Leeham News and Analysis
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Leeham News and Analysis
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- SPEEA, Boeing at impasse over safety program, union says April 23, 2024
- Better transparency needed on Boeing’s 1Q earnings call April 22, 2024
Pontifications: WA State frets about Boeing brain drain, but it’s already happening
By Scott Hamilton
Aug. 31, 2020, © Leeham News: Elected officials and others in Washington State worry about the “brain drain” as Boeing considers whether to consolidate 787 production from Everett to Charleston.
These people are asleep at the switch and have been for some time. The brain drain is already just around the corner.
Nearly half of the membership of SPEEA, the engineers and technicians union at Boeing, are 50 years or older right now.
Almost two thirds of these are within 55-64 years old. In other words, ready for retirement right now or soon to be.
2018 Alert
LNA first raised this prospect in January 2018. The number of prospective retirements is down. Boeing eliminated jobs and others took early buyouts since then as part of a general cost cutting effort in Puget Sound (the greater Seattle area).
Washington State still doesn’t have a dedicated effort to encourage or provide educational opportunities for engineers and technicians. Whatever’s been done is piecemeal.
In a consulting project I did for the state Department of Commerce in 2010, I noted the need for this kind of professional education in a dedicated manner—much as there is an Embry-Riddle University. Embry has a campus in Renton and there are some engineering courses and degrees. But the state doesn’t seriously promote aerospace engineering in a highly visible way.
Boeing’s proposed joint venture with Embraer had, as its top rationale, access to Embraer’s engineering workforce as a partial solution to the aging SPEEA membership. In 2017, when news of the JV first emerged, Boeing seemed on a path to green light the New Midmarket Airplane program. Embraer’s engineers were going to be needed for the NMA. They were also going to be needed for a new 100-150 seat single-aisle airplane.
The MAX and COVID crisis ash-canned the NMA, the single-aisle and the JV. But the brain drain doesn’t slow.
Washington has very limited training specifically for aerospace engineers. The University of Washington graduates about 125 a year. While you don’t necessarily have to have an aerospace engineering degree to be successful at Boeing, and you can go to places like Eastern Washington to study aerospace-specific computer coding, and both Washington State University and Western University have material science degrees. (Western and Central Washington University also teach manufacturing engineering.)
But you need those aerospace engineers to design the planes. Then those other engineers will build it. And right now, Boeing’s recruiting hard at Purdue and Kansas to fill those jobs.
IAM outlook
On the other hand, the outlook for the International Association of Machinists District 751, while not especially good, is actually better than it was at the start of 2018.
In 2018, I published this chart below.
At one point five years ago, 751 had nearly 40 percent of its members older than 50. A lot of these are gone and have been replaced with “kids.”
The IAM 751 funds educational programs and is creating a dedicated school.
Edmond Community College in association with the Aerospace Futures Alliance created the Washington Aerospace Training and Research Center (WATR) at Everett Paine Field, near the Boeing widebody plant.
There are community college programs statewide (Big Bend in Moses Lake, for example). There are a couple of multi-district programs teaching high school kids. There’s AJAC, which provides training for entry-level workers at the suppliers and preps them to be team leads and shop foremen. There’s INWAC in Spokane.
Still falling short
Washington State still falls short in its support for Boeing and the aerospace industry.
We’ll talk more about this in a future article.
Bryan Corliss contributed to this article.
Reuters (and others) reported in the past few days that 8 Dreamliners had been grounded due to “two distinct manufacturing issues in the fuselage section” (surprise!)
Does anyone know what the manufacturing issues are?
At least one of the aircraft is a 787-10 (SIA)…which points a finger at Charleston (surprise!)
There is a discussion of this near the end of the comments section in last week’s HOTR column, August 25th. The issues did occur in aircraft assembled at Charleston.
There are three discreet operations at Charleston.
1. Fuselage Build originally Chance Vought
2 Fuselage assembly, join venture between what is now Leonardo (tail) and Chance Vought Fuselage section.
3. The latter assembly hall (and its associated bits and pieces)
The join issue occurred in area 2 was where it should have been caught.
The centre fuselage section ( over the wing box) and the small barrel behind it come from Leonardo just outside Taranto in Italy. The small barrel ahead of the wing box comes from Kawasaki in Japan.
The cockpit and front fuselage section comes from Spirit. The rear section made by Boeing ( who took over the Vought/Triumph building and contract) in Charleston isnt made as a barrel section but top. bottom and side sections which are formed into a barrel with the pressure dome which comes from Aernnova in Spain.
The centre section is mated with the wing box and the ahead and behind sections by Boeing in Charleston before being flown to Everett or next door , for the final assembly lines.
Yah mean the ‘Charleston’ that left stuff in fuel tanks of airplanes assembled in Everett WASHINGTON?
Pfft
Washington State should do research into what their target groups really want, apart from salary.
If it is e.g. highly educated exceptional specialists with a decade of multi employer experience (development), it might be different than for 50+ Boeing veterans, that might have different interests (consolidation).
I a lot resources were burned over the last decade realizing shareholder value, financing pensions, bonuses and dividends. If it was always in the longer term interest of the company and younger generational workers is another question.
keesje hits it on the head.
There are lots of good Aviation engineering collages across the US. Why duplicate that is there? You just diminish it for both and both fail.
If you look at history, the industry has moved around the US. It used to be heavy in the N.E. Then California and approaching WWII Washington State.
I guess you could build trailers for your school and move it around.
But a plane tickets is a few hundred bucks, people can acualy fly (or gasp, even drive!) form one area to the next.
Only where there is not a source of labor (the touch end that is not available) and support areas to make it work better.
But when a Corporation is happy to spend 6 billion (my guess into Charleston for buildings and screw ups) for relatively small tax breaks to break a union, you are pissing in the wind. Boeing will leave no matter what you do.
I’ve consulted in the past with school districts on the creation of STEM programs, that lead to highly technical careers. There’s been a decline in the valuation of those programs, from what it was in earlier eras. There is a perception now that kids don’t need higher skills in science and math, that the trades are resurging and a college degree is not worth what it once was.
I’ve seen this view prevail even with professional educators. They can keep kids, parents, and school boards happy with significant sports programs that cost far less. I’ve seen schools that invested more in the parking lot than STEM.
I thought this might change with the introduction of Common Core, as it emphasized math and reasoning skills. But it faces significant resistance, not least because scores dropped like a rock when it was introduced. Parents and teachers have pushed back and that effort too has declined. When I talk to some schools with low scores now, they point to all the other schools with low scores and say it’s normal, and the fault of Common Core.
I had one school that scored significantly below the nationwide standard, but was given the status of “exemplary school” by the state, because they had improved slightly year-on-year. That ended the discussion of STEM, the administrators argued against it, saying their status proved no curriculum changes were needed. Grants and other funding were available, but they decided to withhold those opportunities from the kids. In that case the state was trying to encourage improvement, but it had the opposite effect.
States were left on their own with regard to science testing. In my state, the first year results were dismal and the test was subsequently changed to make it easier and yield “more representative” scores.
So I’m not surprised that there is a deficit of younger people with highly technical skills. We don’t invest at the earlier stages of the educational path, really until the college level, and that is driven more by research dollars, which don’t really apply at the junior college level and below.
I’m glad that Scott has been active and consulted with Washington. There has to be recognition that those skills need to be built up from the lowest levels, to yield a strongly competent emerging workforce.
We have seen the same in Europe and also Russia. Talented youngster were drawn into the perceived more glamorous, international and financially rewarding IT and business schools. Plus the studies that seems designed to attract as many teenagers as possible, lacking debt.
Maybe the major aerospace universities globally should unite further & promise talented teenagers a well organized international base curriculum /traineeships that makes them eager to join. But local financing & strategic interest will probably avoid that..
I agree. The confounding aspect is that with exposure to technical opportunities, along with a little encouragement, kids thrive and are keenly interested. It’s creative development as well if they can design and build things as part of their curriculum.
When I was an engineering instructor at university, the lab & capstone design courses we set up were very popular. That was done due to feedback from major employers (Ford, GM, GE) that graduates were very bright but lacked practical skills. So those activities were win-win.
I’ve tried to push that philosophy lower down in the educational system, with limited success. But I think the same principles apply. Teach a kid about robots, great. Let them build a robot to play with, awesome.
So it’s not that difficult to channel their interest and start them down a technical path. Obviously it won’t be every child, but enough so that you grow a base of young people looking at the technical fields as they leave secondary education.
Rob:
Kind of hard to invest when Boeing only goal is to send money to taxpayers and not support the State that created Boeing in the first place. Oh yea, and an 8 billion dollar tax break or we go someplace else.
Yea, I know, lip service stuff, big deal with a 100k here or there, but the big bucks? Share buy backs and a dividend they were going to borrow 13 billion to pay.
What could Washington State education do with 13 billion?
Boeing is going to dump Washington State, the money should be spent on the future not a Robber Barron operation. Shoot, the Robber Barons at least were honest.
I think the companies themselves need to be more involved and engaged. Becoming a highly specialized aerospace engineer is what the company needs, but as someone who can become an engineer of anything(or another subject area for that matter) it is more risky for the individual. The aero companies need to do more to recruit, train, intern and keep talent in their pipeline. Knowing upfront how many jobs they need to fill and pitching the program as a near guarantee of employment for those who can finish is likely to attract more interest. Similar to what Kettering does/did for automotive engineering. They could also have better sway in the curriculum to ensure the graduates come out with the knowledge needed. Thinking back to 18 yo me such a proposition would have been more enticing.
Zoom:
We can’t have that. It interferes with sending the wheelbarrows of gold to shareholders and management. Socialist commie thinking.
Boeing corroborate simply not only does not care, they are actively planning to get out of Washington state and have for some time.
Its all about the Benjamins for them and nothing for the people that this cou9ntry is about.
I live in a European city that is considered to be “the innovative capital of the EU” — with most of the employment here deriving directly or indirectly from (very) high-tech industry. Despite the presence of a dedicated Technical University in the city in question, and multiple other universities within a 90-minute drive, companies here still have to get most of their engineers and scientists from Asia. In fact, 50% (!) of the houses sold here last year were sold to (Asian) expats.
As long as western street culture labels engineers/scientists as “geeks” and “nerds”, young people are not going to be attracted to these studies. That effect is then drastically compounded by a serious decline in the quality of math and science tuition at primary and secondary level. The whole thing is actually quite depressing.
Boeing and Airbus engineering departments have increasingly been filled with people that have the knowledge and skills. Many come from India. If you are looking for a brain drain country..
They inherited a good education system, have a science stimulating culture, speak english and successive governments continue messing up the local aerospace industry. So the best are welcomed in the West, filling the open spots.
They also cost less.
And you can send them back when their card expires or they get uppity
Brain-Drain is a real phenomenon. It has been studied from when IBM had their first layoffs in company history. IBM was in the catbird seat in the computer business. Management decided they didn’t need experience workers to deal with a slowdown and change in their business. They made “great” decisions: Operating System? Software? Who needs that? PCs? Big deal… The most motivated workers most likely to create start-ups? Pay ’em off! As high tech business has exploded, IBMs piece of the pie has languished.
I have worked with the end results of India and its engineers.
I don’t know how good they are or arn’t if trained in the specific profession, what I do know is we got a mess and spend huge amounts of time cleaning it up.
Its a lot easier to do it yourself.
Boeing had to re-do the whole 747-8 engineering they outsource to their Russian center.
Its all about cheap and nothign to do with capable, they then happily spend big bucks for someone experience to clean it up.
Amusing to see that you evidently think that India is the only country in Asia.
The high-tech companies where I live predominantly hire engineers from Taiwan, Korea and Vietnam…and there’s absolutely no need to “clean it up” after them.
And I don’t know how you arrive at the conclusion that imported engineers are “cheap”: they usually cost more than locally-educated engineers, because they have to be enticed from abroad (from expensive cities), and one has to pay their housing costs, education costs for their children, etc.
It seems that you’re confusing “employing” with “outsourcing”…
From my experience individual engineers from outside the USA that came here to work were on par with the rest. When things were outsourced, and in this case software to India, a team of guys were generally hired to “fix it,” back here in America. But Management was directed over and over to find things to offshore to LCCs – that’s low cost countries. This large, or one of the largest supplier to Boeing and Airbus built these factories in India and Mexico, and by god they were going to use them whether they could manufacture things good or worth %$#&! But as is known, the directive to lower costs at all cost, came from you guest it – Boeing. The men who sent most parts of the 787 to be built in LCCs, and then had trouble assembling it back in the USA.
In the past, Boeing’s workforce management system was comprehensive and integrated with the business strategy. A skills pipeline was fed with capable college graduates who gained job-specific skills and built a network of relationships through new programs and mobility within the company. Boeing had a multi-tiered program of lifelong learning.
How very 1980’s. Boeing’s skill management system and HR infrastructure were gradually dismantled as the business was seen as more commodity-like. The shareholder value business model relies on the external labor market for spot labor. Education and training costs are externalized to workers, families, and communities.
Boeing made a stab at the aging workforce problem a few years ago, but that dropped off the radar again.
The state has never given up, but it needs a partner to make this work in the long run.
Spot on
Yes Washing Stated needs a partner that is not stabbing them in the back.
Benjamin Franklyn vs Machiavelli comes to mind.
The problem is not our country graduating enough people in STEM degrees. The problem for Boeing is not finding enough young Engineers. The problem is money. Half of the people that graduated with engineering degrees with me did not go to work for engineering companies. They went to work for banking and consulting companies because they paid better. Boeing can hire all the engineers they want, but given that they just got rid of about 15% of the Engineering work force in the Commercial Aviation division, is their own fault, not anything to do with the State or the Education system in the country.
The vast majority of Boeing engineers do NOT have aerospace engineering degrees, and I specifically advise interns from seeking one, because the company hires so few people with that degree. Boeing hires mostly mechanical, electrical, structural/civil, chemical, materials, and software engineers.
Sounds about right. far better to do a standard mechanical engineering degree with maybe an elective or two in aerospace or even fluid mechanics.
That way you have more bases covered.
GM used to have its own university , GM Institute which now operates as Kettering University
https://en.wikipedia.org/wiki/Kettering_University
This was from back in 2012 but says that Airbus and Embraer ran their own engineering schools. I doubt if Boeing or even the US companies it absorbed ever lifted a finger in that area.
https://www.industryweek.com/talent/recruiting-retention/article/21957253/boeing-and-airbus-fight-like-hell-for-aerospace-engineers
TW, it’s all well and good for you to blame Boeing for all the ills of the world, but it’s not really a solution. Boeing is not responsible for the lack of qualified workforce, the educational system is. Nor is the problem localized to Washington state.
Educators need to work to improve curriculum, and then propose advances for industry & government to fund. As someone who works to align funding for school technology programs, I can tell you that the problem is usually not industry. In fact industry and local businesses tend to be generous when asked to sponsor school programs. They are funding their own communities, families and kids, in most cases.
Here are some examples: local branch of a nationwide industry offered $30K for school technology. Without asking, the administrator spent the entire amount on 28 of the most expensive iPads (with cart) she could find. The school did not have the wireless infrastructure to support them, outside of the cafeteria and the front office. Nor did she provide any guidance on modification of curricula to teachers. So they sat unused until I volunteered the time and money to get them working throughout the school (they said they had no budget left).
Another case, a school had a slow Internet connection (1.5 Mbps), the administrator insisted it was sufficient and no upgrade was needed or affordable. I asked the local telco for help, they agreed to lay fiber 5 miles to the school at no charge ($55K value), they just wanted the monthly service fee of $250 (bundled with fiber telephone services). They also offered $2500 to replace the border router and switchgear to handle higher speeds. She turned this down as unnecessary. So there was a heated battle in front of the school board, and it barely passed 4 votes to 3.
Another: the federal E-Rate program offers funding for every school & library in the US, to upgrade their wireless & wired networks. I found that most schools were not aware of the money or how to obtain it, or felt that it was too troublesome. So I gave up my right to bid in order to manage the bids instead, and help them get the funding invested in their schools. In most cases the schools were ambivalent, didn’t matter whether the funding was used or not. Also many vendors didn’t want the hassle of registering and qualifying for E-Rate payment. Today, a major fraction of that nationwide funding remains unused, which means it’s unlikely to be replenished in the future.
Another: the Obama administration created Title 2 and Title 4 programs to help districts pay for teacher professional development in technical subjects, since this is always a weak area, and to help schools better leverage their technology dollars to benefit students. At one school, I offered to write the grant proposals but the administrator said it wasn’t my place as technical consultant, it was the principal’s job to manage the curriculum. So I gave him the materials but he refused to file, saying those program were not needed. To this day, that school has no science lab, the kids don’t participate in state science fairs or robotics competitions, and in fact have no extracurricular academic programs at all.
Another: I happened to overhear a conversation that a local business had offered $12K to fund computer upgrades, but the school had turned it down as not enough to be meaningful. So I got the money from the business and instead of buying new computers, replaced the motherboards, memory, CPU, and got them SSD’s. It came in under budget and the business was so pleased they did it again the next year. But again I had to volunteer my time and go around the administration to make it happen.
I suspect you’d find stories like this all over the US. It’s a tragedy for the kids because technical resources and opportunities are so readily available now, with the cost continuously dropping. The kids love those activities and are highly motivated and willing. But the adults are another story.
Bottom line, I suspect if the educational establishment came up with a good, solid technical profession feeder plan, and presented it to Boeing, they’d have support. But as the examples above show, Boeing cannot force it upon them. The desire to do those things has to come from them, otherwise it doesn’t work and the money is unused or wasted.
Rob:
Bottom line is if you don’t pay taxes then there is no revenue for education. Or bridges, or roads, or power.
Boeing bends all the rules like a pretzel to pay no taxes. Then they shift all the burden to cowering workers.
But they will do tens of billions in share buy backs and not even invest in future products . Schools are an investment.
All government and ALL corporations have huge waste. I worked for two very big ones, the waste I saw was astonishing. As long as it benefited the highers up or they got away with it, swept under the rug..
To hang your hat on that is spurious nonsense. Nothing more than standard corporate deflect. A lie repeated a 1000 times becomes the truth in corporate speak.
You said, she said, I heard. Meah. It cost money and all the money came out of workers paycheck and not a dime from Boeing.
There is an old military saying, don’t shit in your mess kit. That is exactly what Boeing is doing.
Boeing is just one of the corporate sheep in the herd. Mediocre and pathetic. One failure after another. Its baked into the Boeing culture now. Blame the workers, blame the state. Bahhhhh
Boeing saved between $200M and $300M per year with the state tax incentives (now ended).
In that period, they paid about the same amount in other taxes per year, spent $13B to $15B per year in the state overall, and another $100M per year in voluntary community and educational contributions. This includes about 300 individual grants for STEM programs in schools.
Employees of Boeing made another $300M in charitable contributions per year, under a program where Boeing matches their donations up to $10K per person per year. They also volunteered about 400K hours in organized community activities.
So please TW, whatever your personal grievance with Boeing is, stop making unfounded allegations and assertions. Boeing is far from perfect, but they are also far from the evil empire you make them out to be.
Back in 2013 it was said to be worth $8 bill to Boeing over the life of the proposal
“The package of tax credits, exemptions, and a reduced business and occupation tax rate was expanded in 2013 and extended to 2040 to entice the company to assemble its new 777X aircraft in Washington and build its high-tech wing factory in the state.”
https://news.bloombergtax.com/daily-tax-report-state/boeings-8-7-billion-tax-break-up-for-a-vote-in-washington-state
Yes, more than $8B over the life of the 27 year package which was ended early after 7 years, and will not now be realized. Also the package was for the entire aerospace industry in Washington state, including all the businesses Boeing activity supports, not just Boeing alone.
If we use the $300M annual number above, to account for all activity, that’s about $2B in value over the 7 years period, for the statewide aerospace program. Boeing got the majority of that as the largest vendor.
Rob:
Reality is they in fact lie and cheat to avoid doing so, including their more than dubious accounting practices.
They did not even put the money into product, it was all share buy backs and dividends. At least product creates jobs and those pay taxes.
We can call it Robs alternative facts, a falsehood is a falsehood.
Let Them Eat Cake.
TW, these are again all assertions that support your highly negative opinion, but which lack factual evidence (I notice you present none) and are therefore unfounded.
But you will never admit that so there is no point in arguing. I gave you factual evidence which clearly refutes your position. There is nothing more I can do.
So I accept your posts as an expression of your opinion, but not as a representation of truth.
Will reduce pressure to lay off people.
Decades ago Boeing had a problem of a gap in age+experience because it laid off young employees in the 1970s downturn.
I know a person who was laid off, fortunately was hired by Lockheed-California for the L1011 program but laid off from that.
A fundamental question is how much knowledge was transferred from the about-to-retire people to younger people.
Boeing has a tremendous amount of knowledge, exemplified to me by Dick Peale and Harty Stoll [spelling unsure] on the 767 program.
But also people who should be moved out. That’s where leadership is essential, on the 787 program some managers had it though needed some coaching, some were bleeps.