Boeing (NYSE:BA) has been handed an early Christmas present. The over priced machinist union has rejected the latest contract. The union membership has played Russian roulette. They clearly do not understand how to spell South Carolina, Texas and a few other key words.
Boeing will almost certainly move work to other friendlier locations. The Washington based machinist union IAMAW (International Association of Machinists and Aerospace Workers ) will call in their political contacts for a variety of blocking moves.
The risks are now purely political. Boeing has crossed swords in the past with Obama loyal bureaucrats. So here are a few of the weapons that Obama will try to use.
Expect more investigations into how Boeing does business with Washington DC. Senate inquiries, bureaucratic inquiries, not returning phone calls and generally slowing things down. Uncle Sam has a huge spending problem and if the work is not going to a Democratic friendly union they will try to cut spending.
Not what the Tea Party had in mind. But in the ensuing three years until a new President is elected the Democratic party will try to create whatever turbulence they can.
Expect lots of political noise. Expect delays and supposed cut backs. Expect political interference. But in the end Boeing will have a lower cost structure. So sad for Seattle.
Amazon (Nasdaq:AMZN) will not be able to fill in the gap.
George Gutowski writes from a Caveat Emptor Perspective.