Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
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- Better transparency needed on Boeing’s 1Q earnings call April 22, 2024
- Bjorn’s Corner: New engine development. Part 4. Propulsive efficiency April 19, 2024
Pontifications: Boeing faces thousands of retirements in next five years
By Scott Hamilton
March 19, 2018, © Leeham News: Boeing faces thousands of retirements in its engineering and touch-labor force ranks over the next five to 10 years, with a limited worker pool for replacements.
A national economy with a low unemployment rate of about 4.1% exacerbates the challenges of finding talent.
These numbers are important to Boeing’s current higher production rate ambitions.
They are even more important as Boeing looks to develop the New Midrange Airplane (NMA, aka 797).
LNC first discussed the looming shortage of engineers in connection with the potential creation of a new company with Embraer.
The Southeast Aerospace and Defence Conference in Mobile focuses on production transformation. Go to Airfinance Journal for program information.
Engineers and technicians
There are 3,823 engineers and technicians ages 55-59 and 1,702 ages 60 and up, according to SPEEA, the engineers’ union. These numbers represent 29% and 27% of the total employment of the two professions who are 55 and older.
This means more than 1,700 will reach retirement age within five years—a critical time when Boeing is beginning to ramp up its engineering work on the NMA, should the program be launched next year—which is when market intelligence suggests is the target date.
(CEO Dennis Muilenburg recently said program launch could be within the next year or so.)
IAM 751 retirements
The IAM 751 district represents the touch-labor skilled workers here in Puget Sound. A large number of 751 members are approaching retirement age, too.
More than 5,000 of the 27,000 union members are ages 55-59 (19%) and more than 3,700 are ages 60 and up (14%). Of the latter, nearly 1,700 are ages 63 and up.
This means nearly 3,800 are eligible for retirement within five years, or through 2023. This is a critical time when the 737 production is ramping up to 57/mo (2019) and Boeing is studying whether to ramp up to 63 or even 70 airplanes per month.
The 787 ramps up to 14/mo in 2019. The 777X production, which is declining during the transition between the 777 Classic and the X through 2020, begins to ramp back up in 2021.
Then there’s the NMA. If Boeing launches the program with an entry-into-service in 2024-25, production begins in earnest during this period—when more of the 751 members become eligible for retirement.
Automation required
These figures illustrate, in part, why Boeing is transforming its production into more automation. (There are, of course, a whole host of other reasons.)
The up-and-coming workers pool is not as plentiful as it used to be. Boeing, and others, reach down into the high schools and middle schools to encourage STEM education, but this takes years to reach a point where the students graduate from college to join the aerospace industry—if they are so inclined.
Workers for touch-labor work are also difficult to nurture. Society encourages white-collar worker. Trade skills don’t have the same support that these did a generation or two ago.
I’ll have more about the labor workforce challenges in the coming weeks.
List prices
It took a while, but I have the answer why Airbus list prices are higher than Boeing’s.
Airbus list prices include IFE and Buyer Furnished Equipment (BFE). Boeing list prices are only the airframe and engines.
As I’ve noted before, Boeing, like The Dude, will “abide”. A good example? Charleston. Just think, Boeing built an entire workforce out of “thin air” there. They can build on that base (with a kernel of Seattle and Charleston 787 managers), along with the 400 acres “reserved” for them in Charleston. Go SC/BA 797!
Stop!No engines.
Genx2b derivative; uprated GTF.
Derivatives are not good enough. The GTF will most probably not reach the required thrust, so even though it may be a very similar engine, it will be a new engine. One question is if the aluminum fan ist strong enough in the larger size, they might need to go to CFRP too, but have nothing in that field yet.
Great information for the engineers.
It will be nice to find out the same for Airbus.
Maybe there is an international issue.
Brazil may veto the deal with Boeing to show its dislike about US steel protectionism. Brazil exports about one third of its steel production to the US.
http://www.aero.de/news-28768/Trump-bringt-Embraer-Boeing-Deal-ins-Wanken.html
Not so. Brazilian government does not care about loosing the control of Embraer, in spite of the political costs associated to this. As far as we know, the deal is almost completed.
Would be interesting to know the state of play on design automation, to go with the production automation. I remember reading about the DLR Digital-X project (https://www.youtube.com/watch?v=BCQXSFtCxvw + scope described in http://elib.dlr.de/103545/) for this but Digital-X ended 2 years ago now. Must be similar projects currently active, with an indication of readiness timeframe.
Boeing has made hiring raids in Europe before and let 100’s of trained engineers come. I know of staff from UK, ex Fokker, ex. Saab so if Airbus does not start new Projects quickly and Boeing offers good carrers and nice housing areas with good restaurants, schools and German bread bakeriers, symphonie Orchestra, soccer stadium and a nice opera house they will come.
Charleston offers most of these (no opera company, but world class annual Spoletto Festival), with the addition of high end beaches—Kiawah, Seabrook, Edisto, and Isle of Palms. Also, elite MUSC medical facilities.
Airbus and most of its tier 1 key suppliers (Safran, UTC/UTAS, Liebherr…) are pretty facing the same retirement tendency… and Airbus is already gearing up hiring for the first time since 2013.
So, even considering automation, there will be plenty of jobs for European skilled workers in the coming years and Boeing would have a hard time attracting them I guess.
Better look for Brazilian ones with or without partnership with Embraer.
Boeing approach is more in the cowering worker mode, ingrates should be grateful for a job.
Embraer does even more outsourcing of airframe assemblies than Boeing. The E1 and E2 models are mostly just a final assembly line in Brazil. There doesnt seem to 1000’s skilled workers for Boeing to use.
Not so. Embraer develops its products from end to end (full product development). Risk partners develop some parts and systems witch are integrated by Embraer engineering. All of this at 1/3 of the salaries paid by Boeing, Bombardier or Airbus. Boeing knows pretty much what they are doing. Process integration with Embraer will be quite ease, as Embraer follows basically the same engineering and production processes used by Boeing. Cultural integration may cause some trouble, but Brazilians are quite open to new cultures and ways of looking at things. IMHO it will probably be much easier than what happened with the integration with McDonnell some years ago.
Airbus and most of its tier 1 key suppliers (Safran, UTC/UTAS, Liebherr…) are pretty facing the same retirement tendency… and Airbus is already gearing up hiring for the first time since 2013.
So, even considering automation, there will be plenty of jobs for European skilled workers in the coming years and Boeing would have a hard time attracting them I guess.
Better look for Brazilian ones with or without partnership with Embraer.
Can’t imagine BA needs skilled workers nearly as much as engineers and managers. Again, Charleston probably is a much better prospect than Seattle…based on company area prospects, cost of living, climate, and beaches. Also, there’s a heavy European (mostly German) presence (BMW, Michelin, Volvo, etc.) in state.
The competition between Seattle and Charleston could be interesting, lots of Nordic ancestors in Seattle so I guess the ex. Saab and northen fish eating Europenas vote for it. Don’t know about the difference in quality of bread, beer, schools and soccer stadiums, Univ of Washington & Washington State vs Duke & Georgia Tech so the more southern Europans might vote for S.Carolina to get close to the BMW&Mercedes plants, more golf courses and just a 6hr time difference from home.
Charleston is also known as the Low Country, aka Swamp, low lying, rising ocean……
Swamps, alligators, Hurricanes, ticks, ergh
Have you been there? I lived in the state for 25 years (inland SC, mostly for family reasons) before going to the Treasure State. Hated the S.C. heat and humidity in the Midlands down through the coast from May through September, but, guess what, most homes and businesses air conditioned in the summer down to 60 to 65*F! Glorious weather from November till April. Low country is mostly south of Charleston, from Edisto down to Hilton Head. World class golf on Isle of Palms/Kiawah, and, of course, Harbour Town Golf Links, Sea Pines, Hilton Head Island.
Yep, been there, middle of winter and it was still too hot.
Can’t say all the destroyed phone booths helped at all either.
And a regular Hurricane target, no thank you.
If it ain’t a Washington State built Boeing, I ain’t going. 😉
Charleston has a better climate than Seattle?
I don’t think so.
I been in both states. You’ll see a lot more sun in S.C.! And it’s much more business and employee friendly in S.C. (By the way, per Sperling, cost of living’s 53% higher in Seattle! Still 7% higher in Everett.) Lastly, it gets you a lot more ready for global warming! LOL
That would be the no unions and lower if any benefits?
SC is more business friendly.
WA is more employee friendly.
Good employees are good business.
Unions are not a requisite for happy employees.
Depends on what you are used to. For some good coffe and see the sun or the hue of it set in the ocean is more important than number of sunny days.
Airbus is the opposite, it has too many managers and the policy has been that the managers don’t need to know anything about the department they manage. This is gradually going down lower in the organisation , so the competency of engineering , especially experience, is disappearing fast.
Such comment is without substance. Ignore it.
Tenho uma sugestão para a Boeing: coloque uma fábrica em São José dos Campos – Brasil.
Have you seen where the E jets airframe assemblys come from ? Mostly not Brazil
rear fuselage/bulkhead Aernnova ( Spain)
rear fuselage Daher ( France)
Wing centre section – Kawasaki ( japan)
Fuselage sections- Korean Aerospace
barrel sections- Latecoere ( France)
wing sections , fuselage sections- Sonaca ( Belgium)
Fuselage sections , empennage – Triumph ( Texas)
Wing skins, components -Triumph ( Seattle)
for detailed list
http://www.airframer.com/aircraft_detail.html?model=Embraer_190_series#Airframe%20Assemblies
Some of those companies may have facilities in Brazil as well
🙂
I think most people would agree the Seattle area is a relatively moderate, civilized part of the country, with good living conditions. If Boeing makes it attractive enough people will come. People will also look at how employees are treated today / in recent history.
As opposed to all the “uncivilized” parts of the country?
I think the failing road system and rising cost of housing are reasons to look for a new site for the 797. Maybe Moses lake, inland empire.
I always thought Boeing missed a huge bet there.
Lots of open space, nice towns around (Euphrates, Wanatchee – Spokane)
And who in that area will provide billions of benefits to Boeing for the move ? I think Washington state will want its Boeing eggs in the greater Seattle basket
Mosses Lake is part of Washington State, pretty much dead in the middle as a matter of fact.
This is why we need immigration.
Trump is proposing cutting back legal immigration.
Unskilled legal migration. A points system like Australia would still allow those with technical and engineering skills to migrate
He is proposing letting more engineers in.
That is total BS sky-screamer
There’s a huge pool of upper middle class Venezuelan and Brazilians, now Americanized (both citizens and permanent residents—mostly legal) in southern Florida, Easily tapable for goodpaying jobs. Less than 2 hours by air up to Charleston.
There are something like 4500 new aerospace engineers per year in the US (and much more for electrical, mechanical of course). Boeing has generally taken about 300 to 500 of the best per year, I think. In terms of educated native population implosions, it’s Europe and Japan that are breeding themselves out of existence, not the US.
My suspicion is that many engineers, vs their predecessors, will value the chance to work a few years longer, too, like most Americans not employed by the governments/with defined benefit pensions. This seems like a cry wolf piece/perspective given the lack of Boeing feedback, and tremendous pool of laid off former engineers from major US aerospace firms (including Boeing) over the last 15 years. Who is even hiring all the current grads from California aerospace undergrad and grad programs?
Texl1649: I think technically are not breeding and taking themselves out of existence.
Egon Musk
Boeing doesn’t have a problem finding young American talent, it has a problem convincing them to stay. You would understand if you worked there.
“Workers for touch-labor work are also difficult to nurture. Society encourages white-collar worker. Trade skills don’t have the same support that these did a generation or two ago.”
The sight of a plumber turning up to a job in a nice, shiny new Porsche was enough for me to seriously consider encouring my own off-spring to pick up a trade like that. I can’t afford a Porsche like that, and I’m supposed to be some hot-shot engineer! I’ve not heard of a poor electrician here in the UK…
I made a pretty decent living on touch labor though these days of course its my brains that do the hard work.
I sure did not have student loans to doom me.
Back to providing a route into the trades after grade school.
I had all the grades I needed, college never appealed to me.
I would have got into where I got sooner if I had been able to access and try it.
The guy driving the Porsche may not be able to afford it either. Lot’s of people live beyond their means. They are up to their eyeballs in debt and haven’t saved anything for retirement.
I sure don’t, I used to have a matching retirement.
That went away 20 years ago.
Impossible to save anything when your family winds up depending on one income (well unless you are a CEO, Lawyer etc)
What we have is as much luck of the draw as anything.
As one of those pending retirement IAM-751 types, all I can tell you is that Boeing is shoving us out the door just as fast as it can.
Experience is no longer respected. Boeing considers most of it’s production jobs as unskilled, even as it laments lack of skills in the labor pool and pushes more taxpayer largess for worker training.
This is reflected in the $15/he starting wage for it’s most populated assembler job codes.
Nevertheless, on the shop floor, at least in my location, age discrimination is rampant, out of control, and unaddressed.
Steve R. :
I think its rampant everywhere. My company also has zero respect for what they have and what we do.
Its going to be quite the mess when we are all gone and they have to try to make it work.
Women have an added burden, not actresses but those with little power.
When someone like Devros is allowed to pass muster in Congress to be Secretary of Education you know we are in seriously deep trouble. I was cringing for the nation.
The Grizzlies in Montana invading classrooms is going to be a classic long after she is gone.
Beyond ignorant of education issues, she doens’t even know or understand her own take on it.
“A national economy with a low unemployment rate of about 4.1% exacerbates the challenges of finding talent.”
The last administration messed up the unemployment statistic calculation formula to make it look less bad than it was. 4.1% under the new method is not low; it is roughly equivalent to 8% under historical rules, so there are still plenty of people who could be put to work.
The same thing was done to GDP; the anemic nominal 2% growth was actually much lower, and was negative for all eight years if you net out deficit spending. This is why wages stagnated through this entire period even as politicians were bragging about how much better the economy was. The claimed improvement was all smoke and mirrors but the press gave them a pass.
A more reliable statistic is workforce participation, which was not distorted for political gain. BLS shows the percentage of the eligible population over 16 now working is only 63%, down from 66.2% in 2008 and 67.3% in 2000. This is something like 6 million fewer people in the workforce now than in 2000, when the more historically accurate unemployment rate was 4%.
The labor force is something like 160m, so the uncounted are about 3.8%. Add that to the official 4.1% and you get a more realistic 7.9%.
Those numbers are right. But looking at details from BLS shows participation for 55 and older was 30% in 1996 and now is 40%, 65 and older has gone from 12% to 25%
Its the other end thats dropped. 16-12 has gone from 65% to 55%.
Projected numbers for 2026 are lower again for the younger group.
There is certainly people available there in that 16-24 age group no matter what the unemployment rate says
Should be 16-24 age group gone from 65% to 55%
https://www.bls.gov/emp/ep_table_303.htm
I think 12yr olds need to be put to work.)
Peter: The poor accounting of unemployment is not due to the previous administration.
That same poor standards goes back forever.
Unlike the previous hand over in 2008, in 2016 the economy was not tanked to great depression levels.
I always did wonder though about people coming back into the work force.
I never could leave it, worked no matter what even if it was for peanuts.
Kind of figure if you can afford not to look for work you don’t need it, but…….
TransWorld,
You need to review your history. Obama moved control of the Census from Commerce to the White House in 2009. I don’t think it was because he didn’t have enough to do. Guess which govt entity does the household surveys that produce unemployment numbers? In 2010 the spread between U3 (obama’s unemployment) and U6 (unaltered) went from less than 4% to more than 7%.
https://unemploymentdata.com/what-is-u-6-unemployment/
It is easy to afford to not look for work. A third of the US population is on some form of means tested public assistance. The median amount is $30k and if you live in Hawaii the median is $50k. This is hardly destitution.
What kind of government gives able bodied men money for not working but doesn’t consider them unemployed?
Those other measure of unemeplment U3 to U6 are
“They are not counted as unemployed because they had not searched for work in the prior 4 weeks, for the specific reason that they believed no jobs were available for them.”
Wouldnt you think in the teeth of a major recession such as 2010 , more people wouldnt think there are jobs for them ?
eg auto workers in an auto town wouldnt be looking for a job ?
dukeofurl
The 3.5% increased spread between U3 and U6 that appeared in 2010 persists to this day, and has nothing to do with recession effects. It is purely due to altered methodology and one of many lies politicians tell to make it so they don’t have to solve difficult problems; They simply don’t even acknowledge that the problems exist.
On the other hand, politicians are delighted to make up problems that don’t exist if they think they can use it to get elected or create another source of tax revenue.
Well put Peter.
Absolutely correct on this. CNBC and all media are just going by these “new numbers.” Also, countless people I know took their S.S. Pension early because there were no lateral moves after lay-offs and contracts ending.
Duplicate.
Neither I, nor anyone i know, has seen any of these re-hires.
October 2017
Boeing, reversing tide of cuts, rushes to bring back retirees as temps
The overall target of up to 800 re-hires — both engineers and machinists, though likely more of the latter — was cited by management in discussions with SPEEA officials.
The temporary hires can stay a maximum of 180 days.
https://www.seattletimes.com/business/boeing-aerospace/boeing-reversing-tide-of-cuts-rushes-to-bring-back-retirees-as-temps/
I thought that was purely because they had underestimated the effort involved in the 777 automation ( which will transfer to to the 777X) and they struggled to maintain the current production rate ( they may have done better than expected on the sales of ‘runout 777-300ERs’ as well)
What if they could acquired a competitor with a good product and engineering talent in a culturally compatible country linked by robust free trade and bilateral visa agreements. Even better if the competitor was distressed and available at fire-sale prices.
Those are few and far between.
Probably only 1/4 of the needed influx, its not a huge operation.
787 Off Topic:
It just occurred to me, with the Trent 10, we have our first 787NEO!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
How it matches up against the 787CEO by the other mfg is ????????????????????????
This raises another interesting issue! If you take a 787-9, remove twenty or so frames, and give it a modernized, downsized (15%?) wing with this engine and/or a 10 year PIPed Genx-1B, do you get a “twofer”—a shorter range, 787-8 “II”, and a 797? Thereby, getting an a/c that could fly by 2022, and holding direct development costs to $3 to $5 billion? And can you do all this for say $95MM or so per average copy?
The A330 neo stops anything that isnt optimised for its role in this area. I dont think Boeing is going to pour money into the 787-8 space , that decision would have been 6 years ago or so.
Too heavy an air-frame, too heavy an engine costly wing and not optimized for the mission.