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Outsourcing Spurs Another Walkout

June 5, 1996

ST. LOUIS (AP) _ Don’t try to tell Charles Jarmuszkiewcz that subcontractors can make airplane components as well as he can.

``You should see some of the parts that come in from them _ it’s terrible,″ Jarmuszkiewcz said as he walked a picket line Wednesday in front of McDonnell Douglas. ``The subcontractors are held to a lesser level of quality than we are.″

Jarmuszkiewcz is one of thousands of McDonnell Douglas machinists who went on strike Wednesday, leaving engineers, clerks and other nonunion workers to man the production lines at the aerospace giant’s sprawling St. Louis campus.

Wages are an issue in the strike. So are health benefits, a retirement plan, job reclassification.

But at the heart of the impasse is what has come to be known as outsourcing. McDonnell Douglas, like many other major companies around the country, is increasingly farming out work to subcontractors and non-union plants in other cities.

Outsourcing is necessary to keep the company competitive, officials say. Reduced labor costs allow McDonnell Douglas to bid lower on potential military contracts.

The union sees it as a threat to job security. In the 1960s, McDonnell Douglas employed 18,000 machinists. That number dwindled to 11,800 by 1990. Now, there are 6,700.

Don’t expect outsourcing to go away, analysts said.

``If there’s a real determination (by the union) to try to change the rules on Corporate America and actively discourage outsourcing, that would be the occasion of a long strike,″ said Wolfgang Demisch of BT Securities in New York. ``It could get quite ugly.″

It got ugly last year at Boeing, one of McDonnell Douglas’ chief competitors. Production workers there walked off the job for 69 days, delaying delivery of nearly three dozen commercial jets. The strike cost Boeing hundreds of millions of dollars.

Boeing is still outsourcing, but agreed to consult with workers over future subcontracting.

``I would think the best (McDonnell Douglas machinists) can hope for is what the Boeing workers got,″ said Peter Aseritis, an analyst with CS First Boston. ``I don’t think McDonnell Douglas can let workers dictate how they shop for goods and services.″

In March, General Motors workers in Dayton, Ohio, struck for 18 days over outsourcing. It was the longest strike against GM in 26 years, and shut down plants around the country. The strike was resolved when the company pledged to provide replacement jobs for jobs that fall victim to outsourcing.

The United Auto Workers has said that limiting the use of outside suppliers is one of its chief goals as contract talks for 400,000 union workers at GM, Ford and Chrysler begin this month.

Another aerospace company did agree to limits on outsourcing. In April, a machinists union at Lockheed Martin narrowly avoided a strike that would have affected 4,000 workers. Union negotiators succeeded in forcing Lockheed to drop demands to eliminate union jobs by outsourcing janitorial positions and other maintenance work.

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