Boeing will transfer another 1,000 engineering jobs from the Puget Sound area to Southern California by the end of next year, the company told employees Thursday.
In the latest blow to the companys local engineering workforce, most of the group that provides technical support to airlines flying Boeing jets will move to Seal Beach and Long Beach.
Even the operations center at Boeing Field, where a team is on call 24/7 to respond to any technical issue with a Boeing airplane anywhere in the world, will move to California.
There may be further job losses among administrative staff that support the engineers whose work is moving.
Affected employees, many of them veterans of more than 20 years working at Boeing, will be offered relocation expenses to move to California, said Lynne Thompson, vice president of the customer support group.
We want as many as possible to consider coming down to California, Thompson said. Other people will find work in other places, either inside of Boeing or outside.
The move, which has been rumored for many months, is the latest and most significant in a series of engineering work transfers out of Washington state that began a year ago, soon after Boeings engineering union agreed to its current contract.
In an interview before the Thursday morning announcement, Mike Delaney, the head of engineering at Boeing Commercial Airplanes, explained the decision by outlining distinct future engineering roles for Boeings design centers in Washington state, Southern California and South Carolina.
He said engineers here will focus on developing new airplanes and building them efficiently, with the 777X project providing a new imperative of transitioning to become a true world-class composite center for advanced manufacturing and design.
Although support of Boeings airline customers is a crown jewel of the company, its distinct from this regions central mission, he said.
By having (customer support) in California, or having it outside the Puget Sound, we have an opportunity to have much greater focus and to attract and retain some of the best talent in California, Delaney said.
Moving that work out, he said, will declutter all the things we have to do up here.
Work with airline customers
The engineers in the customer support group work to maintain aircraft that are already in service with airlines.
They write and update technical manuals and in-service bulletins. They address maintenance issues, consult on the need for spare parts and if necessary send out teams to fix technical problems.
Also, on behalf of the Federal Aviation Adminstration, they attest to the airworthiness of any modifications made to a jet.
The local group is currently about 1,600 engineering staff, the majority based in two office towers in Tukwila, with some in Everett and a small team at the Boeing Field operations center.
The engineers remaining here for now will be those supporting the newest in-service jet, the 787 Dreamliner.
Sometime around 2015, the 787 support work is expected to be routine enough that it too will move down to California. The small group left here will then focus on the next new planes, the 737 MAX and the 777X, Thompson said.
'A growth strategy'
The recent drain of Boeing engineering jobs from Washington state comes amid boom times in the aviation business.
Last year saw record jet airliner orders and deliveries. Airplane production in Renton and Everett, already at all-time highs, is set to climb sharply.
And Boeing just in January committed to build the 777X here, an investment of between $7 billion and $10 billion.
That follows other recently launched new jet programs: the 737 MAX and the 787-10. In addition, the Air Force tanker is under development in Everett.
The company estimates that the 777X project alone, which won Boeing almost $9 billion in extended state tax breaks, will require a dedicated local team of 850 engineers.
That prospect means a growing need from 2018 forward for the engineers who design new planes.
Delaney said Boeings investments and its commitment to building new airplanes here show that the companys approach to the region is clearly a growth strategy.
He said that because Boeing has chosen to fabricate the composite wing of the 777X here, the company in the Puget Sound area is at an inflection point.
The real significance of that 777X win, he said, was not the assembly of the airplane but the increased scope of future engineering because the methods of fabricating a composite wing so intimately affect how the wing is designed.
In the future, Delaney said, Well fundamentally do research and development around wing fabrication here in Puget Sound.
He said North Charleston, S.C., will focus on composite fuselage technology.
And Southern California gets the aftermarket work.
Ray Goforth, executive director of the Society for Professional Engineering Employees in Aerospace (SPEEA), reacted angrily on hearing the news of the work transfer as it was announced internally.
"SPEEA specifically warned Governor Inslee that his legislation was crafted with loopholes that would allow Boeing to take the $9 billion and outsource jobs anyway, Goforth said in an e-mail. Why doesnt the governor call a special session to close the loopholes and save these jobs?
A stream of job transfers
Even before Thursdays announcement, the list of engineering jobs Boeing has earmarked in the past year to move out of the Puget Sound region had already grown alarmingly long.
Management has tagged for transfer to other sites across the U.S. the local IT engineering work, pilot training, support for out-of-production airplanes, modifications and conversions of passenger jets to freighters, work on advanced airplane concepts and, most recently, the companys research and technology unit.
The airline support work previously shifted away supporting out-of-production airplanes such as the 757 is arguably distinct from the regions core work of manufacturing airplanes.
But for this latest transfer, these engineers work to support the airplanes currently built by Boeing in Everett and Renton and so may need to consult with people on those jet programs.
Delaney said the customer support engineers will still interact with Airplane Programs up here.
Theyll just be doing it from California, Delaney said.
Attrition already cut ranks
The local customer support engineering group had already dwindled considerably through attrition.
We havent hired anyone in my organization in two years, said one engineer in the group, who asked to be anonymous. We used to occupy two floors of this building. Now we have half of one floor.
Everyone I know is looking for a job, he said. Morale is the worst Ive ever seen.
He added that response times for customer projects have been moving out longer and longer because we dont have the resources.
Thompson said she deliberately let the local staffing level fall but denied any impact on the level of customer support.
Knowing this was going to happen, I stopped hiring, she said. I didnt want to impact any more individuals in Puget Sound than I had to.
She said her group has always been under the shadow of the airplane programs here and that the rationale for moving the work is to create in Southern California a site thats focused on the customer.
Whereas her unit here is scattered around the Puget Sound region, in Southern California the plan is to set up a new 24/7 operations center with the various support teams arranged right around it, she said.
It will deliver a superior customer experience, Thompson said.
The first step in the migration, she said, will be to hire new people in California in order to do the knowledge transfer to that team down there.
After the third quarter, the move of people from here will begin and the process will complete next year.
Warning during SPEEA talks
The engineer who asked not to be identified said many in his group are convinced Boeing is trying to get rid of older, more expensive veterans in favor of hiring younger people in California.
He also noted that the companys engineering facilities in Seal Beach and Long Beach are not unionized.
During contract talks with SPEEA in the fall of 2012, Delaney warned publicly that an expensive contract would lead to job transfers out of state.
In the interview, he denied any connection between the subsequent work transfers and that warning.
He said he devised the strategy of geographic diversification much earlier, soon after taking his current position in January 2010.
Delaney also denied any age discrimination.
That is a fabrication by people trying to rationalize the situation they are in, he said.
Our worry is the opposite, Delaney said. If we do not take action, our large group of baby boomers will retire and we wont have replenished the organization.
He said competition from Airbus is fiercer than its ever been and so management has to be absolutely fanatical about driving down unit costs.
Nevertheless, he said, management recognizes that all the major problems with the 787 including the early flaw found in the join between the wing and fuselage; the repeated issues with the power generation system; and the overheating batteries were solved not by the partners that built the affected structure or supplied the faulty parts, but by Boeing engineers.
There are many parts of this business that are experience based, Delaney said.
He said roughly a third of the companys engineers are in Washington state. We want to leverage the other two-thirds, he said.
The customer support engineering group is part of a larger unit called Commercial Aviation Services that has various smaller groups based here providing services to airlines.
Delaney declined to say whether more transfers are in the works.
We study everything, he said. We make strategic decisions when the time is right.
At a discussion of the future of aerospace engineering at Seattles Museum of Flight Tuesday night, attended by a contingent of veteran Boeing engineers, a common theme among speakers on the panel was that small groups of engineers working closely together provide the best hope of innovation and efficient airplane development.
There was a consensus that attempts to collaborate across geographic and organizational boundaries have not worked well.
Yet Boeing is choosing now to disperse engineering resources that for so long were concentrated here.
Delaney said Boeing cannot do things today the way they were done more than 40 years ago when it developed the first 747. Airplanes and production systems are more complex now, he said.
People pine for the days that no longer exist, Delaney added.
Dominic Gates: 206-464-2963