Odds and Ends: Assessing the MAX; Airbus and Mobile; skilled labor in the supply chain

It’s a slow August for news, but here are two items we’ll bring to your attention:

Assessing the MAX: Over at AirInsight, we have this post assessing the Boeing 737 MAX, written shortly after the Farnborough Air Show.

Airbus and Mobile: This story discusses how the Airbus plant at Mobile (AL) will add to the aerospace cluster there. The comparison with Seattle, which we make, highlights a real challenge we see for Airbus and the aerospace cluster in Mobile. The supply chain here is struggling under the weight of the high demand for airplanes (not just at Boeing, but all the OEMs), both in terms of product and skilled help. As a member of the Board of Pacific Northwest Aerospace Alliance, we hear of the manpower shortage all the time and the efforts by the State and others to boost training and education to meet demand.

The shortage of skilled labor, and of engineers, is a major challenge for Boeing, and (like it or not) one reason for outsourcing. But the impact on the supply chain is equally great. The lower Tier suppliers in effect become the training ground for the upper Tier and Boeing. This means there is a continuous skill-churn that these small businesses really can’t afford.

Washington State is not the only place where this problem exists; it’s a national problem. What we hear at PNAA is story after story of foreign students (notably Chinese) coming to this country for engineering education then taking their skills home rather than emigrating here. Nationally, there is a wide imbalance between education and training and demand. The shortage of our education institutions in graduating the skills in STEM and touch labor is large. Even high schools have cut back on vocational training of all kinds.

In this State, budget cuts have severely impacted the community colleges and high-ed schools. The aerospace industry is but one of those hurt by these cuts.

16 Comments on “Odds and Ends: Assessing the MAX; Airbus and Mobile; skilled labor in the supply chain

  1. Aerospace engineer shortage? I’ll be sure to tell all the people I graduated with who work at Caribou Coffee now or went back to grad school because they couldn’t find a job that there just aren’t enough of them, ha ha. This system of allocating human resources is colossally inefficient.

  2. It is good to see the B-737-9MAX is outselling the A-321NEO by a factor of more than 3:1.

  3. I’d suggest that Airbus isn’t overly concerned with a deep engineering skill supply at their new FAL location or they would not have chosen to locate it in the 47th ranked state by SERI score (http://preview.tinyurl.com/6k23s59), Alabama’s proud aerospace history notwithstanding.

    I suspect that Airbus feel that in the current world economy, they will easily be able to import/ cherry pick the relatively small supply of genuinely high skill people that they will need.

    In my opinion, the fact that foreign (and domestic — Boeing) manufacturers consistently choose to locate their new U.S. manufacturing facilities in low tax states that also disempower labor and not-coincidentally have lousy overall education performance, rather than states that demonstrate greater concern for education and human capital, gives the lie to all of the public hand wringing about STEM education shortfalls. I think it also indicates that these companies aren’t worried about developing (new) first order engineering capabilities in the U.S. Rather, they seek relatively low skill finishing plants that can operate in a weak regulatory environment and lend them important political and exchange rate benefits as well as leverage in their home labor markets.

    • I find the management/union/education relationship in the US difficult to assess
      but from my ?superficial? viewpoint it appears to be dysfunctional to some degree.

      What one may have a better chance to get in Right to Work States are workers
      that are educatable and willing and not just limited to a union card.

      Question that could be interesting in this respect:
      how high is the workforce turnaround at BMW or other European manufacturer sites in the US R2W states?
      How high ( absolute / in comparison ) is workforce expansion/contraction there.

      • Dysfunctional? That isn’t entirely true, it’s just different. Unlike in Germany, we don’t have one union negotiating for every worker in a sector. I can imagine someone used to such uniformist control might think the US system is strange. Union management relations are highly variable, some companies have very few problems with their unions. Some have massive problems. Mainly it’s a result of how the company treats their employees. There is an old saying in the US, Companies get the unions they deserve. As with any situation, treat people well and you will have few problems. Treat them like chattel and you will have massive problems. This is true in a union or non-union factory.

        • The differences are signifiantly more complex.
          Mandatory union membership is forbidden here. ( i.e. if unions do daft things here they will loose members ( and influence ) fast ) .
          The management/workforce relationship is controlled by legal frameworks. Most of the hot issues unions in the US seem to handle are outside their influence here (like healthcare, pensions, .. ). Workforce representation and unions are not synonymous ( though often dominated ). Mangement and “Betriebsrat” relations appear to be much more constructive.
          Management can’t trash worker healthcare and pensions.

  4. “…story after story of foreign students (notably Chinese) coming to this country for engineering education then taking their skills home rather than emigrating here.” A bit off the topic maybe, but in the UK the perception often is that Government is making it as difficult as possible for overseas (“international”) students to enrol in educational establishments because they fear that they really will stay after training (becoming illegal alien immigrants) instead of returning home…

    • I will not say Boeing overpromising added in killing Qantas long haul operations. QF placed all their eggs in one basket. The 40+ 787-8s and -9s that would be in service with QF by now would have made a hell of a difference in QF long haul network flexibility, agility, fuel costs and CASM.

      They continue to flight off aggressive competition using a large fleet of aging 747s and 767s, far longer then they ever wanted too and passed on the 777 in 2005, because they launched/ ordered the game changing, fuel sipping 787-9 Dreamliners.

      http://www.ausbt.com.au/qantas-ceo-very-p-ssed-off-with-boeing-over-787-dreamliner-delays

      Of course QF large problems aren’t the fault of the unprecedented 787 delays alone. But it sure helped.

      • All airlines live in the same fuel cost environment.
        Joice and B.sales must have been the perfect impedance match at the time.
        Any more dreamliner customers that put all their eggs in a single basket?

      • And yet they continue to lose more and more money by flying the A380s. They should cancel the remaining orders they have of those as well. They lose money on every flight.

  5. Uwe :
    What one may have a better chance to get in Right to Work States are workers
    that are educatable and willing and not just limited to a union card.

    I don’t know if a poor education makes a person more “educatable”. I guess it depends whether the person just knows less than they should on average, or if they have amassed a base of incorrect knowledge. I suspect the latter may be the case as often as not, and I don’t see how that is a hopeful starting point.

    I don’t quite follow the union card thing. I may be wrong in aerospace, but I believe in most U.S. manufacturing jobs, the job has to come before the union membership — so the unions are not involved in hiring or personnel selection.

    Management can’t trash worker healthcare and pensions.

    Of course, the political leverage that comes with the Alabama location partners Airbus up with the very political forces ensuring that, in the U.S., employers do retain the ability to trash employees’ healthcare and pensions (to the extent that these provisions exist at all).

    • Union Card:
      The impression I got from reporting over Boeing would indicate that the manufacturing “shopfloor” is strangely outonomous. lots of information does not backflow to the central entity. IMHO the 747 disparity of existing docs not matching production the production process indicates that.

      Foreign manufacturing in the US:
      My guess is those will try to find as clean a slate as possible and avoid entrenched situations.
      Look how Airbus instantiated Tinajin or VW created their manufacturing presence in China
      ( or earlier SA; Brasil, Mexico , some other places )

      HealthCare, Pensions:
      Certainly the emulation must stay incomplete. Anyway this was to show Howards overly simplistic representation of the situation: “Trash Unions”. imho US worker/employer relations
      are in significant aspects stuck in early industrialisation. Elsewhere people have moved on.

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