Boeing, SPEEA in-fighting continues

Boeing yesterday said it would be cutting more engineer jobs. Boeing’s engineers’ union, SPEEA, was quick to fire back.

Boeing’s message:

The following message was sent today from Mike Delaney, VP of Engineering for Commercial Airplanes, to all engineering managers.

Employment actions being taken to meet the challenges ahead

My message today provides context and background on actions we are taking regarding the employment level in BCA Engineering.

As we move from a lengthy period of non-recurring development efforts, BCA Engineering will require fewer employees by year-end. Overall, we must reduce our Engineering employment level by 1,500 to 1,700 positions during 2013.

We have already taken action. During the past year, we significantly scaled back external hiring to maximize redeployment opportunities across the function. Since last fall, we also have steadily reduced use of contract employees. Almost 700 contract employees have left the payroll since October 2012, and we will continue that effort where appropriate. Additionally, attrition associated with retirements and other departures has reduced employment. That, too, will continue.

Unfortunately and unavoidably we must take additional actions that will impact some direct employees. Beginning tomorrow and through the rest of 2013 we will issue 60-day layoff notices to as many as 700 employees in our function. On Friday, approximately 100 individuals in the Manufacturing Engineering (ME) skill in the Puget Sound region will receive notices. Those employees are the first to receive layoff notices because they directly support the production system, which has been stabilizing in parts of our major development programs. You may recall that several hundred hourly employees in Manufacturing & Quality also received notices.

This has been a difficult decision. We know layoffs impact individuals and families.

We are taking these actions now for two reasons. First, completion of non-recurring development work on the 747-8, 787-9 and the KC-46 Tanker will result in lower overall Engineering employment requirements. But also, potential development programs for the 787-10X and 777X, which might have provided opportunities to avoid these layoffs, have not been formally approved and launched.

I realize this news may be surprising. Commercial Airplanes has been on an upswing for several years. We continue to ramp up production on our major programs, and the prospect for future development work is very positive. The challenge we are facing is that those yet-to-be-launched programs are too far out for us to maintain present levels of employment.

We hope to mitigate the number of layoffs through the reductions we are making in contract labor, by natural attrition and by not filling many open positions. As we have always done, Boeing will support employees with layoff benefits and career-transition services.

We regret the disruption this situation may cause for some employees and their families but the prudent actions we are taking now will position us to remain competitive and provide future opportunities.

As our management team, please make yourself available for questions and conversations with your team about this situation.

Thanks for all you do for Engineering and Boeing.


SPEEA’s response:

As The Boeing Company works to assure the FAA and customers the 787 is ready to resume service, the company today (Thursday, April 18) announced plans to reduce its workforce by 1,500 to 1,700 engineers and technical workers – the same Northwest employees who found remedies to the problems caused by misguided corporate outsourcing.

What Boeing Commercial Airplane Vice President of Engineering Mike Delaney did not say in his message to employees announcing the reduction is it comes hand-in-hand with a new push to outsource more 787 engineering and technical work to the Moscow Design Center, SPEEA said. Information of the push to send more work to Moscow came from multiple and varied sources within Boeing.

“We find it extremely disappointing that Boeing Commercial Airplanes is actively outsourcing engineering work to the Moscow Design Center while laying off employees in the Northwest,” said Ray Goforth, executive director of the Society of Professional Engineering Employees in Aerospace (SPEEA), IFPTE Local 2001.

SPEEA contract administrators are working to get more information regarding Boeing’s employment reduction. The action, which could include 700 layoffs, will be closely monitored for compliance with SPEEA contracts and company procedures. The union is already working with a number of managers who are helping employees find new positions within Boeing.

While the company says it is outsourcing less, SPEEA said key operations are continuing the push to use contract labor over more experienced and committed full-time Boeing employees.

Boeing’s recent decision to move flight simulators from Renton to Miami will also result in the elimination of 36 simulator instructor pilot and five standards pilot positions by the first quarter of 2014. Last fall, members in SPEEA’s Airplane Manufacturing Pilots Association (AMPA) bargaining unit cast a vote of “no confidence” in Flight Services Management based on the escalating practice of using temporary, contract pilots to train the pilots of airlines buying Boeing aircraft.

A local of the International Federation of Professional and Technical Engineers (IFPTE), SPEEA represents 26,560 aerospace professionals at Boeing, Spirit AeroSystems in Kansas, and Triumph Composite Systems, Inc., in Spokane, Wash.

15 Comments on “Boeing, SPEEA in-fighting continues

  1. Hmmm – gotta cut expenses somehow- including the senior people in Lost angeles area but NO managers. after all- that battery fiasco cost money- and may affect the management bonus.

    FWIW- a good friend of mine John Chevedden just rattled the boeing cage with his shareholder proposal about spitting the duties of CEO and Chairman of the Bored.

    Its way past time !!! Ill bet the shareholder meeting In Chi- town will be interesting.

    reminder for Boeing employees who have BA stock in their VIP plans

    at last count- over 60 million shares held in that plan

    Shares are voted in the same proportion as those who do vote !

    example- IF only 10,000,000shares vote YES on an issue, and 20,000,000
    shares vote NO on the same issue, then ( for 60 milliion shares) – the vote would be 40,000,000 NO and 20,000,000 YES. It is explained in the proxy statement.

    Of course shareholder votes are only advisory- but the PR effects often are significant !!!

    ublished: Thursday, April 18, 2013, 8:51 a.m.
    Boeing adds to director’s duties ahead of investor vote
    By Susanna Ray, Bloomberg News

    Aerospace blog

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    The Boeing Co. is adding to the duties of independent lead director Ken Duberstein as it seeks to head off a proposal to split the roles of chief executive officer and chairman which investors will vote on in two weeks.

    The move follows discussion with shareholders and is ahead of the annual meeting set for April 29, the Chicago-based company said in a regulatory filing.

    Duberstein will now approve board meeting agendas and schedules as well as the type of information provided for the meetings; preside at some meetings; be a liaison between the chairman and the directors; be available for direct communication with shareholders; and call board meetings when necessary.

    Boeing had sought to block a vote on a plan submitted by shareholder Ray Chevedden to strengthen oversight by splitting the combined roles currently held by Jim McNerney. The U.S. Securities and Exchange Commission said Jan. 29 the company couldn’t exclude the proposal from its proxy.

    The shareholder proposal calls for an independent director to chair Boeing’s board instead of the CEO and cited McNerney’s service as Procter & Gamble’s lead director and his membership of IBM’s board as potential distractions from his work at Boeing.

    Chevedden reiterated his concerns in a letter to the SEC on Jan. 16, the day regulators worldwide began grounding Boeing’s 787 Dreamliner to investigate battery faults.

    Boeing has since completed testing of a proposed redesign of the batteries and is awaiting regulator approval for flights to resume. The Dreamliner was plagued by seven delays during its development and was more than three years behind schedule when it entered service in late 2011.

    The amendment to Duberstein’s duties moves the lead director’s position from an advisory role to one that gives express approval in certain areas, said John Dern, a Boeing spokesman.

    “The changes are meant to assure shareholders that Boeing’s lead director role is a strong one and that our board structure provides independence, accountability and alignment with shareholder interests,” Dern said.

    McNerney, 63, joined Boeing’s board in 2001 and has been chairman and CEO since 2005. Duberstein, 68, who has served on Boeing’s board since 1997, was a chief of staff to former President Ronald Reagan before founding Washington lobbying firm Duberstein Group.

    Shareholders rejected a similar proposal in 2011, with 35 percent of votes cast for the proposal versus 64 percent against and less than 1 percent abstaining, according to an SEC filing.

    Susanna Ray:

  2. Thanks God Airbus, the successfull airframe manufacturer, will take some of those poor Boeing employees on its pay roll in the US

  3. dumont :
    Thanks God Airbus, the successfull airframe manufacturer, will take some of those poor Boeing employees on its pay roll in the US

    To do what?

    Doesn’t Boeing still have a lot of engineering work to do with programs like the B-787-9/-10, B-737MAX, B-777X, and other future programs? Boeing is also working on numerous military programs like the KC-46A, P-8A/I, F/A/EA-18, F-15SE and a host of other programs.

    I have to join others here who question the wisdom and business case for this move by Boeing. This just doesn’t pass the smell test, and coming, as it has soon after Boeing and SPEEA signed the new contract. Boeing management had to have known before the contract was signed that they were thinking about this.

    It seems that since the buyout of McD, and then the move of corporate HQ to Chicago, they have adopted “Chicago Politics”. That is a sad move by a proud and historic company.

    • You forget to mention Hawkei

      I don’t know what the son of the mining engineer Wilhelm Böing would have said about the statement above by the Boeing Company.

      Wouldn’t it be beneficial to outsource the management to India?

    • Uhh topboom- ???

      The use of the word wisdom in the same article with the words BA and management and or business case are oxymorons of the first order !!

      Please do not confuse or conflate those words in the future 😛

      Power point rangers do not use or comprehend those words either !!

  4. This is really disappointing to see. Many times i have heard Boeing (and Airbus) say that they cant take on too many new programs because they cant handle the engineering demands concurrently. That was also mentioned as a reason to delay the 777x program (too much 787 work, too much 747-9 work, too much max work) ..initially.. . now the delay to the 777x becomes the reason to lay off folks…. seems a circular argiment to me. What is not getting said in that argument ? Must be something else. Qualified and experienced engineers are the real lifeblood of Boeing (and Airbus). This could be slow death more than any other other factor. What am i really missing here ?

    • you are NOT missing anything re need for engineers and experience- unfortunately you are missing the management mindset in place for over a decade.

      Suggest you read the book ” Turbulence ” for an excellent study on Boeing since they were bought out by MDC and friends.

      Power point rangers rule, outsource everything, lose control over quality, screw up morale, etc

      It used to be the three most important things at BA were schedule, and the other two don’t count.

      Now it is MAKE MONEY, forget common sense, quality, and BTW BA is no longer a family ( to paraphrase Harry Stonecipher and his GE rejects.)

      Consider the 777 was essentially the last plane mostly designed in house, financed mostly by Boeing, and close control over suppliers with emphasis on quality.

      compare to 787 any other questions ??

  5. The following link is five years old. As of today, I would not be surprised if Boeing CEO James McNerney makes more than 700 of those engineers, combined.

    Are there any CEOs out there who aren’t greedy bastards these days? If there are, they’re few and far between.

    Over the past quarter century, CEO pay has skyrocketed in the U.S. In the 1960s, CEOs made around 40 times what rank-and-file ordinary workers earned. Today, CEOs make over 400 times what the average worker earns. (And they keep much more of what they make, thanks to income tax laws that are vastly less progressive than they were in the 1960s).

    Business schools and economists routinely argue that exploding CEO pay is “inevitable” and that it’s all a normal (and unavoidable) aspect of capitalism. Titanic pay packages are necessary to attract the best talent, they argue.

    But there’s at least one CEO out there who defies all these conventions: Frenchman Louis Gallois, the CEO of EADS, the European defense company.

    A CEO like Gallois, 64, would be inconceivable in any American corporate boardroom (where the belief that “greed is good” has been elevated to the status of a religion these days).

    After all, Gallois is a lifelong socialist. He once read Das Kapital, cover to cover. He’s a business leader who has earned the respect of the workers at the companies he has run (including SNCF, the French rail company). And as The Financial Times once pointed out, Gallois has “disdain for money and the trappings of power.”

    When Gallois was named the CEO of EADS, he insisted on retaining his old SNCF salary of $273,000/year. EADS had offered him an annual salary of $3.4 million. To this day, Gallois retains his old salary and gives the balance to charity.

    Can you imagine any American CEO voluntarily accepting a $273,000 salary, when they could be earning $3.4 million a year?

    These days, American CEOs are busy laying off workers by the thousands and exporting jobs overseas, and pulling down fantastic pay packages. As long as they make Wall Street happy, their creed is: screw the workers (and society as a whole). While U.S. CEOs make over 400 times what the average worker earns, in Europe that multiple is a mere 22. In Japan, the gap is even narrower: the average CEO there makes only 17 times what the average worker makes.

    • I remember this article and misses ethical people such as Gallois.

      Sad world we are living in, led by greed…

  6. This doesn’t make alot of sense to me. Boeing’s reasonsing is flawed. They say that the gap is ‘too big’ between current development programs that are wrapping up (eg. 747-8, 787-9, KC-46) and new programs yet to be formally launched (777x, 787-10). So why not just use the additional resources to pull those new programs to the left when the time comes (very shortly)? Customers would like that to be the case anyways. Is this a drive to reduce R&D expenses for 1-2 years before these new programs kick into full gear? There’s got to be some outsourcing being done here as the SPEEA states in their response. Boeing should just come out and say it instead of trying to hide the real driver behind these cuts. The real problem here is corporate governance and the never ending drive to incrementally ‘reduce cost’…

  7. I find it amazing, the mindset that jobs should NEVER be eliminated in Seattle. The life cycle of aircraft require employment fluctuations of skills. Without the authority to offer the 777x or 787-10 to customers there is no new engineering heavy program to go to. The other programs mentioned in previous comments already have the engineers needed. We can discuss Boeings need to begin the 777x and the 787-10 but the fact of the matter is that there is no authority to proceed so 700 engineers have nothing to do. This is nothing new in the aerospace industry, just ask the NASA engineers. As for the comment from Dustin that the problem is the never ending drive to incrementally ‘reduce cost’……. I can say I certainly hope so. If management isn’t reducing cost they should be fired. Companies are NOT charitable organizations. Their job is not to provide lifetime employment for people. Managements job is to run the business in the most efficient manner and keep the firm profitable overall.

    • Unless aerospace companies are a completely different breed from other companies, just because there is no authority to offer (ie the product plan has not been formally approved) doesn’t mean that there is an actual prohibition to have engineering teams to do work that will help the program when it actually is launched. Or to have them support the MAX program, for example.

      Surely this is strictly a question of the management team looking to reduce the size of the WA engineering team by 700 or so people. Maybe they will be replaced by new (though likely both less expensive and less experienced) people elsewhere, or maybe it’s a permanent reduction. Either way, it doesn’t make sense to me at this point in time when BA is struggling to bring engineering programs to timely completion.

  8. Doesn’t this “fire now & hire again later” affect quality and also the ability to plan of a program? If guys worked for several years in the program and now get laid off … they will hardly wait 12 month and come back to Boeing.

    • Of course it does.. BUT there will always be a small percentage that due to home marriage kinder, etc will be unable to move out of area. Others will leave the industry, some will find other jobs locally. It used to be one could go to southern calif, Loas anagles, San diego, long beach etc. but little chance of that now.

      What is really happening is to cut costs- the 787 is VERY expensive to build and rework and repair and fix all the screw-ups. That in turn delays other programs.

      Add to that the corner office mantra to be like GE ( look at the board of directionless) and interspersed with way to many refugees from MDC in mid level executive positions is not helping.

      The focus is simply on money- mostly for executives- and golden parachutes for many of that same crowd. Consider that most of those same will be long gone before the 787 turns the ‘corner’.

      Running the company like the government may work in the short run- but in a decade or two, bad news.

      If an employee wants a friend or alligence in this industry- get a dog !!

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