Understanding the Choices on the Menu

Suppose you walk into a Mexican restaurant and ask for Beef Wellington and a side of French Toast. Undoubtedly, you would be turned away for the simple reason those items are not on the menu. If you protested loudly, the police would be called and you would be carted away, hungry.

A similar situation exists in Wichita as discussed in Understanding Reality - You Don't Know What You've Lost Till Its Gone.

The choice presented to the Machinist union members at Cessna Aircraft is to accept or reject a 10-year agreement that cuts wages 4.2 percent, replaces the pension plan with a 401(k) plan and increases the share of the cost of health insurance paid by the workers to 30 percent.

The choice is not to ask for Beef Wellington. Yet, several union members working for Cessna have emailed me telling me how unrealistic I am. It may not seem like it but I am trying to help. Moreover, I certainly am not the one who is unrealistic.

Here is my response to "Mary" (name changed to protect the innocent) whose husband works at Cessna.

Mary,

The union needs to understand the gravity of the situation. The union likely has one shot at negotiating a contract. It is possible Cessna has already made preparations and the moment the union rejects the offer, the jobs will leave immediately and permanently.

Whether you like it or not, the union has a choice. The union can accept the contract or reject it. Perhaps there is some room for negotiation but likely not much.

My advice, which I expect not to be taken would be for the union to accept the offer outright or counter by accepting most of what management is asking, perhaps proposing something like 20% of health care costs and a 2.5 percent pay cut.

I seriously doubt management will budge on replacing the pension plan with a 401(k) plan. I do not know is if Cessna is talking about new employees or existing employees. I suspect a bit of both with grandfathering of accrued benefits.

The one thing I am certain of, is that protests will not help, nor will getting union members fired up with anti-Cessna sentiment.

If the union rejects the contract in some bitter fight as opposed to a genuine meeting of the minds where the union gives in up front on most of what Cessna has offered, it is highly likely the jobs will move to New Mexico, if not Mexico.

The Union's Choice

1. Accept the offer and the jobs stay for 10 years
2. Reject the offer and the jobs are gone for good
3. Hold out for Beef Wellington in a contentious round of negotiating and protests
4. Counter with friendly negotiations, agreeing to most of what Cessna management is asking, hoping to tweak the percentages a bit more favorably.

I strongly suggest the union go for option #1 or option #4.

Once management says hello "New Mexico" all options will be off the table. That is the reality of the matter.

The union needs to understand the gravity of the situation, the permanency of the result, and how much workers in New Mexico would love to have those jobs at exactly the terms Cessna is offering.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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