SEATTLE – Boeing Co. announced Friday a significant shift of both current and future engineering work out of the Puget Sound region, to Southern California and South Carolina.
The company also said it is exploring opening a new engineering design center in Kiev, Ukraine, to add to the one it already has in Moscow. The most significant immediate impact comes from the decision to move engineering support for airlines that fly out-of-production airplanes – such as older 737 classics and 757s – from Tukwila, Wash., to Long Beach, Calif., within six to nine months.
More than 300 engineers work in that unit. Many of them are older with family connections that may make a move to California impractical.
In an internal note Friday morning, Lynne Thompson, vice president of Boeing Customer Support, told employees that “we will be working closely with these individuals as we finalize our staffing plans.”
But an even bigger blow to the Puget Sound region may be the decision to create engineering centers elsewhere for work on future airplanes.
Boeing said it will establish a new propulsion operation in South Carolina that will initially do the engineering design and also assemble the engine nacelle inlet for the 737 MAX.
The corresponding work on the current 737NG is done by Goodrich, not by Boeing, so this initial move of nacelle engineering and production is not a shift of work.
But Boeing said the South Carolina propulsion operation will “expand strategically on future airplane programs.”
Most of Boeing’s commercial jet propulsion work is done today in Everett.
In addition to the new propulsion center, Boeing said it will open an “engineering design center” in South Carolina that will “support Boeing’s business from product development through design, production and support.”
“The new centers will add internal capability and capacity in both engineering and propulsion as the company scales up to meet unprecedented demand,” the company said.
The moves follow extended negotiations last fall and into the spring between Boeing and its engineering union – the Society of Professional Engineering Employees in Aerospace – that finally ended with a new contract in March, after months of bitter dispute.
Last October, Mike Delaney, Boeing’s vice president of engineering, warned publicly that if the union forced an expensive contract, the company would inevitably move engineering work out of the Puget Sound region.
“It won’t be fast,” Delaney said then. “But slowly over time, if you become uncompetitive, you have to deal with the arbitrage and leverage other resources.”
It turns out it’s not happening so slowly after all.
But in an internal note to employees Friday morning, Delaney offered only a positive rationale.
“Three years ago, company leaders began mapping out a strategy to capture and sustain significant future growth and ensure Boeing’s continued industry leadership up to and beyond 2016 – our 100-year anniversary,” Delaney wrote. “That strategy calls for Boeing to become a larger, more globally competitive company with expanded production capacity and a more geographically diverse manufacturing and engineering footprint.”
The internal message cited three specific motivations:
“First, they will enable us to use Boeing engineering capability more strategically across the company. Second, they provide greater geographic distribution of work within Boeing. Third, the centers also enhance Boeing’s ability to attract, develop and retain a talented engineering workforce by opening career paths in multiple locations.”
There was no mention of the fact that the Long Beach and South Carolina sites are nonunion.
“Our opportunity for future growth is unprecedented and this helps us be more competitive by building on our team’s talent and capability – across Boeing, the United States and around the world,” Delaney said in a public statement.
Nicole Piasecki, vice president and general manager of the Propulsion Systems Division, described the new South Carolina propulsion unit as part of “a thoughtful, disciplined approach to building our capability and capacity.”
“As we look to the future, we believe that innovative propulsion-system designs are needed to capture the benefits of new, more powerful and efficient engines,” Piasecki said.
Thompson told her employees that the move of the engineering support for the out-of-production jets to Long Beach “will allow us to use engineering capability more strategically.”
Despite the announced work shifts, Washington state will remain the largest center of engineering for Boeing Commercial Airplanes for the foreseeable future.
But it no longer will be the only one.
Delaney’s message to employees said the company intends to “build upon the legacy of outstanding engineering capability in Washington” but to expand it “across the enterprise.”