Boeing Employee Relations Record Mixed

For an indication of what Boeing Co. is like as a corporate citizen, consider the concert hall rising up from a block-size cavity in downtown Seattle.

Not only did Boeing plunk down $3 million in cash to help build the new home for the Seattle Symphony Orchestra, it also loaned an executive to serve as project director at the construction site.

As an employer, too, Boeing is generous. It pays well, offers good benefits and makes all the right noises about partnering with workers.

As the nation’s leading exporter, Boeing acts like a nation state, frequently hosting visiting dignitaries and negotiating complex agreements with such distant powers as China and Japan.

But if Boeing fits the mold of the powerful, paternalistic company, there is also a darker side to its management practices. Its international agreements often involve buying parts overseas in exchange for promises of new plane orders. Its long dominance of the aerospace market has left it slow-moving and bureaucratic. And the company can be ruthless when it comes to firing workers when orders slow.

The International Assn. of Machinists and Aerospace Workers led a grueling, 69-day strike against the company last winter, protesting the company’s outsourcing practices and demanding employment security.

Boeing’s boom and bust hiring practices have contributed to the volatility of the local economy. And some complain the company uses its enormous clout in the Puget Sound area to exact important tax concessions from local governments.

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Still, on balance, most observers give Boeing high marks for the way it deals with its workers and its community. That could be good news for Long Beach as it ponders the future of its huge McDonnell Douglas work force.

“When you compare it to other companies, Boeing is pretty good to work with,” says Bill Johnson, who led the machinists strike last year.

And many observers believe Phil Condit, Boeing’s new chief executive, is on his way to making the company an even better place to work.

When Condit announced in July he would create a $1-billion trust of Boeing stock and distribute any growth in the trust that exceeds 3% to workers, employees were impressed.

Labor leaders were even more surprised when Condit recently added to the fund to account for the new employees joining the company with the acquisition of Rockwell’s defense business.

“It showed he was serious,” said Charles Bofferding, executive director of the Seattle Professional Engineering Employees Assn., which represents Boeing engineers.

After just six months, the trust is worth about $500 per employee. Boeing said it would require approval of its board of directors to further expand the trust to account for the new McDonnell Douglas employees.

Credibility with its workers is something Boeing management has sorely lacked. In the process of “re-inventing” Boeing over the past decade, Condit’s predecessor, Frank Shrontz, offered frequent lip service to the notion of labor participation. But in Dilbert-fashion, the plans were seldom fully implemented.

“They wanted a success story right away,” said Johnson, who represents 40,000 machinists employed by Boeing. “If something doesn’t work, they move on to something else.”

Such efforts at worker participation also collided with Boeing’s seemingly short-sighted hiring practices.

After spending years on improving relations with its union, for example, Boeing abruptly announced in 1993 it would lay off 19,000 workers. Less than three years later, the company is on a hiring spree.

Analysts loved Shrontz’s focus on productivity and shorter delivery cycles. But workers found it difficult to see the upside in participating in new programs they believed were designed to eliminate their jobs.

Among suppliers, Boeing is noted for playing hardball to drive down costs. In recent years, it has also set out to improve the quality and timeliness of parts coming into its assembly lines.

“They’ve compressed the time it takes to get orders to suppliers and to get the supplies back,” says Paul Nisbet, a Newport, R.I.-based analyst who covers Boeing. Such efforts have dramatically shortened the time it takes to deliver a plane after it has been ordered.

But efforts to develop stable relationships with high quality suppliers have run into trouble. To win business from the likes of China and Japan, Boeing believes it must share its technology and jobs. Sometimes that means breaking longtime domestic relationships to ship work offshore to sometimes lower quality suppliers.

Johnson of the Machinists union points out that strategy brought few dividends this year when the bulk of Boeing’s new orders came from domestic airlines. But Boeing argues that the general trend is for a growing proportion of the industry’s business to come from Asia. And analysts say there is little Condit can do to change the harsh reality of barter-style trade in such regions as Asia.

Still, Condit may be making some progress with workers. He is beginning to win their trust and he may be starting the process of breaking down Boeing’s infamous bureaucracy. He has become famous for walking unnannounced into Boeing plants to hear worker gripes. As head of development of the new 777 airliner, he revolutionized the design business by almost totally automating it. He also cut through traditional barriers to create teams that included machinists, marketing executives, engineers and even representative from customer airlines to design and manufacture the airplane’s parts more efficiently. That approach is now being replicated in other divisions.

Speeding the delivery time for planes could help reduce the degree to which economic swings affect hiring at Boeing. If airlines know they can get new planes in a timely manner, they are less likely to order planes they don’t need, a practice that has made it hard to predict demand.

Many workers remain cynical, despite the current boom at Boeing. Some worry the company will use its new facilities in Long Beach to play workers in one region against another.

In addition to doing more to win the confidence of labor, analysts say Condit has to do more to change Boeing’s slow-moving bureaucracy. Recent strong demand for airplanes has made change even more difficult as the company takes on new workers as fast as it can.

Now, in addition to changing Boeing’s culture and coping with strong demand, Condit also has the gargantuan task of assimilating workers who come from vastly different corporate cultures at Rockwell and McDonnell Douglas.

“Boeing is well run, and in Condit they have one of the strongest executives around,” says Bill Whitlow, aerospace analyst at Pacific Crest Securities. “But they are bringing together a lot of companies. It won’t be easy.”