Boeing delivered a record number of jetliners in 2013. The large amount of orders is likely to keep Boeing as the number 1 airline manufacturer, outpacing its longtime European rival Airbus though both firms are said to be in a boom time as air travel to Asia and Latin America picks up.
Boeing is what in economics is called a national champion, not only has the firm survived primarily on US government contracts, it has found markets abroad thanks in part to US trade missions and diplomacy. The best example perhaps being one of Boeing’s most lucrative markets – Saudi Arabia. It is a rather open secret that part of the United States’ strategic partnership with Saudi Arabia involves the kingdom shoveling back some of their petrodollars into the US economy in the form of defense contracts with companies such as Boeing. Not to mention the research and development funds poured into Boeing by the Department of Defense from World War II on to foster developing its modern aircraft fleet – with some nice tax breaks from Congress. Which is all to say, if Boeing had been forced to exist in an entirely free market without public assistance it would, likely, not exist at all.
Enter a recent and successful push by Boeing to kill their workers’ pensions. Yes, after a record year Boeing decided to force its American workers to kill their pensions or they would walk. The vote to approve the controversial plan split 51-49 with Boeing management walking away with a convincing victory.
Boeing’s new threat worked. The old paradigm of contract negotiation—give-and-take haggling—is so 1980. The new model is one in which the employer uses its willingness to walk: Take this job on our terms or we’ll find someone who will. Boeing said it had gotten proposals to host the 777X program from 22 states, most of them offering millions in tax breaks and other incentives to lure airplane manufacturing jobs. Washington State politicians had already passed the largest corporate incentive package in history, $8.7 billion, but Boeing demanded that its workers pay, too. When new airplane programs come along, expect Boeing to use the same successful playbook.
Talk about welfare queens. Boeing not only received that $8.7 billion incentive package on the state level, they are now asking for even more federal benefits in R&D tax write-offs. That is on top of the benefits it already receives and Boeing’s uncanny ability to dodge taxes.
But more to the point, why is a company so reliant on government assistance screwing its workers like this? Boeing claimed it was following the market, that in order to compete Boeing needs more of a profit margin. So who is Boeing competing with?
Boeing said it had to cut costs to meet “aggressive international competition.” But Boeing’s sole major global competitor is Airbus, based in highly unionized Germany and France, and Airbus puts a premium on maintaining its high-quality workforce and treating its workers generously.
So not only does Boeing rely heavily on the government for tax breaks and research funding, its main competitor is also a national champion with high labor costs. In other words, this has nothing to do with the market or the necessities of “aggressive international competition”, this is simply corporate greed at its worst.
Photo by cheukiecfu, used under Creative Commons license