detailed financial information needed to make the process work. Now, Schneider says he wants to form joint management-union committees to study outsourcing decisions.

VOLUNTEERS. Boeing's ideas for saving jobs are equally controversial. Management wants to run plants around the clock and on weekends to avoid bottlenecks. Boeing could do so now, but only by paying time and a half. If the IAM agreed to straight hourly wages, "we would add employees and mitigate layoffs," says Calhoun.

He hopes to overcome the IAM's opposition by using volunteers for irregular schedules. But the IAM fears that will open the door to mandatory weekend work down the road. Indeed, Boeing recently rebuffed an offer for voluntary flexible scheduling from its white-collar union, whose labor pact expires in December. "It's fine if employees agree,"' says Charles Bofferding, head of a union representing 22,000 Boeing engineers, of his group's offer. "But if you're going to dictate weekend work, you have to pay extra."

IAM leaders could try to strengthen their hand by playing up members' anger. After all, a strike would be bad news for Boeing, too. But if the two sides can avert a showdown, no one will be happier than Phil Condit.