Business
10:47 am
Wed April 23, 2014

Boeing CEO: Moving Engineering Jobs Out Of Wash. Will 'Strengthen Our Company'

Boeing Chief Executive Jim McNerney says he understands that shifting engineering work away from Washington state may be controversial, but he says these moves “strengthen our company, strengthen our engineering capability.”

Over the past year, the Chicago-based aerospace giant has announced several transfers of engineering jobs that affect thousands of Puget Sound-area employees. Most recently, the company said earlier this month that it will move 1,000 engineering positions to southern California as it makes that region the center of customer support for airplanes currently in service.

"There is a tension between engineering work being done right next to the product on one hand, and on the other, doing it in the place that has the best engineers for the task at hand, our so-called 'centers of excellence,'" McNerney said. "It's an equation that we're balancing all the time."

Ray Goforth, executive director of the Society of Professional Engineering Employees in Aerospace, has argued the company is moving jobs away to replace older, more expensive employees with younger, cheaper workers. A company spokesman called the job transfers a "business strategy, not a labor strategy."

Earnings

Boeing on Wednesday reported that first quarter sales climbed 8 percent to $20.5 billion, and the company delivered 161 airplanes, including 18 787 Dreamliners.

Net income fell 13 percent to $965 million, partly due to expenses related to retirement plan changes. Excluding certain pension charges, earnings were $1.76 a share, topping the consensus estimate of analysts.

In early January, the company reached a long-term contract extension with unionized machinists in Washington state that phases out workers’ defined-benefit pension plan and shifts them to a defined-contribution retirement plan. Boeing is also making the same change for many non-unionized employees.

McNerney says that after an initial transition period, 80 percent of the company’s workforce will be on a 401(k)-type retirement plan instead of a pension. That’s up from 15 percent at the beginning of this year.

“These changes are strategic and fundamental to the way we’re structuring the company to reduce risk, ensure the health of our balance sheet and enhance our competitive position, all while providing employees with attractive and competitive benefits and further driving long-term shareholder value,” McNerney said on a conference call with analysts and reporters.

But many machinists are still angry about the change in retirement plan and say it will cost them tens of thousands of dollars, if not more, in benefits. They were asked to vote on a contract extension at a time when they had no strike authority, and the proposal squeaked by with 51 percent of the vote.