Pontifications: Workforce shortage hurts entire supply chain

By Scott Hamilton

Aug. 20, 2018, © Leeham News: A growing shortage of workers is exacerbating pressure on suppliers as they struggle to meet current aircraft production rates, even as Airbus and Boeing want to raise them even more.

Add to this the thousands of retirements facing the OEMs in the next 5-10 years, and you can see the strain facing Airbus, Boeing, the engine makers and the suppliers feeding into them.

It also partly explains the shifting trend toward automation. Setting aside the obvious benefits of automation—quality control, accuracy, boring repetitive work, etc—the supply chain in simply facing a growing shortage of workers for which there is no easy answer.


LNC has been writing about the growing worker shortage for some time. Throughout the second half of last year and well into this year, we’ve noted that this is one element of the production transformation that’s going on at Boeing and aerospace.

We noted that worker shortages, the need to automate for efficiencies and preparing for the next generation of airliners are all probably reasons why Boeing refused to provide job guarantees in exchange for tax breaks on the 777X.

Since then, Boeing reduced employment in Washington State as employment in other “Boeing states” grew, much to the chagrin of the labor unions.

For Boeing, though, it’s also about retirement and cost cutting its labor bill. LNC previously reported that Boeing faces a surge of retirements in the next 5-10 years as engineers, technicians and touch-labor employees hit age 55 and above.

Boeing compounded the problem, however, by offering early retirement buyouts in an effort to reduce its labor costs. This chicken just laid a big egg.

The Seattle Times, in a report Thursday, once again noted Boeing’s worker shortage due to accelerated voluntary retirements and its negative affect on the production backlog and meltdown on its 737 line at Renton (WA). Some 40 737s are parked at Renton and Boeing Field, without engines or with unfinished work. The Boeing Co. CFO Greg Smith says the problem will extend into the third quarter.

But these high-profile headlines are only the tip of the iceberg. Deep down into the supply chain, finding workers is a growing problem.

Tool Gauge

Tool Gauge, of Tacoma (WA), is a small company by supplier standards. Its employee head count numbers in the low hundreds, not thousands. Its parts generally aren’t things passengers will see, though some handles, vents and wingtip lens are visible.. They’re nuts, air system components and the like. It supplies parts to all the Boeing 7-Series airplanes and to Boeing Global Services for the latter’s MRO business.

Jim Lee

The company is in the beginning stages of an expansion that will add about 160 employees.

It’s also expanding its use of automation.

Jim Lee, manager of the company, said the shortage of workers is part of the reason more automation, including robots, is being pursued.

(For purposes of this article, all the other reasons for automation are assumed. This focus is on workforce.)

In a tour of the current plant, workers were seen using toothbrush-like tools to do finishing work on plastic parts, shaving off little burrs. The work is painstaking, tedious, repetitive and not very interesting. Automation could do this job, freeing the human labor to pursue much more interesting and rewarding work, Lee says.

Automation seen on the tour reduced one job from three days to under 24 hours.

“We’ve got a ton of repetitive motion,” Lee says. Automation and robotics are best suited for this type of work.

Parenthetically, see this Forbes column about pilots that in part addresses the boring, repetitive nature in cockpit work. Automation is a big part of piloting airplanes and has been since the 1950s.

Gluing plastics and small parts requires highly repetitive maneuvers for one example at Tool Gauge in Tacoma (WA). Source: Tool Gauge.

The workforce shortage makes it difficult to find employees. Tool Gauge recently retained an employment firm to find people. Lee prefers to stick to the Puget Sound area, eschewing national recruitment and the moving costs associated with it. He even wants to avoid moving people from within Washington.

The employment firm does Tool Gauge’s basic training so that when the employee sets foot on Tool Gauge property, he or she is ready to go right into a productive position.

The company cross-trains its employees for multi-job functions so it can handle surges in demand.

“This has been our work-around” for the shortage in employees, Lee says.

Although typically workers in the supply chain historically leave to move up to larger companies, Lee says there have been resumes coming from Boeing employees who are tired of the grinding commute from Pierce County (the greater Tacoma area) to Renton, Boeing Field or Everett. But these numbers are small.


Orion is a supplier of a different business model. Located in the Seattle suburb Auburn, thus us a non-profit company whose mission it is to train people for its own workforce, providing good industrial jobs supplying principally Boeing but also feeding into a host of Tier 1 suppliers that serve Airbus, Bombardier, Gulfstream and others. Two-thirds of its revenues comes from Boeing.

Tom Brosius, VP and GM, says finding entry-level people with no training is easy, although retention sometimes is difficult. Orion has lost trained people to other industries, such as construction, as they seek higher wages.

Orion pays competitive wages but finding skilled people in this highly competitive market is difficult, he says.

With 400 employees, Brosius says Orion has had as many as 30 skilled worker open slots for as long as 90 days. Orion can’t fill its own skilled requirements by hiring entry-level people and then training them.

“It’s extremely challenging,” he says.

Esterline Mason

Esterline Mason is based in the Los Angeles area. It’s best known for making controls for UAVs and other unmanned systems, but it, like Tool Gauge, makes things for the commercial airplane companies. In a first, it makes the cockpit systems for Embraer’s E2 jets.

In an interview at the Farnborough Air Show, its president David Tessier told me he’s having trouble finding workers.

“It’s pretty straight forward,” he said in an interview a week ago. “The way we look on hiring people is based on regional [factors], how close to we are, in the LA suburbs. Its’ pretty straight forward.”

Tessier says Mason not only has had to expand its localized, regional approach to trying to find employees, it’s now cruising Linkedin.

“I’m running out of options. We’re scouting Linkedin to find people to talk to. We have 20 open tech jobs we can’t fill, even with strong compensation packages,” he says. Finding people with engineering background, high skilled labor is difficult.

Some jobs have been open for three or four months.

“It’s been a nightmare,” he says. It’s one reason—though not the only one—he opened a plant in Tijuana, Mexico.

What Boeing is doing

Aside from shifting workers around in SWAT teams to fill in where needed, such as the 737 production backlog, Boeing is hiring back as contractors workers who took early retirement buyouts.

Boeing recognizes the impending workforce shortage crisis.

It’s spending millions of dollars on STEM training (Science, Technology, Engineering and Math) through grants and direct training.

In June and July alone, Boeing announced plans to dedicate $100m in worker training in the USA. It also announced a grant of $5m for STEM education in Europe, where it also has significant investments.

It previously announced a commitment of $300m for US training. (The $100m announcement above is part of this $300m commitment.)

Boeing declined an interview request.

Separately, Boeing sees a need for 790,000 commercial pilots over the next 20 years as a wave of retirements loom. Boeing, through its Boeing Global Services unit, offers pilot training.


While I’m focused on Boeing in this column, this is only because I live in Boeing’s backyard. The workforce shortage is an industry-wide issue.

Spirit Aerosystems in Wichita (KS)—the self-proclaimed aviation capital of the world—also has workforce shortage issues. Spirit builds the fuselage for the 737 and nose sections for the rest of Boeing’s 7-Series airplanes. It builds composite panels for the Airbus A350 at its Kinston (NC) plant.

Boeing South Carolina, which is the Charleston 787 assembly plant, faced workforce shortages in its early years. It still does.

Pick an aerospace company and you’ll find that workforce shortages are a problem.

It’s going to get worse before it gets better.

20 Comments on “Pontifications: Workforce shortage hurts entire supply chain

  1. Regarding: “Tom Brosius, VP and GM, says finding entry-level people with no training is easy, although retention sometimes is difficult. Orion has lost trained people to other industries, such as construction, as they seek higher wages.

    Orion pays competitive wages but finding skilled people in this highly competitive market is difficult, he says.”

    If Orion has a problem losing its trained employees to construction work where they get higher wages, then the wages that Orion pays for skilled workers are not competitive, since if the wages were competitive, Orion would not be losing the competition with the construction industry for these workers due to not being able to match the wages paid by the construction industry.

    I once read an economics article or text in which someone was quoted as saying that in a true market economy there are no labor shortages, there are only disagreements between employers and employees over the wage or salary levels appropriate for a particular job, and I think there is much truth to this. Is the problem that aerospace companies are having filling positions in the Puget Sound. at least in part, that young people in the region look at the history of labor strife and periodic layoffs at Boeing and its suppliers, and the wages they pay, and conclude that other employers in the area, such as Microsoft, Amazon, or biotech companies offer a more promising future? Medical, Dental and Optometry schools require a science and math background, are schools for these professions in the Seattle area seeing a shortage of applicants or do they have many applicants for every available position? If the later is the case, then I would describe the situation not as a shortage of people with science and math training, but as the aerospace industry failing to effectively compete with the medical field for college graduates with math and science backgrounds, probably mostly due to their being a disagreement between the graduates and the aerospace companies over what an appropriate mid-career salary level would be. See below for average salary by medical specialty, taken from the website at the link after the list. How does this compare to average salaries for aerospace engineers or factory workers? Could this have something to do with with how attractive each line of work is to the best science and math graduates, or to mediocre math and science graduates? Do senior MD’s get laid off like senior Boeing engineers do?

    Anesthesiology $409,000
    Cardiology $473,000
    Colon & Rectal Surgery $380,000
    Dermatology $434,000
    Emergency Medicine $336,000
    Endocrinology $266,000
    Family Medicine $241,000
    Gastroenterology $456,000
    General Surgery $382,000
    Geriatrics $245,000
    Hematology $372,000
    Infectious Disease $265,000
    Internal Medicine $260,000
    Medical Genetics $247,000
    Medicine/Pediatrics $232,000
    Neurology $286,000
    Neurosurgery $662,755
    Occupational Medicine $290,000
    Oncology $404,000
    Ophthalmology $391,000
    Orthopaedic Surgery $537,568
    Otolaryngology (ENT) $431,000
    Pediatric Cardiology $283,000
    Pediatric Emergency Medicine $274,000
    Pediatric Endocrinology $214,911
    Pediatric Gastroenterology $255,000
    Pediatric Hematology/ Oncology $208,524
    Pediatric Infectious Disease $191,735
    Pediatrics $221,900
    Physical Medicine / Rehab $304,000
    Plastic Surgery $473,212
    Preventive Medicine $231,838
    Psychiatry $268,000
    Pulmonology $354,000
    Radiation Oncology $468,000
    Radiology $431,000
    Rheumatology $270,000
    Thoracic Surgery $602,745
    Urology $427,000
    Vascular Surgery $476,300


    • A postscript to my comment above. I was once in graduate school training for work in the semiconductor industry in Silicon Valley where I grew up. Before I finished my MS degree program the semiconductor industry entered a long recession and not only was it hard for new graduates to find jobs, but semiconductor plants were closing and many experienced people were being laid off. Not knowing how to put myself in suspended animation until whatever time in the future semiconductor companies might again start hiring, and needing to work because I was not independently wealthy, I ended up driving an ambulance in San Francisco and noticed that hospitals never seemed to stop hiring. I was thinking about going for PhD in electrical engineering or solid state physics, but decided to go back to graduate school in the medical field instead, and I think that this is the smartest thing that I ever did. There was lot of howling them, just as there is now, from large engineering employers about a shortage of science and engineering graduates, but somehow, with a degree with honors in physics from UC Berkeley, I could not find a job in silicon valley when I graduated and had to instead go work in the medical field for more than what I could have made in the semiconductor field. Some industries, in my personal experience, have a very funny way of “competing” for employees in the presence of alleged shortages of potential employees.

    • The excerpts below are from a 4-27-14 AL.com article at the link after the excerpt. Why would any Puget Sound science or engineering student in their right mind who read this article, and wanted to stay in the Puget Sound area, go to work for Boeing instead going to medical school or going to work for Microsoft or a biotech company, if they had the choice? If there is a shortage of engineers why is Boeing plotting to reduce salaries instead of increasing them to better compete for the limited pool of candidates?

      “The relocation of a Boeing engineering center from Washington state to Alabama is part of an effort to save more than $100 million a year, documents from the company show.”

      “The documents show as many 40 percent of the jobs at the new centers will be entry-level engineering positions. The projected average salary at the new centers would be $89,000 versus $125,000 at the Washington state/Southern California locations. With benefits added in, the company expects to spend $152,000 per engineering position at the new centers compared to $212,000 at its existing locations.”


      When a higher paying company can fill all its engineering positions in a particular region but a lower paying company with a worse reputation among potential employees cannot, does that mean that there is a engineer shortage, or does it mean that the lower paying company is failing to provide a combination of pay, benefits, and job security that can effectively compete for engineers? If a company wanted to hire engineers at minimum wage but got no applicants, would that mean that there was a shortage of engineers, or instead that minimum wage is not high enough pay to attract engineers?

      • AP: Good points all.

        Different twist but one aspect is that the construction industry ebbs and flows and at best you are out of work at times.

        If you loose someone to the construction industry where benefits are iffy at best and you are going to be out of work, you need to take that into account as far as wages goes.

        That means you are really underpaying. A 2008 is going to hit sooner or latter and dips happen all the time.

        I have never been out of work since I got into the repair and maint end.

        And you have to downer, automation has a cost.

        It needs highly skilled people to repair those machines when they break down.

        And where do you get them?

    • AP_R – “…in a true market economy there are no labor shortages, … only disagreements … over … wage … levels…” Isn’t supply and demand the central tenet of capitalism?
      There’s tendency for folk to say when the Dow Jones goes down that ‘everyone is selling’; the truth, of course, is that for every seller there’s a buyer. It’s also why an Apollo astronaut has said that, when asked what you think about as the countdown passes 10, you reply that you’re considering the 250,000 parts in your launch vehicle “all made by the lowest bidder…”.

    • See below for a list of US national average annual salaries for the job title “software engineer” for the listed companies, according to Indeed.com as of this morning (8-20-18). For the Silicon Valley companies, one does need to keep in mind that housing costs are very high in Silicon Valley. The average Boeing salary according to Indeed is lower than the average for most Silicon Valley companies, but higher than the averages for competitors Northrop Grumman and Lockheed.

      Apple Average / Boeing Average = 155,837 / 96,077 = 1.62

      Apple: $155,837
      NetFlix: $155,459
      Facebook; $152,247
      eBay: $146, 989
      PayPal: $146,709
      Tesla: $144,632
      Google: $141,438
      Pixar: $140,352
      Twitter: $139,559
      Oracle: $132,661
      Microsoft: $122,794
      Intel: $119,761
      Amazon: $116,314
      Walt Disney Co: $108,933
      NASA: $103,628
      IBM: $102.617
      Boeing: $96,077
      GE Corporate: $95,854
      Ford Motor Company: $94,906
      Bank of America: $87,345
      Lockheed: $80,433
      Electroimpact: $80,000
      Northtrop Grumman: $79,438
      Goldman Sachs: $78,019
      Fidelity Investments: $75,517
      Sony: $75,490
      Delta Airlines: $74,985
      General Motors: $74,280


      And similar links for the other companies listed.

      • Most of the companies that are paying the highest salaries to their software engineers are very successful. Are they able to afford high salaries because they are successful, or are they successful because they are willing to pay whatever it takes to outbid their competition for the best of the best software engineering talent?

        • Sucessful ?
          Are you saying Tesla is making money. I wonder about some of those pay packages too. How much is in stock ?

        • I’d also point out that a lot of the companies that pay large software engineering salaries actually develop a lot of their own internal software. Boeing contracts most of its IT and coding work and employees software engineers for future projects, proof of concepts etc that mostly get farmed out to contracts eventually anyways. There is a large SE presence already that is growing quickly as more demand for in-house solutions becomes needed as well as higher costs for contracts make it not competitive to purchase software that doesn’t fit all the needs anyways.

      • This list is more on-target than your initial one (doctors) since Boeing (or any other aerospace company) shares mostly the same talent pool and engineers tend to have a fraction of the student debt that doctors have. An even better comparison would be typical starting salaries for these companies. At BCA in Puget Sound that’s typically like $65k although it goes up rapidly once you promote. Starting salaries for engineers at large tech companies can be almost double that.

    • Shouldn’t Colon & Rectal Surgery specialists get paid the most? I mean really…

  2. Sorry, but this article seems to be like the wining of the wolves that they can’t find enough rabbits.

    As an aerospace expert searching a job for quite a while, I’d like to share my experience from the time I was an invited Lecturer to a University where they had a small section of aerospace engineering with 5-8 graduates every year.

    These were very smart, highly motivated and highly educated individuals
    However the first 1-2 graduates always ended with IBM, Infineon, Intel, Microsoft, Google.

    The second group of 2-3 students were hired by BMW, Mercedes, Saab, Volvo. The third group of employers were Siemens, ABB, etc.

    One graduate was reserved for the Military and every second year maybe one engineer was hired by the Aerospace, maybe. And they did not stay there too long. Bosch, Exxon-Mobil, Ford, etc. was waiting for them.

    So, please, please stop this hypocritical whining.

    Pay well the people, respect them, treat them well, you will find them and keep them.

    However, when you deal with some of the smartest people in the society, with these hypocritical policies you will not outsmart these people.

    A problem I see is that the selection process into management is not based on professional knowledge but is “an HR based political correctness and loyalty” principle that is counterproductive and damaging in long term to these companies. If you check the mid and upper management of Aerospace companies, you will rarely find a manager with aerospace competencies, but rather all kind of outsiders with a “very good corporate verbiage” and loyalty, I call them “Managerial Mercenaries”.

    If presently a young smart person asks my opinion in following a career in aerospace (technical or piloting), most of the time I have to discourage them.
    If you don’t come from a rich background and ready to leave your country and become a “modern gypsy” without a family life, don’t go there.

    Also, I must agree with “AP_Robert” and his example from the medical field, when I started my career had almost double of an MD, now it was almost half and had to move and relocate across countries. So, go figure.

    • I think Scott has put it straight forward.

      People in Smaller Businesses are victims of what the Corporations politicians of a certain party have imposed.

      Kansas finally rebelled when they saw that no taxes meant no state.

      The question all businesses have to ask is, are we part of the problem?

      What can we do about it?

    • Ferenc – “Pay well the people, respect them, treat them well, you will find them and keep them.” If folk do not stay (or will not come) because of the pay on offer, does this mean that companies will tend to be populated (as we have to say these days) only by those willing to work for low wages? I know of the manager of an international aerospace-related concern of such repute (in analysis and reporting) that in a period of staff, er, “unrest” he reminded employees that outside his office door was a queue of eager young men “willing to work here for nothing…”. Aye, there’s the rub. Do we get the managers/employees that we deserve?

      • By shear concidence. since my response to Ferenc I happened upon a 2013 obituary for engineer/aerodynamicist Peter Clignett (Fokker 100, Bombardier CRJ200, Embraer E-Jet): ‘The CRJ and E-Jet families triumphed where the Fokker 100 failed, partly thanks to Clignett’s influence. … [Son] Maurice recalls: “It was a pure hobby. He would say, ‘They want to pay me a salary, but it’s not necessary. I like the job anyway’.” ‘

  3. That is true up and down the work scale.

    I have 36 years in the general mechanical field of keeping things running. I am good at what I do. I worked hard to get there.

    Have not seen a raise in 5 years of any kind.

    When things were bad they said we can’t afford it, you have to ride through with the company, good to be employed (and that is true and no issue, it hurts but understood)

    Now times are GOOD? NADA.

    So it does not matter. And I no longer care about the company – it goes belly up there will be another bottom feeder to take their place.

    I hope to sit on the sideline and laugh in a bit. I will take all my knowledge with me because the company has no program to follow up and ensure its preserved.

    And as people like me go, it will cost more and more with the mistakes that are being made.

    They could take promising people and teach them via both schools and on hands assist, they don’t do that. They don’t care, they think it will keep going along forever when in fact they are eating the seed corn.

    You can’t bring in people that have little or no technical background or education and not just teach them, but get them the fundamental of what make the tech work.

    I once had a manager ask me if facility experience or background capability was more important.

    they both are equal in a functioning operation.

    But if I had to take a choice of one, I would take knowing fundamentals of math, engineering, function – because with that I can (and have) figured out a particular system or piece of machinery.

    Without it, at best you are monkey see monkey do.

    What I see now is what I call Voodoo tech, the most bizarre explanations of why things are not working backed by no reality to the point you might as well be putting pins in a voodoo doll and praying that the alternator starts to work again.

    Repair can’t be automated. What then when no one to fix it?

  4. I had to laugh about pilots.

    So, they were bored keeping an aircraft int he air back int he days of the DC-3 /4/6? Really?

    Now all you do is sit there and watch a computer run things.

    What they really need is video games. Oh, that is right, they have them, it called cockpit automation.

    And what happens, they forget that Zelda is hidden behind the boulder from time to time.

    Remember flight engineers? Aircraft were so boring it took 3 people to keep atop of them.

    What they have done is allowed a lot of poorly trained pilots to fly and we see the results when they acualy need to understand what is going on and have to acualy fly the aircraft.

    • If you want to see the results of cockpit automation, and even the increased boredom of flying an aircraft, you only have to look at the accident statistics.

      Seems like letting computers run the plane has saved many, many more lives than those that are lost because the pilots didn’t know what to do when the computer couldn’t handle it.

      Is there a way we could keep all the benefits of automation and still have skilled pilots when finally needed ? Maybe a lot more simulator flying is the answer. Or would it be more cost effective to keep improving the automation ?

      In the case of MH370 and Germanwings the pilots seem to have been the cause of the disaster.

      However, the replacement of humans with automation in many areas of life is leading to profound changes in society. Many of these changes result in reducing the quality of life, even as we increase the length of life. Deep problems indeed.

      • The reality is that most aircraft crashes the pilot has been the cause of disaster.

        The Bizzare thing is once they loose it in a modern aircraft, its simple airman ship activity.

        But automation has not done anything to make a pilots life exciting (except when they do loose it)

        I do wonder if we are making a correlation to automation that is not fully warranted?

        Today we have 737/A320. Back in the day it was more different types.

        We have vastly better NAV systems and ATC that all came along with automation.

        Larger commercial flights are above the clouds, ATC and on board equipment keeps you out of Thunderheads.

        What we have seen is that almost all accidents continue to be pilot induced (though for larger commercial that is far less)

        The Stake Owners have realize3d that rote and same old same oh does not train a pilot to take over when things go South, even if they are the ones who induced it (or AF447 simply botched should be a routine transition into an unfathomable action)

        Training was focused on landing and takeoff. You get to do one of those a flight. If you can’t land or takeoff it should be quite evident.

        Now they have moved to, give them an engine out, nasty crosswind. Having done really nasty crosswind landing (that was beyond the listed limits but encouraged by an instructor ) , that really tests your airman ship ability.

        We have bells and voices in the cockpit when its been proven that those are ignored.

        Rather than a female voice for male pilots should it be a male voice calling them out?

        “Hey Dude, you are realy low and you suck at this”

        A very recent one was an Airbus that lost an engine on takeoff, they ran off the runway. As pilots we should be able to handle that.

        As pilots, we should shine when its an emergency, not be the emergency. That is what we are there for. A simple auto pilot can keep an aircraft straight and level.

  5. How many of the US companies supported school systems through taxes?

    And frankly, that is where this really does fall down.

    I don’t think I am untypical. Nothing I saw in high school or a year of college was the least interesting.

    I went onto work construction for many years and eventually fell into equipment repair and maint.

    The world lit up. I like hands on, I never had an issue with getting dirty (my wife says I like it!) – its challengeing.

    So along with schools not having the support they need, they did not offer tech courses (shop ala carpentry, ungh – I never was going to be a cabinet maker)

    For people like me, vo- tech is a good way to go. I always like being around machinery and liked working on it.

    I could see that 40 years ago, corporation just want money to CEO and shareholder (buy back now)

    In their greed they have lost sight of the fact we are in this together. Not every person is work 80k a year, but you can’t run a business on 15k a year employees when you live in an economy that takes about 50k a year to stay afloat.

    Everyone has to pay a fair share and its not been done at the top for all too long.

    Taxes provide infrastructure and so do donations to political candidate that refuse to vote to ensure the infrastructure is sound.

    Back in the 70s when I was traveling a lot, the Freeways were a wonder.

    Now, they are god awful as the trucks have work dimples into it and its thud, thud, thud all the way – its all falling apart.

    A trillion dollar tax cut for share holder buy back, not a penny to the promised infrastructure, not a penny.

    Kill The Goose laying the Gold Eggs.

    Or you reap what you sew, and if there is no sewing, there is nothing to reap.

    I wonder how it works in Mexico when your drug cartel takes over the plant?

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