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| James McNerney, CEO of Boeing |
On Boeing, Taxes, and Modern Heroes: Disparate Thoughts
Boeing Corporation, Chicago-based industry and member of the
Civic Committee of the Commercial Club of Chicago, is in the news.
The legislature in the State of Washington has decided to
pay the extortionist fees of nearly $9 billion in tax breaks through the year
2040 to try to persuade CEO James McNerney of Boeing to remain in the local
area of Tacoma and not move his airplane manufacturing business elsewhere. These are fees the taxpayers themselves will
cough up in the next 27 years to prevent a possible corporate decision to move
away and build items somewhere else. Boeing
has been shopping around the United States to find the best “deal” when it
comes to manufacturing the 777X, Boeing’s new design
The last of our World War II vets are now fading away, falling into the
dark ground like a gentle rain dropping from our history. The Greatest Generation is marching quietly
into cemeteries and graveyards, having given of themselves for the most noble
of causes.
On Wednesday, November 13
th, 31,000 of Boeing’s
machinists union cast their votes on the offered contract by McNerney to commit
to the company’s position and the resultant agreement to manufacture the
777X.
When asked directly about the 777X
offer, McNerney characterized the workers association as part of the team, but
one he’d be willing to relinquish if the vote were to go the wrong way.
“
We hope the team stays together, but we will consider other
alternatives if the vote goes negatively,” McNerney said. “I’m not prepared to
say we’re moving in one direction or another. The big thing is that this
airplane we want to build is a spectacular airplane that our customers want.
Where and how we build it will be decided over the next few months”(http://missoulian.com/news/local/boeing-ceo-discusses-leading-company-into-challenges-of-future-in/article_2f01b6fc-4c9f-11e3-81a1-001a4bcf887a.html).
In World War Two, over 16 million Americans forsook their chances at a
peaceful and safe life, and left to fight in European or Asian theaters, while
nearly 2 billion humans in all threw themselves into the endless conflict. Nearly
half a million American men and women perished.
63 million people were consumed during the war. Blood covered the world like
a warm blanket for nearly a decade.
Long before McNerney’s stewardship, Boeing had moved from
the deliberate concentration on sea-planes for the owner’s delights and the
Navy’s needs in World War One to single wing, metal covered wood frame planes
with retractable landing gear, increasing speeds and versatility, and the
unfortunate likelihood of crashing. Nevertheless, by 1938, Boeing developed the
very more safe commercial plane called its B-307 Stratoliner (later called
Model 17). Advancements included four
powerful prop engines (and a capability to fly two or even one engine if
necessary) and the ability to fly above weather in pressurized cabins at nearly
two miles in altitude.
That was Boeing then, but certainly not today. McNerney tells anyone who will listen that
Boeing faces a very different, competitive world today - one he calls “vexing”
in a recent presentation at the University of Montana. “McNerney also named …slowing growth and aging population in
mature markets, and the increasing costs of regulatory regimes around the
world, including those at home.” Regulatory
regimes are free-market code for a “vexing” evil called taxation and government
oversight/regulation.
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| 381st Bombardment Battalion early in the war. |
My brothers and I put our father into the ground this last spring,
suffering through an echoing call of taps and shocking percussive burst of
honor guard rifle shot while we sobbed with each other. He was not only our father; he was our
Achilles. And for us, even though Dad
did not speak of war, we had built his exploits in the battles over the skies
of Germany into material suitable for Homer or Virgil. My father flew a Boeing. It was their Model 17, also known as a B-17,
the Flying Fortress. He flew 29
daylight-bombing missions over flak-infested targets and the skies of Germany
filled with young and still confident Luftwaffe yearning to earn their diamond
flying clasps. One of his early missions
was the desperate second attempt to stop ball-bearing manufacturing in Schweinfurt,
Germany, a ridiculously bad idea by Curtis LeMay and others to throw thousands
of American lives a second time into the furious combination of anti-aircraft
and fighter plane resistance without fighter protection in order to prove the
first mission over the same target less than a complete defeat. The brutal second run over Schweinfurt was
known by the participants as Black Thursday. was by The brass publicists considered
the loss of nearly 60 of 290 B-17’s as “incidental to their successes.” My father watched them hose out the remains
of their gunner when the wounded plane arrived home. He was 19 years old.
And under McNerney’s leadership at Boeing, his pursuit of
unregulated and unfettered success with disdain for any taxation (that is,
payback to workers, resources used and unused, local people and their needs,
protection by local and federal government, etc.) moves through our
legislatures like a Blitzkrieg on an open field.
According to a late report by the CTJ (Citizens
for Tax Justice), a non-partisan advocacy group for tax fairness, Boeing is one
of many companies that paid no tax to the United States people.
In fact, Boeing received money back in the
form of federal subsidies and perks from the Congress.
How much?
In the three years leading up to 2012, Boeing’s average federal tax was
– 1.8% on $9.7 billion in earnings.
You
do the math…
But that’s just on the
federal level.
McNerney’s regulatory
enemies may be waving the white flag in Congress but a true warrior knows his
battle has many fronts - vexing state and worker levels too. (
http://www.ctj.org/corporatetaxdodgers/CorporateTaxDodgersReport.pdf)
My dad was an Indiana kid, born to an assembly-line worker with a
modest pension in South Bend, Indiana.
While his father crafted Studebakers, his mother, an ex-flapper girl,
doted on her son and complained she “coulda been in pitchers.” They struggled by in a two-story clapboard
house on Leland Avenue alongside the St. Joseph River. A simple but smart kid, the unbelievable luck
in surviving the war became a once-in-a-lifetime chance to go to college and
become a member of the middle class. He
took it and worked his own way into business, something no family member had
done before.
Boeing CEO James McNerney, graduated from New Trier High
School in Winnetka, Illinois, in 1967. His
father was CEO of Blue Cross/Blue Shield and he was a star baseball athlete,
playing at Yale. In fact, at Yale he was
a fraternity brother of George W. Bush.
After Yale, McNerney entered the Harvard Business School. It was a short hop to the next success. McNerney worked his way from up to highest positions
in Proctor and Gamble, General Electric and now Boeing. Interestingly, all three companies also
represent evolutionary levels of the dark art of tax avoidance.
According to CNNMoney (
http://finance.fortune.cnn.com/2011/10/19/procter-gamble-tax-avoidance/
),
P&G has long followed a clever
“legal” practice of using Reverse Morris
Trust Transactions to avoid $billions in tax consequences, even though
Congress thought they’d closed the loophole in 1997.
According to the Institute for Policy
Studies, General Electric paid no taxes at all on nearly $88 billion over ten
years from 2002-2012
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| Return from a run over Frankfort, Germany. |
We were so proud of our father that we mythologized his designing the
insides and outs of the most wonderful plane in the word – the Boeing 17. We argued for hours over the merits and
deficits of Liberators, and Mitchells, and the Superfortresses that dropped the
Big One. Models of B-17’s hung in the
spaces of our bedroom, and models in mid-assembly lay on desktops stained and
stripped by glue and paint. We imagined
standing in the fuselage for hours in bulky flight clothes ankle deep in spent
cartridges the size of our fingers as Messerschmitts slid sideways through our
formations at 500 miles per hour. In
reality, my father battled the fear evident on his suit fronts after each
mission, watched his own blood freeze on his clothing at 30,000 feet when
wounded on two occasions, and marveled at his own amazing fortune each
mission.
McNerney, on the other hand, is a modern warrior of the
business elite, and he knows exactly how to run his battles – whether Proctor
and Gamble, General Electric, or now Boeing.
Take it or leave it, preferring to work, as he says “without unions as a
middle man.”
Lately, McNerney offered
the workers in the area off of Puget Sound an opportunity to be part of the
building of Boeing’s new 777X, but McNerney also demanded that workers give up
pensions, increase their health care payments, and agree to a long-term salary
increase of only 1% every other year.
Afterwards,
the machinist union’s
president declined, calling the offer a “
piece
of crap.” (
http://www.dailykos.com/story/2013/11/16/1255927/--This-Is-How-The-Middle-Class-Dies).
McNerney has begun searching for another more willing and
compliant state. By the way, according
to one source, McNerney’s current salary (without extras and pension promises)
is over $21 million per year.
Today’s warrior.
