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    Monday, March 25, 2024

    Boeing's Largest Union Seeks Seat on Plane Maker's Board, FT Reports

    Boeing’s largest labour union is seeking a board seat at the plane maker, saying “we have to save this company from itself” as quality control concerns draw scrutiny from customers, passengers and regulators.

    The International Association of Machinists District 751, which represents 32,000 workers at factories in the US state of Washington, began contract negotiations with Boeing this month. One of its aims is to have a greater voice at the company, district president Jon Holden said in an interview.

    Adding a union representative would bring “a grounding and a balancing” to the 13-person board, he said.

    “We are motivated to ensure our members have a say,” he said. “We’ll be proposing that we have a seat on the board of directors. We believe that we have a unique ability to understand the production system...With what’s going on these days, we are oftentimes the last line of defence, and we have to save this company from itself.”

    Boeing is struggling to address quality concerns after a door panel blew off one of its 737 Max planes on an Alaska Airlines flight in early January. A preliminary report by the National Transportation Safety Board found that the panel left Boeing’s Washington factory lacking bolts meant to secure it to the fuselage.

    The US Federal Aviation Administration has launched an investigation, and an audit of Boeing and supplier Spirit AeroSystems found “multiple instances” of failure to comply with manufacturing quality controls”.

    The US Department of Justice is also investigating the incident. In 2021, Boeing admitted wrongdoing in two fatal crashes, but the department agreed to ask the court to dismiss the case in three years if the company paid $2.5bn and operated a compliance programme. January’s incident took place shortly before the agreement expired.

    The union is pursuing a 40 per cent pay rise over three years as part of its contract negotiations, as well as seeking to have Boeing’s next new plane built in Washington state. The machinists also plan to pursue a two-pronged strategy to win a board seat, first in contract talks and then next year via a campaign targeting Boeing’s 2025 shareholder meeting.

    Regarding the board seat, Boeing said it would “continue to review all of the union’s proposals and plan to discuss them at the bargaining table”.

    While the board seat is a new goal for the union, Holden said “we’re serious about it, and we believe we can bring value”. He added that the union also would support a seat for the union of Boeing’s engineers, were they to pursue it.

    Holden said the seat is one aspect of union bargaining proposals aimed at ensuring the company is building safe aeroplanes.

    “It’s very complex to build aeroplanes,” he said. “And our members do that very well. But there’s always decisions that leaders at the top make to try and increase production rates that we want a say in. We want to ensure that it’s done with the proper risk management assessments. We want to make sure that we aren’t eliminating important redundancies.”

    The move by the machinists comes after a labour coalition tried to advance a board slate at Starbucks, where hundreds of coffee shops have unionised in recent years. The effort was dropped this month after the company agreed to take up contract talks with the Workers United union.

    While union representatives on corporate boards are rare in the US, Germany has adhered to “co-determination” for decades, a system that gives labour a voice at the board level at larger companies. German supervisory boards are split between representatives for shareholders and unions, making it in effect impossible for executives to enact big plans without union support.

    Even in the US, having a board-level union representative is not unprecedented. Douglas Fraser, who was president of the United Auto Workers, joined the board of Chrysler in 1980 after the UAW granted the company $460mn in concessions to help the financially floundering carmaker. An employee stock ownership plan at United Airlines in the 1990s also awarded board seats to unions.

    But the presence of a union representative on a corporate board creates a conflict of interest, said corporate governance expert Charles Elson, because union representatives owe their allegiance to workers while board members have a fiduciary duty to shareholders. Typically, workers want higher wages while shareholders want to pay lower wages.

    “You can argue a good wage benefits the employees and the company, but it’s a tough one,” he said. “You can’t negotiate with yourself...It puts you in an odd fiduciary pickle.”

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