Interesting article on the changing economy.
Sunday, March 12, 2000, 11:59 p.m. Pacific
Boeing strikers swap picket line for new jobs
by Kyung M. Song
Seattle Times aerospace reporter
Boeing engineers and technicians walked out on strike 32 days ago, complaining
they are underpaid and underappreciated. A growing number have kept right on
walking - into new jobs with fat pay raises and new-found respect.
"I spent 11 years telling myself that money didn't matter," said Kelly Bunn, a
Boeing engineer who defected to Metapath Software International in Bellevue in
January, on the eve of the strike, for a 30 percent boost in pay. He said Boeing did
little to entice him to stay.
"Their opinion was, `If you can make more, leave,' " he said. "So I did. They
never counteroffered."
Stories like Bunn's are becoming more common as Boeing squares off with a
surprisingly stubborn group of engineers and techs. The Society of Professional
Engineering Employees in Aerospace (SPEEA) has drawn the world's attention by
staging one of the largest white-collar strikes in history, and it shows little sign of
wavering now.
That stubbornness is driven in part by numbers - Boeing last week imposed its final
contract offer, raising salaries an average of 5 percent. That's small change to
people like Bunn, who can walk away for six times as much.
But the union's apparent resolve also speaks of something Boeing can't counter - a
red-hot job market that gives highly skilled engineers plenty of options and plenty
of patience.
Technical talent and some tolerance for risk are valuable commodities in the Puget
Sound economy. Striking Boeing workers have moved on to Internet start-ups,
software firms, aerospace contractors and even Nordstrom.
Their departures testify to something Boeing acknowledges - salaries at the
aerospace giant, which for years led the region, have fallen behind in the high-tech
boom.
And the Boeing veterans who part for other jobs are giving their striking
co-workers a boost of confidence that is helping them hold the union line. And who
needs a Hoffa-sized strike fund when jobs with stock options abound?
"Everyone has been putting together their resumes last month," said Joe Hopkins,
who left Boeing two days before the strike began. Hopkins joined an Internet-based
engineering company, Andrews Space and Technology, and netted a slightly better
salary plus stock options and bonuses.
Yet Boeing seems undaunted by the competition for the "brains behind its planes."
All strikes eventually end, and most employees return to work, Boeing spokesman
Peter Conte said last week.
The company argues that it made progressively better offers to the union, and that
the final contract is fair and competitive within the aerospace industry. To give in to
the union's demands would "be a sure-fire way to go out of business," said Jerry
Calhoun, vice president of employee and union relations, in a recent interview.
The company has warned that its first-quarter profits could be hurt, and that
second-quarter deliveries could be delayed.
But the company may be embold ened because airplane production is slowing after
last year's record output. Conte, the company spokesman, denied a widely
circulated rumor that Boeing has plans to pare its engineering force by 25 percent
and is letting the strike do some of that work.
"Maybe Boeing feels they have some time," said Robert Toomey, an analyst with
Dain Rauscher. But the strike "is starting to bother me now."
Boeing said it doesn't know how many engineers and technicians have quit since
the strike began Feb. 9. The union officially counts about 40, but believes there
have been far more. The union has advised departing workers to withhold
resignation letters so they remain eligible for any bonuses Boeing offers as part of a
contract settlement.
One thing is certain: SPEEA workers may be the best-educated work force to ever
stage a major strike. Of the 12,000 Boeing engineers in the Puget Sound area, 98
percent are college graduates; nearly a quarter of the total hold a master's degree or
higher. Among the 8,600 technicians, 75 percent have bachelor's or associate
degrees or have attended college.
Alan Mulally, president of the commercial airplane group, recently praised his
engineers and techs as "the world's best."
"I can't wait for them to come back," he said.
Some SPEEA workers already have left Boeing for similar jobs at airlines,
suppliers and the Federal Aviation Administration.
But if an engineer wants to build commercial jets, "Boeing is the only game in
town," said Rich Reed, a veteran engineer who left the company last week. He did
so reluctantly, noting the joy that comes with the creative parts of the job.
Reed, 48, gets a thrill whenever he sees a fighter jet scream overhead. "Even
commercial airplanes, which are just big buses, I think they're just beautiful," Reed
said.
The company counts on that emotion, as much as money, to lure and keep skilled
employees. It also cites a century of stability - cyclical layoffs and call-backs
notwithstanding - that high-risk start-ups can't match.
But many Boeing engineers are finding career options outside aerospace.
Only 10 percent of Boeing engineers majored in aeronautical or aerospace
engineering. Mechanical, electrical and software engineers can work in a variety of
fields: building skyscrapers, running computer systems or consulting for
businesses.
Dan Mackley gave notice at Boeing the day after the strike began. He spent 15 years
with the company, most recently as a software engineer on the Joint Strike Fighter
program for the Pentagon. He began thinking seriously about leaving nine months
ago. He said he was finally pushed out the door by what he felt were unacceptable
contract offers and by the company's rigidity during negotiations.
"Boeing is being absolutely arrogant in handling of this union," said Mackley, who
was paid $66,000 a year. "The engineers were getting treated poorly. That made me
walk."
On March 1, Mackley started his new job at Freeinternet.com, a service provider
based in Federal Way. He said he got a big raise plus stock options.
With competition like that, Boeing and other traditional companies face a
challenging future. Even if Boeing gave its engineers decent raises every year,
Mackley said, "I don't think they'll ever catch up."
Boeing acknowledges that its salaries lag behind other companies'. It estimates that
average salaries for engineers and technicians are 6 percent and 4 percent below
market, respectively.
Boeing's said its contract offer is a serious attempt to narrow that gap, but that it has
to work within the economics of the aerospace industry to remain competitive. The
company said wages industrywide are expected to rise by 4.5 percent next year.
SPEEA contends the engineers need a 13 percent raise, and the technicians need 12
percent, to catch up to industry averages. Boeing argues those comparisons are
unfair because the union includes wage surveys from non-aerospace industries.
But competition for Boeing engineers and techs is coming from non-aerospace
industries, giving the union's assessment some weight.
Rob Balen started job-hunting last November, just as SPEEA and Boeing were
negotiating over the first contract offer. Balen fished for work with Internet
start-ups but struck out because he lacked enough computer programming
experience. He recently landed a job as an information technology analyst at
Nordstrom.
He figures his Boeing salary was 10 to 15 percent less than he could make
elsewhere. But Boeing offered good benefits, including an education program
through which he earned an MBA at the company's expense.
"I guess what I would tell people is that if you're really into planes, it's a fun place
to work," said Balen, whose background is in civil engineering. "As far as making
a great living or advancing really high, it might not be your first choice."
Last week, Boeing implemented the pay raises that were part of a contract offer
SPEEA workers declined to ratify. Raises have been given to the 25 percent of the
21,000 SPEEA-represented workers who did not join the strike. The union claims
only 10 percent of the workers are crossing picket lines.
Technicians received raises of at least 3 percent, with an additional 2 percent
available for merit raises.
Engineers were not guaranteed any across-the-board money; rather, supervisors
granted discretionary raises from a pool totaling 5 percent of the payroll and made
another 3 percent available for those receiving promotions or working in
high-demand disciplines such as software development.
Boeing engineers earn an average of $63,000, and technicians make about $45,000.
The union says those averages are skewed to the high side because Boeing has laid
off so many lower-paid newer hires in recent years.
"They're going to have to do something to be attractive to younger software
engineers," said Aaron Zedonis, a 25-year-old software engineer who received a
recruiting call the first day of the strike and started his new job a week later.
Zedonis now works at an Internet start-up company, Enthusiasm.com, making 15
to 20 percent more than he made at Boeing in salary plus stock options.
The flow of workers from Boeing to other companies does more than bolster the
strikers. It exacts a toll on the company.
When Rich Reed quit his $71,000-a-year job as a Boeing systems engineer, the
company lost a decade's worth of intuition and experience.
Reed was a member of a two-man team developing part of the cockpit display
systems on the 767-400 jet. But last week, Reed returned to his former employer,
Rockwell-Collins, an avionics company. Reed said he left because he was worried
about Boeing's corporate direction, and because it seemed to him that the company
began to devalue the work of engineers.
Rockwell-Collins offered Reed a handsome raise and job stability - a change from
Boeing's long history of feast-or-famine hiring cycles. He said whoever replaces
him at Boeing won't be as familiar with the 767-400's fuel, oil, temperature and
engine speed gauges as he is.
"Any engineer can take my place, but I've been working on this system for 10 years
now," Reed said. "They've lost a lot of experience."
Dan Hartley, a former SPEEA president, contends that not only has Boeing fallen
behind on salaries, but it also has stopped competing nationally for engineering
talent. He warned that it would take Boeing years to get full value out of new
engineers.
"It's the old people who are far more productive than the younger people," said
Hartley, who joined Boeing in 1961.
Of course, not all SPEEA workers want to leave Boeing. Many people work at
Boeing, the sole American maker of commercial jetliners, because they love
airplanes. Contractors may build landing gears or jet engines. Only Boeing builds
the whole plane.
After missing a month's pay while on strike, avionics engineer Jim Hayes is
reluctant to go job-hunting. Hayes, 54, has spent 32 years in the aerospace
industry, including 17 years with Lockheed.
Given his age and his desire to stay in Seattle, "I don't have as many options" as
some of his co-workers, said Hayes, an avionics engineer.
SPEEA estimates that striking workers already have given up $88 million in lost
wages. But the solidarity on the picket lines hasn't wavered noticeably.
Boeing may have some time to wait them out. The company is in the midst of a
periodic work-force purge. After a hiring frenzy in the mid-1990s, Boeing in the
past two years has cut 43,000 jobs nationwide, most of them in the Puget Sound
area. It might trim up to 14,000 more jobs by December.
After delivering a record 620 jetliners in 1999, Boeing's production is expected to
fall by 20 percent this year. That means fewer workers are needed, although Boeing
may have to put people on overtime later to catch up on deliveries missed during the
strike.
Dave Patzwald, a negotiator for engineers, predicted that Boeing will lose at least 10
percent of its engineers and technicians because of the strike, as workers take offers
now or make contacts that will play out later.
"We haven't seen a lot of people leave right now because they're waiting for the
bonus," Patzwald said.
SPEEA is seeking a 10 percent lump-sum signing bonus, to be granted to returning
workers, like the one that Boeing gave the International Association of Machinists
and Aerospace Workers last year.
Patzwald, an avionics engineer, said 20 of his co-workers left Boeing last year.
They took with them valuable specialties in such areas as early crash-warning
systems and designing more useful cockpit controls for pilots.
"They are irreplaceable," Patzwald said. "The cost to the company is just
enormous." |
