Boeing to move engineering jobs to California

Boeing will move 1,000 engineering jobs from Washington State to  California, The Seattle Times reported today. Predictably, the engineers union, SPEEA, is having fits about this.

Washington State probably won’t be too happy, either, especially after giving Boeing nearly $9bn in tax breaks to build the 777X here.

We’re going to set aside the debate with the union and Boeing and the Washington impact and try to take a larger view.

Boeing says the move is, in part, to bring more focus onto the Commercial Aviation Services division. There is a desire to make CAS more of a revenue and profit producer than it has been, which to now has been an important but small part of the contributions to Boeing’s bottom line.

Services are increasingly important to several aerospace OEMs. Rolls-Royce, GE Aviation and CFM have long made services key components of their sales efforts and Pratt & Whitney/IAE are ramping up their efforts in this field. Airbus has some effort in services, but lags CAS.

Another factor Boeing faces is the decline of its Long Beach operation. Inherited from McDonnell Douglas, aircraft production ends next summer with the final deliveries of the C-17 military cargo transport. Shifting after-market support and customer support to Long Beach enables Boeing to retain some of this talent that will be surplussed and develop new job opportunities there. From a corporate, 35,000 foot level, this makes sense–as does further building up South Carolina, which has benefited from other job transfers.

According to The Seattle Times, one SPEEA member points out that Long Beach is not unionized, and we presume this to be the case. But doing business in California is hardly inexpensive; its business climate it worse than Washington. So we’re not entirely convinced that cost is the prime driver with respect to Long Beach.

As for Washington, we’ve been advocating for years that officials need to prepare for the days when Boeing moves jobs out of state. Each time there has been a victory in retaining an aircraft program, officials seem to go, “whew,” sit back and relax. We’ve been advocating the creation of a “Washington Institute of Aerospace” that could serve as an independent research and development center and in-source work from outside the US, and/or serve as a global training center. With Boeing laying off engineers and IT people, there is a core group that could form the basis of a WIA. But officials continue to wear blinders and have taken no steps that we’re aware of to look “Beyond Boeing” in this fashion.

29 Comments on “Boeing to move engineering jobs to California

  1. Its- its deja view all over again ! Increase shareholder value- hose the employees- outsource- etc. Many many years ago in 2000 I modified a satirical post about AT&T- from a friend of mine. later found out it was from a web site- so I queried the site owner and got permission. ( satire.com) He got a chuckle at the response I got from a Boeing executive after sending the same to Phil Condit …
    ++++++

    Boeing to lay off 120 % of workforce !-
    well that is what I posted back in Jan 2000 – since its time for a little humor —
    BTW there is a satirical site for real just search on satire and wire

    Please note the wonderful response I got from Phils lacky .. and eventually a Boeing person had to post a disclaimer on yahoo .. 😛

    BTW- can I post your response ( with attribution ) ?
    Don
    ====
    Don,
    And a well-done job of working Boeing into the story it was! Really, if we could ask one thing in
    regards to your handiwork, it would be that you mention . . . ( satirewire )
    when making your posts or passing on messages. As you may be aware, since that initial story ran, AT&T has, in fact, ceased to exist: . This somehow leads me to believe Boeing will as well.
    And by the way, I can’t agree with Mr. Koehler. Not just anyone can make sorry attempts at humor on the Internet. It takes a special person to make sorry attempts at humor. We should know.
    Thanks for writing, and reading,T Warland Editor – – – – satire – – –
    —–Original Message—– (by way of D Shuper)
    ….
    Date: Thursday, January 06, 2000 4:35 PM Subject: RE: A little humor
    Having plagerized your parody on AT&T, changed a few words and names to apply to Boeing (
    H. Stone— is CEO and Chairman of the Board ), I posted it on yahoo, and then sent it to Phil and buddies.
    Here is the response I received +++++
    *** Tom says it ALL ;DD
    =======
    From: Koehler, T . . To:’DShuper
    Subject: RE: A little humor Date: Thu, 6 Jan 2000 —
    Don:
    This is just a note to let you know your message to H Stone—- has been received.
    For what it’s worth, you’ve re-confirmed for me that just about anyone can pass along
    misinformation or sorry attempts at humor in the internet age!
    T – – Koehler Executive Communication Company Offices
    – – – – – – – – – –
    From: DShur Sent: Wednesday, January 05, 2000 2:33 PM
    To: philip con . . .
    Cc: jam – – dagno–ng jerry. . . ..calho–i

    Subject: A little humor
    I found this on the IBM message board written initially about Mr Armstrong of AT&T. I
    couldn’t resist changing a few words as shown below, and posting it on Yahoo. As it turns out, I have received several queries as to ” is this for real ? “. Same thing happened on the IBM yahoo pension board. This does NOT bode well for how employees and others view the company or its executives.
    DShuper
    ++++++
    BOEING ANNOUNCES STEEP CUTBACKS Tukwilla Wa [ satire . . . ] – Boeing will reduce its
    workforce by an unprecedented 120 percent by the end of 2013, believed to be the first time a
    major corporation has laid off more employees than it actually has. Boeing stock soared more than 1 point on the initial news release. The reduction decision, announced Wednesday, came after a . . .
    year-long internal review of cost-cutting procedures, said Boeing Chairman Jim McNearney .
    The initial report concluded the company would save $1.2 billion by eliminating 20 percent of its
    140,000 employees.
    Employee Reduction Plan From there, said Jim McNearney , “it didn’t take a genius to figure out that
    if we cut 40 percent of our workforce, we’d save $2.4 billion, and if we cut 100 percent of our
    workforce, we’d save $6 billion. But then we thought, why stop there? Let’s cut another 20
    percent and save $7billion.
    “We believe in increasing shareholder value, and we believe that by decreasing expenditures, we
    enhance our competitive cost position and our bottom line,” he added.
    Boeing plans to achieve the 100 percent internal reduction through layoffs, attrition and early
    retirement packages. To achieve the 20 percent in external reductions, the company plans to
    involuntarily downsize 22,000 non-Boeing employees who presently work for other companies.
    “We pretty much picked them out of a hat,” said Jim Among firms Boeing has picked as
    “External Reduction Targets,” or ERTs, are; Northrup Grumman, AMR Corporation, parent of
    American Airlines, Rolls Royce, and Perkins Coie ( Boeing legal firm ). Boeing’s plan presents a “win-win” for the
    company and ERTs, said Jim McNearney M , as any savings by ERTs would be passed on to Boeing, while
    the ERTs themselves would benefit by the increase in stock price that usually accompanies
    personnel cutback announcements.

    Legally, pink slips sent out by Boeing would have no standing at ERTs unless those companies
    agreed. While executives at ERTs declined to comment, employees at those companies said they werenot inclined to cooperate. “This is ridiculous. I don’t work for Boeing. They can’t fire me,” said
    Kaili Blackburn, a flight attendant with American Airlines.
    Reactions like that, replied Jim McNearney, “are not very supporting.”
    Inspiration for Boeing’s plan came from previous cutback initiatives, said company officials. In
    January of 1999, for instance, the company announced it would trim 40,000 jobs over two years.
    However, just a year later, Boeing said it had already reached its quota. “We were quite surprised at the number of employees willing to leave Boeing in such a hurry, and we decided to build on
    that,” Jim McNearney said.
    Analysts credited Jim McNearney short-term vision, noting that the announcement had the desired
    effect of immediately increasing Boeing share value. However, the long-term ramifications could
    be detrimental, said Bear Stearns analyst Beldon McInty. “It’s a little early to tell, but by
    eliminating all its employees, Boeing may jeopardize its market position and could, at least
    theoretically, cease to exist,” said McInty. Jim McNearney, however, urged patience: “To my
    knowledge, this hasn’t been done before, so let’s just wait and see what happens.”

    ++++

    YEP _ I even got a few emails from a few Boeing workers asking if my post was for real, !!

    ya cant make this up !!

    • How is this a case of “hose the employees- outsource” Don? I don’t see any mention of outsourcing and, as an outsider, it looks to me like they are actually attempting to safeguard Boeing jobs and retain the viability of at a centre (CA) that might otherwise shut.

      I could well understand WA state govt and taxpayers feeling upset though.

      • sending jobs out of state for phony reasons is outsoucing, ditto to russia, South carolina, etc

        especially when ” offering” moving expenses only to those with 20 plus years to an area with higher personal income tax, higher property tax, lower wages, and then having them train ‘ newbies” …

        The only jobs safeguarded are those of certain executives until retirement.
        IMHO – dispersing tribal knowledge has already been demonstrated via the 7 late 7.

        Of course it is reasonable to move a few orbs to a unused facility- but it should be done in a way that makes best use of recent ( more than 5 but less than 20 years ) hires, and some reasonable compromise for newbies hired within the last 5 years for so. There seems to be just one pee poor explanation – the Jack welch theory of management- and the focus on near term stock prices or shareholder value.

        Even Jack welch has NOW ( after he got his ) admitted that that was/is a flawed policy.

        • That isn’t outsourcing, it is offshoring (well, it is for Russia, but only maybe for Cali or SC depending on how you regard the level of sovereignty of individual US states).

      • I feel the same. I have to give Boeing credit in trying to maintain some vestige of aircraft manufacturing in SoCal. I think we also have to look at the idea that if Boeing stays, other companies may stay or move to provide contracts to Boeing in Long Beach

    • As a contract worker for Fortune 500 aerospace companies, I have experienced these massive house clearing layoffs three times. One time they actually admitted they went too far. It took them years to get the plant up to speed again with qualified white and blue collar workers. This most recent layoff spawned job fairs, hiring bonuses, open houses, etc. All good parodies carry an element of truth.

  2. Washington State could ask the Pentagon to accelerate the KC-Y and then support Airbus if they would decide to open up shop and put an A330neo FAL in Moses Lake. 😀

      • But great water skiing at potholes reservoir around memorial day and during the summer . . . camping out on one of the island sand dunes . .

        • Potholes reservoir is indeed very nice, but lake Coeur d’Alene, lake Pend Oreille, and my personal favorite, Spirit Lake, ID, are all very nice and great for water-skiing as well.

      • In GOP country?

        I’m sure all of the Frenchies coming over would want to be closer to Seattle. They could even ask for a high speed rail line. 😉

        • Moses Lake is not any less GOP country than Spokane. If anything, Moses Lake is probably more so. The high speed rail line would only be about 100 miles longer and then it would have the added benefit of crossing the entire state.

        • With a high speed rail line the Frenchies could live in Seattle and commute to Moses Lake. No need to hang around the Wallmart Supercenter with the locals. 😉

          • In Seattle there is a trolly called South Lake Union Transit, or as it is known locally, the SLUT.

  3. From what I hear along the grapevine, Boeing is experiencing 50%+ retirement or quit rates. Many of those are retiring, some are going to other companies. Not good for “enhancing shareholder value” or “supporting the business.”

    • @Johan Liebert
      APRIL 11, 2014 @ 2:15 PM
      “From what I hear along the grapevine, Boeing is experiencing 50%+ retirement or quit rates. Many of those are retiring, some are going to other companies. Not good for “enhancing shareholder value” or “supporting the business.””

      I have read many silly things around here before… But, this is a bit rich.

      You do know that these are some of the best and highest paying jobs around right?

      Normally, I would ask for proof or a link or something to substantiate your claim. But, I’m sure you would not be able find any supporting data. So, don’t waste your time for me…

      Anyway, maybe your grapevine needs an update?

      Perhaps, you could sent to Toulouse and they could NEO it for you? 🙂

      • Although the 50 percent number may be a bit high- it is no secret re the following

        1) Boomers are reaching retirement age- at Boeing it is 60 or 65 depending on union, non union, and the particular pension plan ( PVP modified) or heritage BCERP

        2) SPEEA has been conducting retirement seminars for those nearing retirement or planning retirement in 2016 under the current contract before the major takeaways begin. They are on a monthly basis or sometimes bi weekly and are reported to be full till novemeber.
        3) IAM many months ago stated they expect a loss of members thru retirement of about 30 percent within the next 3 to 4 years

        Many years ago 1995 – Boeing decided to shove a few older high paying types out the door-gave 5 years extra device and plus 5 years on age re pension calculations. They expected a few thousand – major oops – over 9000 ( close to 9500 ) bailed. Two years later, for a variety of other reasons, but including the special retirement bunch. for the first time in BA history- they had to STOP the production line in addition to the normal august reductions in rate.

        Of course , one can access the boeing site – and read the annual report and estimates of employment and pension $$ at any time.

        Bottom line – the 50 percent may be high- but IMHO – the number will be ( in addition to the normal 6 to 8 percent annual attrition ) closer to 30 percent !

        Be sure to welcome the newbies as in SC who still after 3 to 5 years have yet to come very far down the learning curve- after all Anyone can pound rivets and drill˙ holes and design and inspect with na few months training .

        ( at least according to the Chicago power point rangers who recently found out the the pointy end with windows is called the front end or cockpit !)
        Just like shown in the MBA CLASSES . . .

        What we lose on every plane ( 787) we can make ump by volume !! – someday !!

        • I should have been more clear. 50% quitting/retiring and transferring. 30% will outright leave and the other 20 will transfer. Overall though morale is really low. One top researcher in his field who was asked about schedule said point blank he told his team to stop work and he is taking all of them (11 folks with ME and PhDs and real world experience) with him to another company. It is that bad. Boeing is cutting off its nose to spite its face. I am advising engineering students to consider other Aerospace firms before Boeing at the colleges I speak at, and have been asked by another major aircraft manufacturer to forward names, which I gladly have done.

        • take a look at today ( wed 15th ) seattle times re the morale etc

          http://seattletimes.com/html/businesstechnology/2023383110_boeingbrtxml.html

          Originally published April 15, 2014 at 9:09 PM | Page modified April 16, 2014 at 6:07 AM

          Boeing managers say transfer of engineer jobs damaging talent, morale

          Company documents reveal that Boeing’s plan to transfer 1,000 technology research jobs out of Washington state has caused widespread internal dissent and confusion. Some top engineers are leaving to work elsewhere.

          .. goes on ..

        • There’s a reason why I said 50% will transfer or leave. I keep in touch with a few folks in BR&T. None of them are staying. The Times is writing what I’ve heard for months now.

          There’s also rumors of a layoff cycle for R3’s in BCA engineering.

        • re the 50 percent – its still confusing as to what/whom you are counting

          Speea has about 7,000 Engineers and about 15,000 techs most of which are in the seattle area.

          So are you saying 3000 plus engineers by your count are bailing- retiring, leaving, jumping ship or being on layoff. WARN notices ??

          Or are you saying about 10,000 total ( engineers plus techs ) will be leaving ??( quitting- retiring, transferring, etc )

        • 50% of those jobs which are being transferred are quitting, transferring, or retiring. Thus far, there’s around 3000 jobs that are being moved out of WA. Of those, around 1300 will be leaving or retiring. The other 200 will be transferred to BCA (BR&T is a completely different branch of Boeing that supports both the defense and commercial sides of the biz).

          And even though this is mostly from word of mouth, the Times has a big story on why. Duh, cost!

          http://seattletimes.com/html/businesstechnology/2023469058_boeingtransfersxml.html

          Of course, the company will put a positive spin on things. My opinion is, if this had been a period where little was going on and Boeing had little real competition, then maybe this would be OK. But the reality is, Airbus leads the narrowbody market with a Airbus/Boeing/Others 55/35/10 split. The 60/40 split is naivete. Further, Airbus has future backlogs and sales to split the widebody market 50/50.

          And what is Boeing doing? Doubling down on the failed 787 business model and making it so the engineers are just paper pushers. That’s what this amounts to really. By making a bunch of people quit or retire, they will be forcing the suppliers to do the research. And no suppliers will be doing R&D unless a big manufacturer is putting some money into it. AND no one at Boeing will understand what the suppliers are doing until it is too late. BCA and BDS are really good at traditional manufacturing and some rogue parts of the company are good at guerrilla solutions. They push the envelope, sometimes. But never go beyond it. BR&T looks way out there and tries to predict and create the future. And Boeing is basically saying they don’t care anymore.

          That is a slippery slope to eventually being a has-been. I already see stuff coming out of Europe and Japan that makes Boeing look like a dinosaur. They’re already 10 years behind technologically. This is just the beginning act of the final requiem.

          Well, you may be thinking, “well these folks are super specialized, who else can hire them?” The answer is almost anyone. Materials science research is booming today with all industries being revolutionized. 3D printed parts is just the beginning. Aircraft systems can be applied to commercial products like smartphones, networked solutions, etc. Mechanical solutions can be hired by any number of companies that do work for automotive or other such industries. The list goes on and on …

          Goodbye Boeing. It was fun while it lasted. The fun stopped after the 777.

  4. I don’t see any need anywhere for yet another organization claiming to promote something, I think almost all of them just end up being a paycheck for some people.

    WA state shoould take a cue from California’s failure and get out of the way of honest people who want to produce.

    (California is so bad that employees were asking their employer to move out of state.)

    But politicians want to grandstand.

    Boeing has announced end of production for the C-17, but it will be supporting the C-17 airplane somewhere, is supporting DC-9 and derivatives as well as DC-10/MD-11, and had some other operations in California (perhaps space).

  5. The reason for this is not rocket science:

    1) no union
    2) replace older more expensive work force with junior cheaper employees
    3) surplus real estate in long beach

    The problem will be that Boeing is trying to be replace highly skilled employees with significant experience on the cheap. This is a classic McDonnell Douglas/GE strategy. Service to the airlines will deteriorate. Management will sweep the declining service metrics under the rug so outside analysts will never know the truth. It is a high risk strategy for the company but a low risk strategy for the executives involved since Boeing doesn’t believe in executive accountability – witness the billions of dollars in cost overuns on the 787 program and no accountability for Mcnerney.

  6. Maybe Boeing is negotiating building the short/ medium range 200-275 seater in California and wants have/keep a good knowledge infrastructure to start from.

    McNerney doing both record cost/schedule/reliability overruns on the Dreamliner and fooling stockholders into his record salaries is a mistery of modern US capatalism I guess. Maybe he did an excellent job on the 737/747/KC767/777x?
    In a European environment he would have lost his job years ago.

  7. Of course there could be other reasons re the displacement to Long Beach of engineers and such. Many years ago- SPEEA tripped over its …. in trying to take over a Southern calif union ( SCEPA)- result was both essentially got hammered and SCEPA virtually disappeared. But then as now, there were issues re pension funding arrangements. returning to a long time ago – before MDC melded with Boeing … MDC closed the Tulsa plant to avoid pension/healthcafre funding issues for older employees- and in the court case- got caught lieing about it . The case drug on for about 6 to 7 years and MDC/Boeing lost …

    Seems that just one of the things that tripped up was a document which was obtained/obtainable thru FOIA . .

    Here is an extract – I’ll try to post a link to the total document I have later- but the story sure sounds familiar re the current mess

    Case 4:94-cv-00633-TCK Document 258 Filed in USDC ND/OK on 09/05/01 Page 1 of 92

    IN THE UNITED STATES DISTRICT COURT
    FOR THE NORTHERN DISTRICT OF OKLAHOMA
    JAMES R. MILLSAP, et al.
    Plaintiffs,
    MCDONNELL DOUGLAS CORPORATION,
    a foreign corporation,
    Defendant.
    Case No. 94-C-633-H

    +++++

    came across this little factoid re government interest in such issues as pension and healtchcare costs.

    Documents filed with DOD relating to this are available thru FOIA. as to who and when such decisions are made AND the financial reasons for doing so…. In the case mentioned, MDC refused to use FOIA after being directed to do so by the court- becasue such document would reveal that they had lied to the court. Now of course with the first class ethics now in BA – such a thing would be impossible :-PP

    ++++

    181. The Court finds that the December 3,1993 disclosure and mandatory
    governmental documents were material and MDC’s failure to produce such documents clearly
    interfered with the Plaintiffs’ ability to prove their case. For example, under the Federal
    Acquisition Regulations, FAR 52.215-27 (Sept. 1989), MDC is obliged to disclose the amount of
    surplus pension funds the company recouped through the plant shutdown. The relevant Federal
    Acquisition Regulation stated that defense contractors like MDC “shall promptly notify the
    Contracting Office in writing when it determines that it will terminate a defined benefit plan or
    otherwise recapture such pension fund assets.” FAR 52.215-27 (Sep. 1989) At trial, the
    evidence showed that in conjunction with the closing of the plant, Defendant transferred
    $11,196,000 pension surplus from its Tulsa segment to another segment of the company.
    ++++ end for now ++

    • Found the link re the case Millsap mentioned above

      REGARDING JOBS AND PLANTS AND CONTRACTS IF….
      BELOW IS OLD, BUT PERHAPS ITS DEJA VUE AGAIN

      September 6, 2001
      Judge Hands Boeing Defeat in Lawsuit Brought Over Loss of Retiree Benefits
      By J. LYNN LUNSFORD and ELLEN SCHULTZ
      Staff Reporters of THE WALL STREET JOURNAL
      A U.S. District Court Judge in Tulsa, Okla., handed Boeing Co. a surprising defeat Wednesday in a class-action lawsuit filed in 1994 by more than 1,000 older McDonnell Douglas Corp. workers.
      The workers alleged that the company closed their plant in order to avoid paying pension, health and retiree medical benefits. Judge Sven Erik Holmes issued a 90-page opinion that found among other things, the company “engaged in a course of obstruction, inconsistent representations and outright falsehoods” during the course of the lawsuit to keep the truth from coming out about the 1993 closure of a McDonnell Douglas plant in Tulsa.

      The case can be found at http://tinyurl.com/BAMILLSAP2001
      Go to page 70-76 and read about J McDonnel. He of course was on BA BOD for many years. Seems that in 1992 He and buds claimed they would use the Tulsa Plant IF they got a contract for F-15 from Saudis. Everyone kissed . . . and pushed for the contract. Then . . .

  8. Pingback: Boeing slammed for moving jobs to Southern California, WA state for naivete | Leeham News and Comment

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