May 16, 2022, © Leeham News: Boeing is spending millions of dollars to retain engineers represented by the union, SPEEA.
It’s a reversal of efforts to trim SPEEA ranks through early buyouts and outsourcing and to address an aging workforce.
The proposed 2017 joint venture between Boeing and Embraer was meant to address the retirement crunch. But delays in clearing the JV by the European Union and then the Boeing 737 MAX crisis and the global COVID pandemic killed the deal. Boeing walked in April 2020, shortly after the pandemic began. Officials claimed that Embraer failed to meet all the terms and conditions outlined in the documentation. Embraer denied this, claiming Boeing’s self-inflicted MAX crisis was the reason Boeing walked. The companies are in arbitration over a $100m break-up fee. With the collapse of the JV, Boeing lost access to Embraer’s young (and less expensive) engineering workforce, the No. 1 reason to do the joint venture.
“There is a big push to keep people,” SPEEA tells LNA. “Boeing is using raises, restricted stock, and incentive bonuses to keep engineers. Our contracts called for $7m in out-of-sequence raises last year and the company spent $22m.”
Boeing is more than a year away from clearing its inventory of 737s and 787s. Until then, or until the end is definitively in sight, it’s highly unlikely that Boeing will launch a new airplane program. But there are five 7-Series airplane programs that engineers and others are working on: the certification of the 737-7 and 737-10 this year and next; the development of the 777-8F; and increasing the gross weight of the 787-9 and -10. Certification of the 777-9 is also outstanding. Nothing official has been said in detail, but changes to the airplane demanded by regulators may require engineering work.
Meanwhile, Boeing is on the verge of turning the corner, its chief financial officer said last week. But there are still challenges ahead before it does.
Brian West, CFO of The Boeing Co., told a Goldman Sachs investors day on May 11 that he agreed with host Noah Poponak that it’s been a “tough couple of years” for Boeing. “It has not been easy for customers or shareholders. Some of the issues, we control. Some of the issues we don’t control. But I will tell you, we are on the verge of turning the corner. Once we do, Boeing is going to do what Boeing does best, which is deliver great airplanes and defense products for our customers.”
But the climb is still uphill. The crest may be getting closer, but deliveries of the cash cow, the 737 MAX, remain constrained. Deliveries of the 787 are still suspended. Supply chain issues and the continued inaction by China to allow MAX deliveries to resume affect the 737 recovery. The Federal Aviation Administration (FAA) hasn’t yet given authority to resume deliveries of the 787. (Twitter chatter now suggests 787 deliveries may resume in June.)
West said he recently visited St. Louis, where Boeing’s defense business is concentrated. He met with 100 engineers. “They’ve got faith and the things they were taking me through blew me away, the things they were working on. This company has been around for a very, very long time. They’ve gotten through difficult periods. We’re going to get through this period, and I believe, come out better and stronger.”
“While we know we’ve got more work to do, I would say that the feeling is confident,” West told Poponak. West said he hopes China will begin taking MAXes, the supply chain bottleneck will ease, and 787 deliveries resume this year.