Challenges and opportunity mark Boeing CEO's remarks

JIM Albaugh's interviews with The Seattle Times Monday put the talk about Boeing into some perspective. "We have no long-term strategy to move out of the Northwest," Boeing Commercial Airplanes' CEO told us. Boeing has 75,000 employees here, and Albaugh said his intention was to make that number grow.

That was the happy part.

Mixed with that statement was another one: that the company cannot keep having strikes or raising wages at the rate it recently has. He said the Aerospace Machinists' strike in 2008 cost the company $5 billion in cash. It also damaged the company's reputation with its customers, who are now inserting into contracts that if an airplane is delivered late because of a strike, the company will have to pay penalties.

At the same time, he acknowledged that the problem with labor relations has been the company's fault as well as the union's. The two have developed a culture that requires adjustment to the 21st century.

It will be a competitive century. For a long time, Boeing's competition has been limited to one rival, Airbus. But within the next five to seven years, Albaugh said, China will produce a model directly competitive with Boeing's best-seller, the 737, and offerings will come from Canada, Russia and Brazil. Management and labor here will have to work together either to re-engine the 737 or redesign it totally, or else Boeing's business will be taken away.

This page is, and always has been, for high wages at Boeing — as high as can be sustained, with the company continuing to be successful. Finding the sweet spot requires reason on both sides.

Albaugh also spoke to the concerns of Boeing engineers, who have grumbled for years that bean counters in management were making a long-term mistake by outsourcing work that relied on proprietary knowledge, like the wings.

The engineers were right, Albaugh said. The wings, the flight-control system and "some of the fuselage" should come back in-house on the next airplane.

And that is very good news.