Delta Air Lines to Build Heavy Maintenance Facility in Queretaro, Mexico

[wings396]

Thanks for the input [edited]. Is this topic about US or DL building a facility in Mexico? If you took the time to actually read the entire thread, you would have seen that I don't condone this being done by ANY airline. Having one actually open their own just makes it worse. Hopefully we can start outsourcing some of the financial jobs in the US to Mexico as well. I forgot, who do you work for again? Oh, that's right you are to Chicken Shite to admit it.
If and that's a big if you knew anything about the airlines, you would know why US went with Airbus. At the time of the aircraft order, Boeing told US that they had approximatly a 3 year backlog on aircraft due to the filling of large orders that had already been placed. Other than bitching about the airlines, you really are clueless.

 

[737823]

If and that's a big if you knew anything about the airlines, you would know why US went with Airbus. At the time of the aircraft order, Boeing told US that they had approximatly a 3 year backlog on aircraft due to the filling of large orders that had already been placed. Other than bitching about the airlines, you really are clueless.

Were you present and privy to the US negotiations with Boeing? I'm guessing not. More likely than not Airbus gave US a better overall price or financing guarantees to meet their needs. That's beside the point-I was addressing your desire to buy American and pointed out that the airline you love so much is the largest operator of Airbus aircraft worldwide.

Josh

 

[Glenn Quagmire]

http://www.ajc.com/n...s-abound/nQTbc/

From the link:
"The airport’s biggest tenant, Delta Air Lines, also is looking ahead. CEO Richard Anderson said last week the airport could also expand by adding Concourses G and H, with Delta moving its hangars in that area to former Ford plant land the airport acquired last year."

Ouch. I had not seen that little tidbit.

I do remember Richard's statement about not being in the maintenance business. He has not changed since his Larenzo lawyering days.

 

[WorldTraveler]

Kev,
I want to hear Dawg’s comments but since he can go for quite some time between posts, we need to keep the conversation going.

I am very glad that you said:

Your comment is dead-on accurate… but it isn’t just about AMFA. AMFA may have done a worse job of other unions than other unions and IAM might have done a better job, esp. during BK (both are hypothetical – not saying it is/is not true), but the fact remains that labor and management have an adversarial relationship in most US industries, and the US airline industry is probably out front for being one of the worst.

The reasons are simple. Companies, with any expense, asset, or liability want Control, Predictability, and Flexibility.
Obviously in a unionized environment, mgmt gives up control. Even if labor-mgmt relations are good, it is still a process of compromise and negotiation which can often take a lot of time. IN the US airline industry, history is on the side of difficult, long and drawn out negotiations.
That is all academic but the application is directly related to maintenance and to the AM maintenance JV.
The answer to all of the questions I raised above is MONEY – or because what DL did made financial sense – at the time.
But the better answer is that DL made a decision that made the best financial sense – and they had – and still do have – the flexibility to adapt to the realities of the marketplace.
DL didn’t need to shut down all of its maintenance operations… it focused on the part – airframe overhauls – that didn’t make sense.
Because DL outsourced a lot of airframe maintenance, it was able to close a lot of hangars around the system. And it focused on higher value work to keep in-house, the same kind that they could get a premium to do – and the same services which other airlines don’t do because they are more high tech, require considerable expertise, AND because they require lots of VOLUME to do economically.
DL has the flexibility to in-source what makes sense to do today and change to what might make sense to do tomorrow.
You need only look at the jobs that are returning to the US from Asia to realize that outsourcing manufacturing does not always produce the sustained results it once promised. The same principles apply to outsourced SERVICES.
You need only look at DL’s traffic statistics (released today for the month of August) to see why DL is NOT outsourcing more of its work, but actually insourcing.
DL’s MAINLINE capacity IS UP while its regional carriers are DOWN. Overall, DL’s capacity is DOWN which means its regional partners are absorbing the brunt of the decreases in capacity.
That trend will only accelerate with the removal of 50 seaters and the arrival of the 717s.
Compare that record to other airlines… I’ll give you a hint…. Even though US is the only other major that has reported so far this month , their regional capacity is UP 10%. MOST US network carriers continue to increase regional capacity.
How many major airlines do MRO work for their regional partners? If mainline FLYING is shrinking and regional capacity is increasing, then that is lost work.

If you are looking at the company as a whole, then DL is bringing jobs back while others continue to outsource.
Why?
MONEY… because as industry capacity is pulled, it makes more sense to remove CONTRACT capacity than to pull mainline capacity and make mainline less efficient, driving up its costs.
Could DL outsource more of its maintenance to Mexico? They sure could. But the answer to why they have not done more in the past is the same reason why there is little likelihood they will do it more in the future.
MONEY
They can’t get the costs out except in bankruptcy.

Now contrast this with the maintenance situation at other airlines, and labor in general. While not all airlines are engaged in continual war with labor, there is far more conflict than cooperation.
And outsourced work at other airlines is not only higher than at DL, but is increasing. WHY?
CONTROL, FLEXIBILITY, and PREDICTABILITY.
It is easier for other airlines to OUTSOURCE work than to risk losing control of the business to labor unions, or more specifically, the process of conflict and negotiation that marks most labor-mgmt relationships.
With multiple outsourcing providers, companies have the FLEXIBILITY to adapt to realities of the business. Labor contracts allow very little flexibility (in general) to what is obtained in non-contract employee or outsourced arrangements.
FLEXIBILITY most definitely means that at times some strategies are used to allow the company to adapt. DGS mechanics, RR employees in ACS are just a couple examples.
But the real question that has to be asked is whether current full-time jobs are being lost in the process. Unions will always seek to protect CURRENT and FUTURE jobs in that class/craft. DL has no allegiance to protect future jobs and has made no promise to do so.
It also is worth nothing that very few people will stand up for protecting future jobs, esp. if their current situation is stable and safe. For most DL employees they can say that they are as good as or better off than their peers at other airlines. There is little reason to attempt to protect future work as long as their current situation is safe and the company demonstrates a commitment to protect the jobs of current employees.
PREDICTABILITY means that you know costs will rise in a labor contract and there is little you can do to bring it down short of a BK. There are precious few examples of US airline labor unions renegotiating contracts to cut costs outside of BK.
Even if you look at the unionized companies w/ the best labor-mgmt relationships – WN and CO – they succeeded because they had low costs relative to their competition. It is a whole lot easier for mgmt to be cooperative and conciliatory than when costs are comparable to or above your peers.
The AA BK is a stark reminder that the process of getting costs down is brutal – and it absolutely will affect employees throughout the industry, including at DL.
While it may not be popular to say so, DL is willing to keep work in-house because its non-union workforce is more efficient and provides the flexibility to the company to adapt to the market when it is necessary to do so.
Look also at DL’s better relationship with DALPA (unionized pilots) than exists at other airlines that drives an environment that helps both. DL’s pilots are blasted by other pilot groups for giving away scope via 76 seat RJs. The DL pilots allowed DL to buy more but only if DL added more mainline jets and reduced overall RJ flying. And the DL pilots got a pay raise out of it all. Contrast that with other pilot groups.
If a company views an asset as a high-risk, low flexibility asset that locks them into escalating costs and gives them little ability to adapt to the market, they will seek alternatives – and often that is an alternative outside of the control of their unions.
But if they see employees as assets that provide the company what it needs while allowing both to win, then the historic confrontational environment is banished to – history.
DL employees are not going to buy the company “family and culture” line if the evidence is contrary.
The mindset that DL will outsource work because it can is a byproduct of the confrontational environment that exists at most airlines.
While companies and individuals can change over time, there is a constancy that should be used as the basis for gaining insight into the future. Tossing out a history of above average employee relations, including a history of doing a better job of protecting the jobs of DL employees in order to argue for something new is not only illogical but it also raises the question of why anything is discussed about the future if you can’t draw some experience and insight from the past.

BTW, with regards to moving the TOC, it's at least been discussed.

http://www.ajc.com/n...s-abound/nQTbc/

From the link:
"The airport’s biggest tenant, Delta Air Lines, also is looking ahead. CEO Richard Anderson said last week the airport could also expand by adding Concourses G and H, with Delta moving its hangars in that area to former Ford plant land the airport acquired last year."

As for the possibility of moving the TOC in order to expand the terminal, I will fully go on the record as saying that if Anderson or anyone else supports “moving” the TOC in order to built out the terminal, you can kiss the TOC and the jobs it has goodbye. A few jobs might get moved but the vast majority of jobs will not move – they will be lost.
ATL is big enough and there are other options to expand, including the south side terminal. And there is nothing that says the main domestic terminal itself couldn’t be razed to allow for new concourses. The road system at ATL is a disaster and isn’t getting any better.
You don’t move a major industrial operation. There is a reason why the land where the former Ford plant once stood as well as the former GM plan on the NE side of the city is largely vacant. Regardless of the industry, there are very few major industrial plants – and the TOC is an industrial plant and not just a bunch of hangars – that are MOVED from one location to another.
Beware of ANYONE who tries to argue any differently.
This would also be a good place to AFFIRM CATEGORICALLY that I am pro-success and not against ANYONE. I am not opposed to any person or any idea. Healthy dialogue requires providing evidence for ideas and allowing them to stand the test of time.
The notion that workers have to lose in order for management to win is a false dichotomy that flows from the failed labor-mgmt relations that exist at most US airlines.
Labor and mgmt CAN and SHOULD succeed – to each other’s mutual benefit. One side cannot gain everything at the expense of the other. But if one side is losing, then the system is a failure – and no can argue any differently.
I have every desire to see every airline employee AND company to succeed. TOGETHER.

It's a two way street foreign companies are beginning to show an interest in US manufacturing once again in right to work states. Airbus is building their facility in Alabama which will be more cost competitive than their France operations, Caterpillar (a US company) shuttered a plant in London, Ontario, Canada to relocate to Georgia. United Technologies (Otis elevator manufacturer) has similarly moved work back to the US from Mexico.

Josh

Aviation is a global business. Companies insource and outsource and buy and sell products worldwide. You can’t argue that it is ok for US companies to buy products from other countries if you won’t also acknowledge that customers in other countries don’t also buy services from US companies… and they do.
DL has a number of customers in other countries and the flow of services and revenue is one-way – into DL’s shops.
AM is a customer of DL Tech Ops as well as a supplier. That is why it is called a Joint venture. Lost in all of this rhetoric is that AM brings a lot of its work to DL.

Ouch. I had not seen that little tidbit.

I do remember Richard's statement about not being in the maintenance business. He has not changed since his Larenzo lawyering days.

The comments from Richard years ago at NW reflect the situation at that time. If NW didn’t insource, then maintenance was solely a cost base.
DL Tech Ops generates about $50M in PROFITS per year. Not revenue. Profits. Richard isn’t going to wipe out those profits unless he can find something else to replace them. Tech Ops generates the highest margin profits for the company.


BTW, your fearless leader is or has been in Paris, apparently talking with Airbus. DL has also reportedly signed an NDA with AA, as have other companies beyond BA and US as has been reported. Time will tell but I have a feeling the two events are most definitely connected.

 

[wings396]

Were you present and privy to the US negotiations with Boeing? I'm guessing not. More likely than not Airbus gave US a better overall price or financing guarantees to meet their needs. That's beside the point-I was addressing your desire to buy American and pointed out that the airline you love so much is the largest operator of Airbus aircraft worldwide.

Josh

Not privy to anything, as that fact was common knowledge from some Q&A sessions from management at the time. CO & DL had just placed sizeable orders with Boeing, and their lines were booked up. The leadership of W&G stuck a good deal with Airbus, and the a/c started to arrive soon afterwards.
Should US have waited a few years in order for Boeing to accommodate them with new a/c?
Once again you have gone off topic to take a jab at US.
We went from DL building a mtc facility in Mexico, to US operating Airbus a/c.
Were you privy to what US did at that time? That's what I figured. I suppose that you overlooked that UA,B6, and AA have current orders with Airbus, or currently operate them.

 

[737823]

Not privy to anything, as that fact was common knowledge from some Q&A sessions from management at the time. CO & DL had just placed sizeable orders with Boeing, and their lines were booked up. The leadership of W&G stuck a good deal with Airbus, and the a/c started to arrive soon afterwards.
Should US have waited a few years in order for Boeing to accommodate them with new a/c?
Once again you have gone off topic to take a jab at US.
We went from DL building a mtc facility in Mexico, to US operating Airbus a/c.
Were you privy to what US did at that time? That's what I figured. I suppose that you overlooked that UA,B6, and AA have current orders with Airbus, or currently operate them.

I didn't overlook that but I'm also not the one touting that we should all buy American products. Like I said we are living in a global economy it is irrational to buy more expensive and/or inferior products based on where they are manufactured. I totally get the appeal to nationalism, patriotism, and supporting local/national industry but there comes a point in time where that is no longer the equitable thing to do.

Josh

 

[wings396]

I thought that you were smart enough to know the difference between buying products of another country, and possibly shifting US based mtc jobs to Mexico. Fwiw, I think that it was a disgrace that GM moved jobs to Mexico after their bailout too. I don't care too see any US based companies shift work out of the country. I know it happens, but not a good trend for the American workers.

 

[FWAAA]

At this point its only a couple of bays, and Delta does x amount of work in house, but that can easily change. IMHO, its a disgrace for ANY American based company to be associated with a facility in Mexico, or anywhere else outside of the US. I know a lot of companies do it, and I try to avoid thier products, GM included especially after their government baiil out. Within a few years, Delta could decide to triple the size of this Mexican facility, and nobody can do squat to stop them.

Yet you accept a paycheck derived, in part, on the backs of low-paid aircraft maintenance technicians in San Salvador, no? Doesn't US send some of its narrowbody fleet to Aeroman?

To Parker's credit, he has repatriated call-center jobs that were previously outsourced to Manila, Mexico City and San Salvador.

 

[blue collar]

I thought that you were smart enough to know the difference between buying products of another country, and possibly shifting US based mtc jobs to Mexico. Fwiw, I think that it was a disgrace that GM moved jobs to Mexico after their bailout too. I don't care too see any US based companies hift work out of the country. I know it happens, but not a good trend for the American workers.

As a side note, I don't agree with sending jobs overseas. Also, I don't agree with your stance on not buying GM just because of the bailout. How about those ATSB loans that US got? Couldn't that be a 'bailout'?

 

[wings396]

Yes, but the ATSB loans were paid back and I don't believe that any additional jobs went overseas to coincide with the loans. As you know the ATSB loans were to help offset the impact of 9/11, and the GM bailout was due to poor management of the company.

 

[blue collar]

Yes, but the ATSB loans were paid back and I don't believe that any additional jobs went overseas to coincide with the loans. As you know the ATSB loans were to help offset the impact of 9/11, and the GM bailout was due to poor management of the company.

Way to support American union workers, you're probably also watching the NFL tonight.

 

[wings396]

Whatever the hell that is supposed to mean....

 

[topDawg]

good to see you back, Dawg. And thanks, Kev, for sticking with the conversation.

The three of us - and others - have discussed many of these same things many times before. The definition of insanity is to continue to argue the same points expecting to move someone to the point of view which they have resisted multiple times before.errr good job on missing the point.

So, let me ask you a couple questions...

Why didn't DL shut down the TOC or cut it to the bones, as you describe they could do, during BK. big reason is they would have had a union in there so fast it wouldn't be funny......and then it is very unlikely they could make 600M in extra cash. They dumped alot of maintenance capacity in peripheral cities. Why did they choose to concentrate maintenance in ATL instead of just gutting the whole thing. Others cut far deeper in BK. eh...not really. AA and US both do(or will be) doing some kind of HMV in house after BK. UA....well its IBT nuff said. NW said it was worth outsourcing virtually the whole operation? Why? err AMFA told them to FUPM
and Northwest pretty much hated it employees. lol.
Why doesn't AM - and a whole lot of other airlines and MROs - do half the stuff DL Tech Ops does.errr what? AM does its HMVs. They do do engines because they wanted Delta's HMVs. Why did DL choose to keep those functions while others ditched them? Why does DL send out work on some engines but keep others in-house - and then use that capability to insource? why are you talking about engines? Talk about airframe. quit trying to make me love Delta for the engine shop. I'm a Airframe guy....

Why haven't DL employees - esp. in Tech Ops - chosen to unionize before? They haven't for, what, 80 years? Why is today different? because Delta does just enough. As Kev has said, as the airline gets younger and dumps the people that love Delta because of the first 20 years of there careers and can deal with the last 10. Same answer largely fits for DL's other non-union employee groups.

The answers to every one of these questions are the same cold, non-emotional reasons that I mentioned above. It has nothing to do with whether you two do your jobs very well (I know you do), whether you are outstanding people (you are), whether I would personally would love to sit down for a beer and burrito with you - I would.

I await your responses.

 

[topDawg]

No one said it was the exclusive domain of DL; this thread just happens to be discussing them. A lesser problem =/= no problem.



It wouldn't surprise me. BTW, is the loss of 13's as big of deal down there as people are making it sound? Might be another straw on the camel's back...

heck yes. 13.3 shift is sweet. They are retards though. They want to have full coverage and can't figure out how to do it without overlap. One would think 4/10s on Mon-thur and then 13.3 weekend crew would work.....but Noooooo some friggin bean counter says 13s don't work. they already said before 8s don't work. So now its sounds like they are going to do 4/10s then do 3/12s with a make up day.....so it will pretty much mean the same friggin problem they have now.

So yeah...its a big deal. I already know a hand full of guys that are going to try to hardship it. May mean a few more guys get to sleep in the parking lot.
Delta right now gets to play the AA BK card....that wont last forever though. UA and US will get a chance to better the craft. Hopefully AA votes out the TWU and does the same.

 

[Kev3188]

The reasons are simple. Companies, with any expense, asset, or liability want Control, Predictability, and Flexibility.
Obviously in a unionized environment, mgmt gives up control.

"Flexibility" is just a euphemism for "autocracy," which DL will spare no expense to maintain.

But the real question that has to be asked is whether current full-time jobs are being lost in the process.

For the one-too-manyeth time, YES.

There is little reason to attempt to protect future work as long as their current situation is safe and the company demonstrates a commitment to protect the jobs of current employees.

That commitment doesn't exist.