Puget Sound Boeing engineers: irreplaceable?

  • By Michelle Dunlop Herald Writer
  • Wednesday, October 3, 2012 9:04pm
  • Business

EVERETT — Would the Boeing Co. cut a deal that guarantees future work here for the engineers and technical workers union?

Not likely.

“They turned that down” when the union proposed it, said Ray Goforth, executive director of the Society of Professional Engineering Employees in Aerospace.

SPEEA members did some turning down of their own this week, resolutely rejecting Boeing’s first complete contract offer. Boeing and SPEEA negotiators met Tuesday but aren’t expected to meet again until next week.

A key issue in the labor dispute is just how indispensable Puget Sound-area SPEEA engineers are to Boeing’s future.

As the company’s 22,765 workers at Everett, Renton and other locations in Western Washington pondered the contract offer during a 10-day voting period that ended Monday, they heard repeated inferences from Boeing officials about a shift of engineering and technical work to other locations within the company due to climbing payroll costs in the Puget Sound region.

A Boeing labor contract that guaranteed future work here in exchange for, say, greater medical cost-sharing or lower raises wouldn’t be unheard of.

Late last year, the company struck a deal with the local district of the International Association of Machinists and Aerospace Workers that included a promise that workers in Renton would build the 737 MAX. In return, the Machinists took on more health care costs and agreed to drop a federal labor complaint against Boeing.

Boeing spokesman Doug Alder declined to comment on whether a work guarantee could be a possibility in the case of SPEEA. As for the union, “we would certainly have the discussion with them,” said Bill Dugovich, communications director for SPEEA.

Analyst Scott Hamilton of Leeham Co. doesn’t foresee a similar pact for Boeing’s engineers and technical workers, despite a pipeline full of crucial development work.

“Boeing is already moving engineering work out of the Puget Sound area anyway,” Hamilton said.

The engineers and technical workers who belong to SPEEA already are at work on programs like the 737 MAX, the 787-9 and the 767-based Air Force aerial-refueling tanker. On the horizon are the 787-10 and the 777X.

“I don’t think it matters what new airplane comes along, Boeing has a shortage of engineers,” Hamilton said. “We don’t have enough engineers in America, let alone here in Washington,” to take on all the work, given the number of engineers who are expected to retire in the next several years.

Chicago-based Boeing, said Alder, has enough engineers in the Puget Sound region to take on development of new programs.

But Mike Delaney, vice president of engineering for Boeing Commercial Airplanes, has said that if costs aren’t kept in check, the company will move work to other Boeing sites.

Delaney and SPEEA’s Goforth agree that as many as 5,000 engineers will retire over the next five years. In an interview in early September, Delaney expressed confidence in Boeing’s ability to replace them.

But Goforth thinks Boeing will have too few seasoned ones, experienced engineers who are crucial to important future design projects. There would be more such engineers in-house had the company not outsourced so much technical work on the 787-8, he said.

That outsourcing, the union contends, also led to many of the problems Boeing had developing the 787, and serves as an example.

“They had to send engineers and technical workers (from the Puget Sound area) around the world to fix the 787,” said SPEEA spokesman Dugovich.

More recently, Goforth pointed out, Boeing sent engineering work on the 737 MAX to its Long Beach, Calif., site. Boeing engineers there ultimately had to hire contractors to help, he said.

“They’re already moving work. It costs more and takes longer,” Goforth said.

Delaney told The Seattle Times that 30 percent of the work in his unit already is performed outside of the Puget Sound region.

Regardless of where it’s performed, more engineering work is on the way. Uncertain is how soon the company will officially launch programs to develop derivatives of the 787 and 777.

Analyst Hamilton suggested last week that Boeing soon could ask its board of directors for approval to offer the 787-10X to customers. The 787-10X is a larger version of the Dreamliner that likely would seat between 300 and 350 passengers.

In September, Ray Conner, the new president of Boeing Commercial Airplanes, called the 787-10X a “really straightforward derivative.” Of the 777X, he said: “That’s a bigger work statement.”

Analysts differ on how quickly Boeing needs to devise the 777X, which is seen as an answer to Airbus’ A350-1000.

Richard Aboulafia, an analyst with the Teal Group, criticized Boeing’s indecisiveness in late August. The analyst pointed to the last time Boeing “rested on its laurels” — when the company hesitated in replacing the 767. That allowed Airbus to develop the A330.

“The market preferred newer products, and the A330 won big,” Aboulafia wrote.

Analyst Hamilton notes that Airbus’ A350-1000 has been delayed to 2017.

“There is no rush to make immediate decisions for the (777)X,” he wrote.

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