Boeing's use of foreign subcontractors has become the key issue in what is shaping up to become a long and bitter strike by its 32,000 machinists. Unlike the typical labour disputes over wages and benefits, this strike focuses on some contentious areas of US trade policy.
Two recent events have raised union concerns: Boeing's decision to boost its subcontracting level from 48 to 52 per cent; and its bid to join China and South Korea in building a regional jet in Asia.
Union leaders claim China in particular is blackmailing Boeing to transfer jobs and technology as a condition of aircraft sales. President Bill Clinton has set up a task force to probe these claims.
Boeing has used outside suppliers for years to cut costs or improve market access. And, the company argues, offset programmes have generated billions in aircraft sales.
But offsets can also have strange effects. In Japan, where a trio of suppliers is building 20 per cent of the B777, Kawasaki Heavy Industries has found it cheaper to use a California firm to make certain components, ship them to Nagoya where assembly is completed and then send them to Boeing in Seattle. Unions claim this is one reason why they should have a right to review and bid for subcontract work.
Boeing insists that offsets create more work than they take away because much of that work would not be carried out inside the company anyway. Foreign sales account for 70 per cent of Boeing's total orders, but the work overseas suppliers perform is equivalent to only 1,900 Boeing jobs, the company argues.
David Knibb
Source: Airline Business
