Boeing yesterday said it would be cutting more engineer jobs. Boeing’s engineers’ union, SPEEA, was quick to fire back.
The following message was sent today from Mike Delaney, VP of Engineering for Commercial Airplanes, to all engineering managers.
Employment actions being taken to meet the challenges ahead
My message today provides context and background on actions we are taking regarding the employment level in BCA Engineering.
As we move from a lengthy period of non-recurring development efforts, BCA Engineering will require fewer employees by year-end. Overall, we must reduce our Engineering employment level by 1,500 to 1,700 positions during 2013.
We have already taken action. During the past year, we significantly scaled back external hiring to maximize redeployment opportunities across the function. Since last fall, we also have steadily reduced use of contract employees. Almost 700 contract employees have left the payroll since October 2012, and we will continue that effort where appropriate. Additionally, attrition associated with retirements and other departures has reduced employment. That, too, will continue.
Unfortunately and unavoidably we must take additional actions that will impact some direct employees. Beginning tomorrow and through the rest of 2013 we will issue 60-day layoff notices to as many as 700 employees in our function. On Friday, approximately 100 individuals in the Manufacturing Engineering (ME) skill in the Puget Sound region will receive notices. Those employees are the first to receive layoff notices because they directly support the production system, which has been stabilizing in parts of our major development programs. You may recall that several hundred hourly employees in Manufacturing & Quality also received notices.
This has been a difficult decision. We know layoffs impact individuals and families.
We are taking these actions now for two reasons. First, completion of non-recurring development work on the 747-8, 787-9 and the KC-46 Tanker will result in lower overall Engineering employment requirements. But also, potential development programs for the 787-10X and 777X, which might have provided opportunities to avoid these layoffs, have not been formally approved and launched.
I realize this news may be surprising. Commercial Airplanes has been on an upswing for several years. We continue to ramp up production on our major programs, and the prospect for future development work is very positive. The challenge we are facing is that those yet-to-be-launched programs are too far out for us to maintain present levels of employment.
We hope to mitigate the number of layoffs through the reductions we are making in contract labor, by natural attrition and by not filling many open positions. As we have always done, Boeing will support employees with layoff benefits and career-transition services.
We regret the disruption this situation may cause for some employees and their families but the prudent actions we are taking now will position us to remain competitive and provide future opportunities.
As our management team, please make yourself available for questions and conversations with your team about this situation.
Thanks for all you do for Engineering and Boeing.
Boeing CEO Jim McNerney is cited in the Puget Sound Business Journal on labor unions, China and other stuff from his appearance at an aerospace summit.
In the article, McNerney tries to take a moderate stance on unions. But just this week Boeing announced it is moving SPEEA and other union jobs out of Puget Sound, here and here. The moves resulted in a blast from Seattle Times columnist Jon Talton here, and our response here.
Production is booming in Seattle’s Puget Sound, but it’s clear to us that Boeing is engaged in a long-term strategy to build up Charleston as a major, second production plant–not just a 787 production line. We see Charleston-as-to-Seattle as Hamburg-is-to-Toulouse some day. We don’t see Everett shutting down (at least not in our lifetime) because there is too much there. We think Renton is more at risk, once there is a New Small Airplane finally designed to replace the 737–but this is well into the next decade.
The question over where the 777X will be be built is, to us, a little more vexing. Logic says build it here, given the similarities between the baseline 777 and the derivative 777X. This is no different in principal than the 737NG and the 737 MAX–it would have been silly to build it elsewhere.
But McNerney’s comments about labor in the Business Journal notwithstanding, the anti-union sentiment at Boeing Corporate is obvious for all to see.
The future of the 747-8 is in jeopardy. Boeing said as much in its 2012 10K:
It’s over–for four years. From SPEEA:
SEATTLE – Technical workers at The Boeing Company have approved a new four-year contract, putting an end to negotiations that have lasted nearly one year.
Votes tallied Monday (March 18) by the Society of Professional Engineering Employees in Aerospace (SPEEA), IFPTE Local 2001 show Technical workers voted 4,244 to accept and 654 to reject. Union negotiators told members a second rejection would likely result in a strike as Boeing was refusing to move on all issues.
Union members were voting on a contract offer that was identical to the offer the 7,191 Technical workers narrowly rejected and the larger Professional Unit of engineers narrowly accepted on Feb. 19. While engineers and technical workers bargain at the same time, the contracts are separate and independent agreements.
The new contract extends the terms of the previous contract, including 5% annual salary increase pools, no increases to employees for medical coverage and an increase to the retirement benefit. By the end of the new agreement, SPEEA represented technical workers, and also the engineers, will have received eight straight years of 5% salary increase pools, with guaranteed minimum wage increases each year of the contract.
The major area of contention during negotiations was the defined benefit retirement pension plan. While overwhelming member support and workplace action helped union negotiators continually get Boeing to improve most elements of the contract offer, the company steadfastly refused to move away from eliminating the pension for new technical workers hired after March 1, 2013. Like most new employees at Boeing, technical workers and engineers will now receive the company’s “enhanced 401(k)” and not the defined benefit pension.
SPEEA and Boeing started negotiations in April 2012. Technical workers have been without a contract since Nov. 25.
While the majority of covered employees are in the Puget Sound region of Washington state, these contracts include employees in Oregon, Utah and California.
From Boeing’s Ray Conner:
Techs approve contract offer; SPEEA negotiations conclude
Tonight, technical workers represented by SPEEA approved Boeing’s contract offer, bringing to a close negotiations that formally began almost a year ago. In February, SPEEA-represented engineers approved the same offer which is now in place until October 2016.
We’re pleased to have settled a contract that rewards SPEEA-represented employees for their contributions to the company’s success while maintaining a superior package of retirement and health care benefits. The contract also establishes a new retirement savings plan for future new hires. The plan is market-leading among our peer companies in the aerospace industry and promotes our competitiveness going forward.
The votes by technical workers and engineers in recent weeks will allow us to come together and focus on the challenges and opportunities we face this year. We’re moving forward with an excellent team in place.
tomorrow night: Update: Tomorrow is now today; the SPEEA vote results will be counted tonight (Monday).
The revote by SPEEA technical workers will be counted Monday night. Technical workers rejected the best and final offer from Boeing last month and authorized a strike. The professional engineers accepted the contract but authorized a vote, a technical maneuver that became moot with contract acceptance.
The issue leading to rejection was Boeing’s desire to shift from a defined pension plan to a defined contribution for new employees.
Boeing refused to improve its offer. Without the backing of the professionals, we think the technical workers will vote to approve the contract this time.
Vote results will be well into the evening.
Big Airbus-LionAir Order: At long last, the huge order we first referred to September 24 last year appears ready to be announced Monday, Paris time. Reuters, The Wall Street Journal and French papers are reporting the deal will be announced tomorrow. It’s for A320s (neos, maybe some ceos) and breaks Boeing’s monopoly with LionAir and the 737/737MAX. This is a huge win for Airbus.
Update, Feb 20: SPEEA issued corrected vote totals; see below.
If negotiations fail to reach a contract for the Technical unit and they were to strike, the Professional unit cannot strike but neither can they replaced the Techies. SPEEA says production would come to a halt in the event of a strike.
Here are the results:
18,043 votes cast.
Do Authorize Strike:
Do Not Authorize Strike,
Do Authorize Strike:
Do Not Authorize Strike:
The Tech group will return to the bargaining table in hopes of reaching a new agreement.