Labor Leaders See Advantages In Boeing Merger Possible Deal With Mcdonnell Douglas Could Strengthen Union’s Hand In Current Strike

Merger talks between the Boeing Co. and McDonnell Douglas could bolster the negotiating position of the striking Machinists, a labor expert says.

A merger, which essentially would be a Boeing acquisition, combined with Boeing’s recently announced $12.7 billion contract with Singapore Airlines for 34 of its 777 jetliners, demonstrates that the company is financially strong and does not need to cut labor and medical costs to remain competitive, said Stanley Aronowitz, a labor professor at the City College of New York.

“It gives the union a lot of ammunition,” Aronowitz said. “The question of cost is not hanging in the balance. I think the company is throwing a ball in the air to see how far they can get on cutting wages and working conditions. It’s a serious blow to the company if the union understands the implications.”

The merger talks add a new wrinkle for the 32,500 members of the International Association of Machinists and Aerospace Workers who have been on strike for six weeks.

While merger talks are speculative at this point, some labor leaders cautiously support it because they believe it would retain high-wage jobs.

“The bottom line is whether such a merger would strengthen the U.S. position in aerospace in terms of jobs and technological leadership, or whether it would further decimate the industry,” said George Kourpias, international president of the Machinists union.

“We’d rather see U.S. companies partner with other domestic companies to retain jobs and technology here in the U.S.,” said Bill Johnson, president of Local 751, which represents 23,500 striking Machinists in the Puget Sound area.

The leader of Boeing’s second-largest union - the Seattle Professional Engineering Employees’ Association - said a merger may mean more jobs for the 21,000 Boeing engineers and technical workers, who are in the midst of negotiating a new three-year contract.

“It’s too early to know how employment would be affected,” said Charles Boefferding, executive director of SPEEA. “Every merger has layoffs.”

But Boeing and McDonnell Douglas may have already reduced employment to the point that a merger may spur more hiring to meet the anticipated growth for new airplane orders, Boefferding said.

However, a merger also could mean the consolidation of duplicate operations, and that could lead to layoffs. The Lockheed-Martin Corp. merger, which took effect recently, cut 15,000 jobs.

Analysts’ reactions are mixed. Some say the talks could impact contract negotiations between the Machinists and Boeing. Others say they won’t have much effect.

“It’s fishy stuff here, and they could be throwing a curve in the negotiations,” said one New York-based aerospace analyst. “Why leak the story now?”

Bill Whitlow, an analyst for Seattle-based Pacific Crest Securities, said the merger talks “might throw a monkey wrench into negotiations, but I think it’s a totally independent thing.”

Boeing Machinists in Seattle, Portland, Spokane and Kansas have been on strike for six weeks. Key issues are Boeing’s proposals to raise the cost of medical benefits and the union’s concerns about job security as Boeing moves more jobs to low-cost suppliers in other countries.

The two companies also would have to face antitrust scrutiny, an issue that has prevented commercial aerospace companies from merging in the past. While the government has encouraged defense mergers, a merger of commercial aerospace giants would be eyed carefully.