Boeing Co. expects to save more than $100 million a year by transferring 1,100 research engineering jobs out of Washington state’s Puget Sound region and an additional 200 from Southern California to lower-pay locations, according to internal Boeing documents reviewed by the Seattle Times.
The documents show the company is willing to spend more than $150 million to implement the plan, laying off people and closing research labs in Washington while moving the work to new engineering centers in Huntsville, Ala.; North Charleston, S.C.; and St. Louis.
For each engineering job that is transferred, management projects average annual savings of $60,000 in pay and benefits.
The restructuring of the Boeing Research & Technology unit is just one piece of Boeing’s broader push since the spring of 2013 to shift multiple engineering units away from the Puget Sound region. So far it has announced that 4,300 engineering jobs are to be moved.
Boeing employees and some industry experts warn that these plans have already undermined the morale of the entire engineering workforce in Washington state and that the company is at serious risk of losing essential expertise.
But Boeing is moving ahead. The stark financial calculus outlined in the BR&T documents suggests cost-cutting is the prime driver.
Boeing vice president Jim Schlueter did not dispute the figures in the documents but insisted in an interview that “cost is just one element of the decision making.”
Among other goals in transferring the work, he said, the company aims to “gain access to new talent, reorganize how we operate and reduce our footprint where we are not as productive as we should be.”
Echoing remarks last week by Boeing chief executive Jim McNerney, Schlueter said the work transfer is about finding the best places to do research and the right skill mix for the future.
Ray Goforth, executive director of Boeing’s engineering union, had a different explanation when shown a summary of the documents: “So they really are just trying to drive out the older people to lower their labor costs. Wow.”
He said the BR&T engineers he’s heard from believe that the supposed savings are illusory.
“This utter dismantling of the research and technology capacity is going to really cripple the Boeing Company,” Goforth said.
BR&T is Boeing’s advanced central research and development unit. Its engineers provide support to the company’s commercial, military and space units, running labs that test materials for airplane parts, new chemical treatments or the performance of electronic systems. They also research breakthrough technologies for the creation of products.
The plan to move work from Puget Sound to three new “centers of excellence” in Alabama, South Carolina and Missouri – internally code-named Flash, according to the documents – was announced in early December but with no details of which jobs would move and which would stay.
BR&T engineers expect to hear details of who is to get cut next month, some as early as this week.
Of the 1,300 in Washington and California whose jobs will move, only about 110 tagged as having “critical” skills will be offered relocation expenses and incentives to move to one of the new engineering centers, the Boeing planning documents reveal.
Other employees who are laid off can apply for jobs, likely with lower wages, at the new locations. The documents show Boeing projects only about 280 will make such a transfer.
The company also plans to hire about 660 new people at the new centers, 40 percent of them entry-level engineers.
To fill the remaining gap between jobs cut in Washington and jobs added elsewhere, management plans to use 240 contractors in the U.S. and overseas.
The documents cite a 2014 average engineering wage in Puget Sound/Southern California of $125,000 compared to a projected average of $89,000 – 28 percent lower – at the new sites.
With benefits in 2014 adding 70 percent of value to the wages, the full cost comparison is cited as $212,000 per head annually here versus $152,000 at the new engineering centers.