This December 2019 photo shows workers walking past a Boeing Co. sign as they leave the factory where the company’s 737 Max airplanes are built in Renton. (AP Photo/Ted S. Warren, file)

This December 2019 photo shows workers walking past a Boeing Co. sign as they leave the factory where the company’s 737 Max airplanes are built in Renton. (AP Photo/Ted S. Warren, file)

Lawmakers: Protecting jobs is priority in any Boeing bailout

“The money has to be used for the continued operation of the company,” said Rep. Rick Larsen.

By Dominic Gates / The Seattle Times

Stunned by the rapidity with which the coronavirus crisis has gripped America in a chokehold, Congress on Friday scrambled to agree on a massive financial-relief package that could prevent economic collapse on top of the mounting toll in human lives.

But key players insist that any such government aid — while preventing permanent damage to the nation’s infrastructure, including the aerospace-manufacturing sector topped by Boeing and its major suppliers — should come with conditions that preserve the workforce rather than bailing out shareholders for their losses.

“The money has to be used for the continued operation of the company,” said Rep. Rick Larsen, D-Everett, who chairs the Aviation Subcommittee of the U.S. House Transportation and Infrastructure Committee. “It’s not to be used for anything else. Executives don’t get bonuses. Shareholders don’t get dividends. There are no share buybacks.”

Sen. Maria Cantwell, in a phone interview during a break from the U.S. Senate negotiations, said Senate Republicans had already accepted as inevitable that any deal must cap executive pay and end dividend payouts and share buybacks.

Boeing, reading the tea leaves and no doubt also anxious to preserve cash, said Friday afternoon that it will suspend dividends and share buybacks until further notice, and will not pay CEO Dave Calhoun and Board Chairman Larry Kellner for the rest of this year.

Worse than devastating

The airlines and the broader aerospace industry that builds and maintains the jets are among the businesses most at risk of collapse from the severe economic shock the coronavirus has delivered.

Larsen, in an interview, cited data from the airlines pointing to a dramatic financial hit: American Airlines has canceled more than 55,000 flights next month and grounded 450 aircraft; a couple of days ago, United flew 144,000 people around the country, compared to 1.5 million people on the same day a year ago; and JetBlue is taking in less than $4 million per day, compared to $22 million per day a year ago.

That threatens the entire U.S. aviation sector, and reaches through to Boeing and its suppliers as the airlines don’t want to take new airplanes. It also hits aircraft-repair stations like ATS in Everett as airplanes not flying don’t come in for maintenance.

Bad as it is now, it may get worse. If more states move to shelter in place, air traffic may reduce from a trickle to a virtual stop. And Boeing could be forced to at least temporarily shut down production in its local factories, where the workforce is already fearful of infection.

Larsen spoke of this prospect in dire terms.

“Whatever decision is made, it’s got to be made to ensure the safety of the workforce,” he said. “But the impact of COVID-19 on the economy is already devastating. I don’t know what word is worse than devastating, but that’s what it would be if production had to shut down even for 14 days.”

Eric Fanning, CEO of the Aerospace Industries Association that represents Boeing and most of its major U.S. suppliers as well as its competitors on the defense side, said the country and the aerospace companies face twin challenges. “We have to make the right decisions to protect people’s health,” he said. “But we also have to protect the jobs so they are there when we get through this.”

Fanning said the industry supply chain supports thousands of companies and about 2.5 million U.S. jobs and that the threat from the coronavirus already “looks way bigger than 9/11 was.”

He said 70% of money paid to Boeing flows through to its suppliers.

“Our focus is to keep those companies going and the workers working,” Fanning said. “The way to keep the supply chain sound is to keep it working.”

Keep the workforce

Even the local Machinists union recognizes Boeing’s dilemma about trying to continue work while at the same time facing the growing threat from the virus that as of Thursday had infected 18 of its local workers.

In a note to union members Friday, Jon Holden, president of the International Association of Machinists (IAM) District 751, said he has received calls from members frustrated the union has not called for Boeing to shut down operations in Puget Sound.

“This union membership includes 32,000 families that depend on their paychecks to survive,” Holden told his members. “If we demand that operations be shut down, we have no way of knowing how long a shutdown will last and how much pay members will receive.”

This dilemma is at the heart of the debate over the economic-relief package now being negotiated in Congress.

Larsen said House Democrats will insist upon two basic principles: “It has to protect the workers. And taxpayers have to get their money back.”

He said Congress has learned from the mistakes of the relief package airlines got after the 9/11 attacks, when many of the carriers later went into bankruptcy anyway, cutting wages, handing pension liabilities to the government and outsourcing work of airplane repair and catering.

“We don’t want that to happen again,” Larsen said. He said the House bill will require that companies that take the assistance “continue to pay their workers and provide benefits and continue their obligations to people on pensions.”

And he said Democrats will also seek to insert some protection for workers in the event of a subsequent bankruptcy.

Cantwell said that “if we focus on the long-term sustainability of that workforce in the U.S., it will help us in the long run to keep the manufacturing base.”

Fanning, who represents the large companies now seeking this federal assistance, agreed, and said maintaining worker employment is essential through any temporary production shutdown.

He said the companies in his organization “all want to keep their workforce, at work if possible, but also employed even if not at work.”

Talk to us

More in Herald Business Journal

Nuno Taborda
Former Rolls Royce executive to lead Everett aerospace firm

magniX, which builds electric aircraft motors, has hired Nuno Taborda as its next CEO.

Janette Burk and Timur Keskinturk are fighting to keep their coffee shop location in Alderwood Mall. Photographed in Seattle, Washington on May 23, 2022.  (Kevin Clark / The Herald)
A Turkish café served coffee next to Starbucks. They were told to move.

After years, Kismet Turkish Cafe Bakery’s owners say they were told to relocate in Alderwood mall due to a nearby Starbucks kiosk.

Epic Ford on the corner of 52nd Street and Evergreen Way in Everett is closed. The dealership has been in business for more than 50 years. (Janice Podsada / The Herald)
After 50 years, Everett’s Epic Ford dealership closes shop

It opened in 1971, when gas guzzling muscle cars like the Ford Mustang still ruled the road.

Dan Bates / The Herald
When Seattle Genetics founder, Clay Siegall lost his father while in college, he switched from studying for an MD to studying for a PhD., and a goal to treat cancer patients.  His efforts are paying off in lives.
Bothell biotech CEO resigns after domestic-violence allegation

Clay Siegall co-founded Seagen, which develops therapies for cancer patients. He’s accused of attacking his wife.

FILE - A sign at a Starbucks location in Havertown, Pa., is seen April 26, 2022. Starbucks says it will pay travel expenses for U.S. employees to access abortion or gender-confirmation procedures if those services aren't available within 100 miles of a worker’s home. The Seattle coffee chain says, Monday, May 16, 2022, the benefit will also be available to dependents of employees enrolled in its health care coverage. (AP Photo/Matt Rourke, file)
Starbucks will cover travel for workers seeking abortions

Amazon and Tesla also will provide the benefit. Walmart and Facebook have stayed silent.

A barista pours steamed milk into a red paper cup while making an espresso drink at a Starbucks coffee shop in the Pike Place Market, Tuesday, Nov. 10, 2015, in Seattle. It's as red as Santa's suit, a poinsettia blossom or a loud Christmas sweater. Yet Starbucks' minimalist new holiday coffee cup has set off complaints that the chain is making war on Christmas. (AP Photo/Elaine Thompson)
Interfaith group asks Starbucks to drop vegan milk surcharge

They say the practice amounts to a tax on people who have embraced plant-based lifestyles.

FILE - In this Monday, March 1, 2021 file photo, The first Alaska Airlines passenger flight on a Boeing 737-9 Max airplane takes off on a flight to San Diego from Seattle-Tacoma International Airport in Seattle. A Boeing pilot involved in testing the 737 Max jetliner was indicted Thursday, Oct. 14,2021 by a federal grand jury on charges of deceiving safety regulators who were evaluating the plane, which was later involved in two deadly crashes. (AP Photo/Ted S. Warren, File)
Alaska Airlines to keep canceling flights at high level for weeks

Flight cancellations since April will continue. The chaos has been damaging for Seattle’s hometown airline.

FILE - An airplane flies past the Boeing logo on the company's headquarters in Chicago, on Thursday, Dec. 20, 2001. Boeing Co., a leading defense contractor and one of the world's two dominant manufacturers of airline planes, is expected to move its headquarters from Chicago to the Washington, D.C., area, according to two people familiar with the matter. The decision could be announced as soon as later Thursday, May 5, 2022, according to one of the people. (AP Photo/Ted S. Warren, File)
Boeing expected to move headquarters from Chicago to DC area

The move would put Boeing executives close to their key customer, the Pentagon, and the FAA.

This 3D rendering shows Sila's 6000-foot facility in Moses Lake, to be used to manufacture lithium-ion anode battery materials. (Business Wire)
New factory in Moses Lake will bring hundreds of new jobs

The plant will manufacture lithium-ion anode battery materials for cars and cellphones.

Dr. David Kirtley at the new Helion headquarters, Antares, in Everett, Washington on Wednesday, Jan. 19, 2022  (Olivia Vanni / The Herald)
Helion Energy: New Everett company has the sun in its eyes

The firm is the winner of a new award by Economic Alliance Snohomish County, called Opportunity Lives Here.

Marysville Mayor Jon Nehring is this year's winner of the Henry M. Jackson Award given by Economic Alliance Snohomish County. Photographed in Marysville, Washington on April 25, 2022. (Kevin Clark / The Herald)
Jon Nehring: Longtime Marysville mayor who’s nurtured growth

He’s helped steer the city’s transformation and is winner of the Jackson Award by Economic Alliance Snohomish County.

Monti Ackerman, recipient of the John Fluke Award, is pictured Thursday, April 28, 2022, outside his office in Everett, Washington. (Ryan Berry / The Herald)
Monti Ackerman: A passionate volunteer and calculator whiz

The Fortive executive is the winner of this year’s Fluke Award by Economic Alliance Snohomish County.