Bob Owens visits airline analysts to argue labor's side of story

[TWU informer]

What is the TWU's objective in sending its NYC local leaders to Wall Street to try to convince the analysts that the union's view of AA's labor costs is correct and that management's spin on the labor costs is not correct? Wall St analysts aren't members of the board, aren't mangement and probably don't own enough shares to alter the outcome of the shareholder vote for directors in a few weeks. So what's the goal?

Doesn't realy matter one way or another. But at least it looks more professional than a slogan on a t-shirt.

I have an insight into the outsource versus in-house of maintenance for you.

Every Monday, Wednesday, and Friday I attend an Engine Overhaul Parts Meeting with management and production control.

And every meeting, the parts that are making the engines late for scheduled test date are always the OUTSOURCED parts. And I don't mean once in awhile either. Every single overhaul production engine ends up waiting on a part to return from an outside vendor, while every part done in-house is ready for engine assembly. That is something the BEAN COUNTER never knows and never counts in his/her quest to convince us how lucky we are to get to do in-house production.

 

[eolesen]

Would they still be late if the entire engine were sent out, as most other airlines seem to do?

I'm sure someone will argue that the manufacturer of the engine isn't going to be as knowledgeable on how to overhaul it as AA is, but I'd think that they have more of an assembly line approach to stuff like that, as opposed to dealing with it in twos & fours...

 

[TWU informer]

Would they still be late if the entire engine were sent out, as most other airlines seem to do?

I'm sure someone will argue that the manufacturer of the engine isn't going to be as knowledgeable on how to overhaul it as AA is, but I'd think that they have more of an assembly line approach to stuff like that, as opposed to dealing with it in twos & fours...

Actually Late and Confirmed YES.

Last year or late 2009 there were 10+ CFM-56 Engines full overhaul sent out to Struthers in Kansas. While we still have not heard the coutcome of the 29D Grievance (heard in December) , not only were these engines late, they sit on the ramp because Q.A. could not get confirmation in the paperwork that Service Bulletins and Airworthiness Directives had been complied with.

It was also discovered that paying us Overtime to acocmplish these overhauls would have been cheaper. Imagine that.

 

[eolesen]

OK, but don't you think that if it was a regular process that the paperwork issues would have been worked out? Don't you think that there would be penalties built into the contract for late returns?

Better yet, wouldn't having a QA person onsite at Struthers have avoided the paperwork issues altogether?

Again, I can't imagine that someone like WN, AS, UA, CO, or DL, who all appear to ship their CFMs out, would tolerate perpetually late returns and incomplete paperwork.

 

[TWU informer]

OK, but don't you think that if it was a regular process that the paperwork issues would have been worked out? Don't you think that there would be penalties built into the contract for late returns?

Better yet, wouldn't having a QA person onsite at Struthers have avoided the paperwork issues altogether?

Again, I can't imagine that someone like WN, AS, UA, CO, or DL, who all appear to ship their CFMs out, would tolerate perpetually late returns and incomplete paperwork.

I don't have any response to your "what ifs".

All I know is what the facts are regarding what actually is taking place. In other words the reality of it all.

Here are the facts!
Every week I attend meetings that has management and production control fretting over outsourced work making engine testing late and causing piece part shortages.

And without question the attempted outsourced full engine overhaul was less than ideal on many fronts.

These are the facts as we deal them in current reality. In your fantasy world scenarios, no doubt everything would be perfect and all of AA's overhaul AMT's would be laid-off and most would be drawing unemployment and food stamps so you could feed them with your payroll taxes. You give your pay to Obama, and Obama would give it to me. Thanks E, pass the gravy please. You could also pay 100% of the medical bills for my wife. You're the best moderator we could ever have.

 

[chris perry]

and

I don't have any response to your "what ifs".

All I know is what the facts are regarding what actually is taking place. In other words the reality of it all.

Here are the facts!
Every week I attend meetings that has management and production control fretting over outsourced work making engine testing late and causing piece part shortages.

And without question the attempted outsourced full engine overhaul was less than ideal on many fronts.

These are the facts as we deal them in current reality. In your fantasy world scenarios, no doubt everything would be perfect and all of AA's overhaul AMT's would be laid-off and most would be drawing unemployment and food stamps so you could feed them with your payroll taxes. You give your pay to Obama, and Obama would give it to me. Thanks E, pass the gravy please. You could also pay 100% of the medical bills for my wife. You're the best moderator we could ever have.

One only has to look at BOEING to guage the cost of outsourcing.....the development of the 787 cost cannot even be predicted
or estimated at this point its so far out there. Staggering numbers are being estimated due to late parts,defective parts and rework at final assy.This all stems from the inability to control quality and Time lines.Boeing is staffing whole companys just to get parts of acceptable quality. The money spent on outsoucing could buy the top Four airlines with cash.Wall street estimates are as follows before the horizontal tail problems surfaced.....between 12 and 18 billion cost overuns on top of 5 billiion development costs. They now forcast cost to be between 25 and 30 billion dollars and have to bring horizontal tails to Seattle and build a plant to manufacter.All that to save a buck.....Sounds familiar. One engineer predicted the whole thing John Hart -Smith,google it see!!

 

[787nightmare]

and


One only has to look at BOEING to guage the cost of outsourcing.....the development of the 787 cost cannot even be predicted
or estimated at this point its so far out there. Staggering numbers are being estimated due to late parts,defective parts and rework at final assy.This all stems from the inability to control quality and Time lines.Boeing is staffing whole companys just to get parts of acceptable quality. The money spent on outsoucing could buy the top Four airlines with cash.Wall street estimates are as follows before the horizontal tail problems surfaced.....between 12 and 18 billion cost overuns on top of 5 billiion development costs. They now forcast cost to be between 25 and 30 billion dollars and have to bring horizontal tails to Seattle and build a plant to manufacter.All that to save a buck.....Sounds familiar. One engineer predicted the whole thing John Hart -Smith,google it see!!

Yep...it will be a loooong time before Boeing makes any money off the 787.
They're hoping the -9 & -10 will be big sellers for them in order to help recoup some of that.

You guys wouldn't believe it up here...

 

[Bob Owens]

and


One only has to look at BOEING to guage the cost of outsourcing.....the development of the 787 cost cannot even be predicted
or estimated at this point its so far out there. Staggering numbers are being estimated due to late parts,defective parts and rework at final assy.This all stems from the inability to control quality and Time lines.Boeing is staffing whole companys just to get parts of acceptable quality. The money spent on outsoucing could buy the top Four airlines with cash.Wall street estimates are as follows before the horizontal tail problems surfaced.....between 12 and 18 billion cost overuns on top of 5 billiion development costs. They now forcast cost to be between 25 and 30 billion dollars and have to bring horizontal tails to Seattle and build a plant to manufacter.All that to save a buck.....Sounds familiar. One engineer predicted the whole thing John Hart -Smith,google it see!!

Could have used that info Monday. Ok, its still good to have and I think we made our point to the analysts. Outsourcing may move costs out of labor but sometimes it lands a lot heavier somewhere else on the balance sheet. your story is a pefect example of that.

 

[WorldTraveler]

except you really have no idea how much money, if any, Boeing is losing by subcontracting because they don't report it and any attempt by anyone to esimate is just a swag.

It's a nice theory but you have no idea what the original cost might have been or even Boeing could even have built the 787 on its own.

The simple fact is that many airlines do outsource and do so under very high levels of quality and maintenance reliability - and they also understand the tradeoff in costs and additional time if it exists to do outsourcing by flying planes to far away places.

It doesn't change the fact that AA's maintenance costs are the highest in the industry per seat mile produced and despite what some of you want to beileve, maintenance costs do include the costs of outsourced maintenance.

Further, there are airlines like DL - the lowest cost US network airlines per ASM for maintenance costs - that both insource and outsource maintenance - including doing engine overhauls on the CFM for other carriers. Most recently, Gol awarded half of its engine overhauls to DL in a bid that presumably could have included AA who is also a Gol partner and CFM operator.

Apparently the market does dictate where it is profitable to both outsource and insource; AA labor's attempts to inhibit market forces not only cost AA revenue but also future job security for AA employees.

 

[chris perry]

except you really have no idea how much money, if any, Boeing is losing by subcontracting because they don't report it and any attempt by anyone to esimate is just a swag.

It's a nice theory but you have no idea what the original cost might have been or even Boeing could even have built the 787 on its own.

The simple fact is that many airlines do outsource and do so under very high levels of quality and maintenance reliability - and they also understand the tradeoff in costs and additional time if it exists to do outsourcing by flying planes to far away places.

It doesn't change the fact that AA's maintenance costs are the highest in the industry per seat mile produced and despite what some of you want to beileve, maintenance costs do include the costs of outsourced maintenance.

Further, there are airlines like DL - the lowest cost US network airlines per ASM for maintenance costs - that both insource and outsource maintenance - including doing engine overhauls on the CFM for other carriers. Most recently, Gol awarded half of its engine overhauls to DL in a bid that presumably could have included AA who is also a Gol partner and CFM operator.

Apparently the market does dictate where it is profitable to both outsource and insource; AA labor's attempts to inhibit market forces not only cost AA revenue but also future job security for AA employees.

Boeing just admitted all the cost overruns and the mistake of outsourcing read up.Its not a guess just what they are stating as fact!

 

[TWU informer]

Boeing just admitted all the cost overruns and the mistake of outsourcing read up.Its not a guess just what they are stating as fact!

There are even some specifics.

Aѕ Boeing prepares tο announce уеt another delay fοr thе 787 Dreamliner οf between three аnd six months οthеr problems аrе surfacing thаt рυt thе program іn even worse shape thаn іt appears.


On thе surface thе following issues hаνе bееn identified:


1. A Rolls-Royce engine blew up οn a test stand іn England last summer. A proposed software аnd hardware fix hаѕ уеt tο bе vetted bу regulators. Runway tests іn Roswell, N.M аlѕο uncovered cracking airfoils іn one οf thе engine’s compressors.

2. An electrical fire οn a test flight last month caused a cascading series οf system failures. A redesign οf thе power-distribution system wіll hаνе tο bе approved bу regulators.

3. NO ETOPS Certification, thе FAA hаѕ tοld Boeing thаt іt won’t gеt early certification needed tο flу thе 787 οn transocean аnd transpolar routes without proof οf engine аnd system reliability. Thе 787 wouldn’t bе allowed tο flу more thаn 60 minutes frοm thе nearest airport without thе certification known аѕ ETOPS, fοr Extended-range Twin-engine Operational Performance Standards. Thаt wουld drastically curtail thе υѕе οf thе jet fοr many airlines, including launch customer All Nippon Airways οf Japan.

4. Alenia οf Italy built thе horizontal tails bаdlу, аnd each one іѕ different. Mechanics аrе slowly working through thе 20 Dreamliners already built.

5. Thе rework οf aircraft аnd unfinished installation οf systems οn thе planes already rolled out — more thаn 100,000 tasks outstanding — wіll take many months tο complete.

6. Thе supply chain іѕ halted fοr thе fourth time thіѕ year. Incomplete aircraft scatter thе Boeing facility.


Source =
http://www.planenation.com/2010/12/21/boeing/boeing-787-dreamliner-faces-significant-new-challenges.htm

 

[chris perry]

Boeing just admitted all the cost overruns and the mistake of outsourcing read up.Its not a guess just what they are stating as fact!

“We spent a lot more money in trying to recover than we ever would have spent if we’d tried to keep the key technologies closer to home,” Albaugh told his large audience of students and faculty.

Boeing was forced to compensate, support or buy out the partners it brought in to share the cost of the new jet’s development, and now bears the brunt of additional costs due to the delays


Boeings Words

 

[Deleted member 14439]

except you really have no idea how much money, if any, Boeing is losing by subcontracting because they don't report it and any attempt by anyone to esimate is just a swag.

It's a nice theory but you have no idea what the original cost might have been or even Boeing could even have built the 787 on its own.

The simple fact is that many airlines do outsource and do so under very high levels of quality and maintenance reliability - and they also understand the tradeoff in costs and additional time if it exists to do outsourcing by flying planes to far away places.

It doesn't change the fact that AA's maintenance costs are the highest in the industry per seat mile produced and despite what some of you want to beileve, maintenance costs do include the costs of outsourced maintenance.

Further, there are airlines like DL - the lowest cost US network airlines per ASM for maintenance costs - that both insource and outsource maintenance - including doing engine overhauls on the CFM for other carriers. Most recently, Gol awarded half of its engine overhauls to DL in a bid that presumably could have included AA who is also a Gol partner and CFM operator.

Apparently the market does dictate where it is profitable to both outsource and insource; AA labor's attempts to inhibit market forces not only cost AA revenue but also future job security for AA employees.

787 Outsourcing

 

[Bob Owens]

“We spent a lot more money in trying to recover than we ever would have spent if we’d tried to keep the key technologies closer to home,” Albaugh told his large audience of students and faculty.

Boeing was forced to compensate, support or buy out the partners it brought in to share the cost of the new jet’s development, and now bears the brunt of additional costs due to the delays


Boeings Words

Yes but they sure did lower them labor costs!!!! :blink: :blink:

 

[chris perry]

“We spent a lot more money in trying to recover than we ever would have spent if we’d tried to keep the key technologies closer to home,” Albaugh told his large audience of students and faculty.

Boeing was forced to compensate, support or buy out the partners it brought in to share the cost of the new jet’s development, and now bears the brunt of additional costs due to the delays


Boeings Words

Im not 100% against outsoucing,but you must control your product. Some things make sense,every firm is not an expert but when done on a large scale just to appease the bean counters...something is wrong. This was just a management way to make a quick buck that backfired.... Its kinda sad the 777 was a model of what to do,it was ignored completely to make a buck.