Last week I wrote a letter to the Wichita Eagle, in response to
Dominic Gates: Boeing plans layoffs, transfer of research jobs.
The Eagle ran that letter (with minor edits)
Boeing closing an opportunity path
I don't know whether to laugh or cry over Boeing's plans to move
1,300 engineering jobs from Washington state and California to
low-wage, crony-capitalist states such as Alabama and South Carolina
(April 30 Business Today), but that's because I'm not directly
affected. I don't work for Boeing, own stock in it or plan on flying
much in the future.
Boeing may be able to replace experienced factory workers with
underpaid novices. But engineers are different, and without good
engineers Boeing will soon have nothing to sell.
What saddens me about Boeing's shortsighted move is how it
undermines one of few opportunity paths my generation had. My father
worked in Boeing's Wichita factory, and he managed to buy a home, send
his kids to college and retire early. I became an engineer and did
But Boeing's devaluation of engineering work threatens to close
that opportunity path. And when young people see there's no future in
engineering, who will keep the technology we depend on working?
The Eagle limits reader letters to 200 words, and there are a lot
of points to try to squeeze in here. Someone could (and should, just
not me) write a whole book about how Boeing's management operates,
in what ways it's typical of large American companies and in what
ways it's far out on the cutting edge of figuring out ways to screw
its workers, its customers, the governments it corrupts, the public,
and ultimately itself. For example, one point neither the article
nor my letter bothers with is that Boeing's west coast engineers
-- as well as Boeing's former engineers in Wichita, an operation
they've already shut down -- are unionized. That, of course, has
a lot to do with Boeing's desire to move jobs to anti-union states
like South Carolina (as does the eagerness of state legislatures
to pay Boeing millions of dollars to exploit their workers), but
you really should stop and think about this state a bit. It really
is very hard to unionize engineers, so try to imagine how badly
Boeing must have treated its engineers for how long before they
sought the protection of a union. (In Wichita, "right to work"
Kansas, even the front office workers wound up joining the union,
leading Boeing to shut down the whole plant.) The article does
mention how demoralized Boeing's Seattle engineers are, but it's
not just this latest move that's got them down. The whole 787
program, for instance, has been plagued by Boeing's decisions --
driven by cost-crunching and rent-seeking -- to sell off ever
larger chunks of the design and manufacturing process.
I wrote some more about this piece for Weekend Roundup, but might
as well post what I wrote here now:
Boeing thinks they can save $100 million/year by moving 1200 engineering
jobs from Washington and California to third world states like Alabama
and South Carolina -- they figure $60,000 per engineer -- and they're
willing to spend $150 million to make that happen. Few companies have
obsessed so much over penny-pinching as Boeing, and they always explain
their motivation by pointing to their competition, even though their
only competitor in the commercial airframe business is Airbus, based
in Europe and fully unionized. (Although it's worth noting that when
Boeing shut down their Wichita plant Airbus opened an engineering
office here to pick off the cream of Boeing's engineering talent.
With this news, good chance they're looking at Seattle locations too.)
What makes this doubly perverse is how critical engineering talent is
to a company like Boeing. Without world class engineers Boeing will
soon find themselves without competitive products. Moreover, there's
a huge margin between how much value different engineers produce, so
this kind of squeeze will especially drive the best engineers away.
(Factory workers may be easily replaced, although Boeing's had trouble
there too. But dredging the bottom of the barrel for engineers is
looking for trouble.)
Perhaps even more disturbing is what this move says about the
ongoing impoverishment of the American working class. Even though
labor is a small factor in manufacturing costs, US companies (not
least Boeing) have all but destroyed any chance that factory work
will move one into the middle class (as arguably happened with my
father and many others in his generation). Engineers, on the other
hand, have traditionally been considered middle class, which made
engineering a prime career opportunity for working class children.
However, Boeing's goal here is not just to push engineering wages
into the dirt but to turn engineering into an unattractive career
path. If other companies follow suit, we're liable to wind up with
a severe shortage of the skills we need to maintain the technology
we depend on as a civilization.
Lots more can be said about this. But rather than slide down any
number of rat holes, I'd like to point your attention to today's
Wichita Eagle article on Boeing:
Alwyn Scott: Boeing still working to increase production rates:
Boeing's pace of commercial airplane deliveries slowed to 56 in
April, or 10 fewer than the month before, keeping it under the target
needed to meet its annual delivery forecast.
The company remained the world's biggest plane maker, however,
besting the 52 jets that rival Airbus produced in the month.
Investors watch jet deliveries because Boeing and Airbus receive
the bulk of the cash for jet sales when customers fly them
home. Boeing investors are particularly keen to see deliveries rise
to supply cash for share buybacks and dividends and to work off $25
billion in deferred costs associated with the 787 Dreamliner.
My emphasis: with all of Boeing's chronic problems, it says much
that their prime management focus is propping up the share price.
Those chronic problems are hinted at in following paragraphs:
Production issues at the 787 assembly plant in South Carolina
prompted Boeing earlier this year to hire hundreds of contractors and
send unfinished work to the factory in Everett, Wash., for
Boeing said it is "progressing well" in reducing production
problems in South Carolina, but declined to give details. Workers
there are due to receive a bonus this month if they meet productivity
If Boeing sustains the pace seen in the first four months of 2014,
it would deliver about 651 jets this year, well below its full-year
forecast of 715 to 725 jets in 2014. Boeing delivered 648 jetliners
So the only way Boeing can make up for the cheaper workers they
hire in South Carolina is to hire more expensive contractors to do
their work, or return that work to the higher wage workers back in
Washington that they've been trying to get away from. Like I said
above, as bad as these problems are already for assembly workers,
they'll get orders of magnitude worse with engineers. One of the
principles drilled into every engineer is the importance of getting
it right the first time. That's evidently not a trait that Boeing
expects in its management.