Come Fly with Me: Creating opportunities for workers

The Onex Buyout of Three Boeing Plants.

McAlester, Okla., is a community of 18,000 just off the Indian Nation Turnpike about 90 miles due south of Tulsa. A former coal town, McAlester is now best known as the home of the Oklahoma State Penitentiary, the McAlester Army Ammunition Plant and one of two former Boeing plants in the state. McAlester’s residents are by no means wealthy—the median household income is about $29,000 a year. The manufacturing jobs like the 300 that exist at the aircraft parts plant pay decent wages in a town where most have a high school diploma but few finish college.

In 2005, the stability of those jobs was in question. Boeing announced that it was selling the McAlester plant, as well as one in Tulsa and another in Wichita, Kan.,, to Onex, a private equity firm based in Toronto. Backed by an agreement with Boeing to subcontract to these plants major subassemblies of just about all its aircraft, Onex promised to invest $1 billion to modernize the plants and expand employment. But after the deal was made, Onex would not guarantee that it would keep all 9,080 jobs at the three plants (7,800 in Wichita, 1,060 in Tulsa, and 220 in McAlester). Onex engaged in contentious bargaining with the plants’ largely union workforce over job protections, and the protection of wages and benefits. The workers and their communities were concerned about the immediate impact of the deal on them.

The contracts that Onex eventually offered most workers called for immediate pay cuts and higher medical insurance premiums, but also shares of stock in the new company and promises of future raises.Layoffs of 800 workers in Wichita and 256 of the workers at the Oklahoma plants added to the tension and uncertainty.

By late 2005, all the contracts were settled. They included various concessions in exchange for stock in the new company. With booming aircraft orders in 2006, the company—now named “Spirit AeroSystems”—added new positions and by year-end the workforce had grown to 12,100 (10,000 in Wichita, 1,800 in Tulsa, and 300 in MacAlester) -- a 33 percent increase over the number of jobs at the time Onex bought the plants. 

In November 2006, Onex took Spirit public, allowing the buyout firm to recoup the money it had paid to Boeing—and providing a windfall to workers. McAlester’s mechanics learned in early December that they could expect a check for $20,000 and would retain 1,000 shares of stock—worth more than $30,000. 

Workers who persevered through a sometimes difficult transition finally came out ahead. “It’ll be real good for the community,” Mike Haskins, chair of the mechanics bargaining unit, told the McAlester News Capital. “There’ll be a lot of extra cash in town around Christmas. A lot of it will go into the community.” Haskins added that “some people have been at Spirit for 30 years. We’ve got a really good crew. It reflects the work ethic for all the people that work there that the company has done so well.”

Despite uncertainty, pay cuts and even layoffs for some workers, this is one private equity deal that in the end found a way to provide new economic opportunities and tangible benefits for workers. More new jobs were created, and a community that long had contributed to building a company’s success got something back in return.