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Why workers fell out of love with Boeing
Fifteen years ago, four academic researchers were given un-
precedented access to workers at Boeing Commercial Airplanes.
Studying the impact on workers of a decade of sweeping corporate
changes, they conducted four large-scale surveys over a 10-year pe-
riod, asking detailed questions of Boeing employees at all levels,
from managers to machinists, from engineers to customer service
reps, IT specialists, and tool-and-die makers. About 5,000 workers
were mailed the surveys, randomly sampled from a Puget Sound
area workforce of over 80,000. Researchers also conducted about
60 interviews and led 20 focus groups. They lay out their conclu-
sions in a new book, “Turbulence: Boeing and the State of American
Workers and Managers.”
Boeing, like so many other companies, has downsized, reorgan-
ized, merged, digitalized, and outsourced. The result of the shift in
management philosophy and practice, the researchers found, is that
employees are more disenchanted and less committed to the com-
pany, more attuned to outside life and less involved in their jobs, and
broadly worried — for themselves and for their country — about
outsourcing.
“Until the late 1980s, Boeing was known in the industry as an en-
gineers’ company,” write the authors. “Costs played second fiddle
to design and quality.”
Boeing was willing to spend lots of money, long term, in new
ideas, because the engineers, not the accountants, called the shots.
Management may not have been touchy-feely in the old Boeing, but
company culture always focused on the product, with the result that
workers at all levels felt great pride as Boeing dominated the com-
mercial aviation market with product after product.
Then airline deregulation made customers much more cost-con-
scious. And European Airbus rose as a global competitor gobbling up
market share — mainly from Boeing competitors Lockheed and Mc-
Donnell Douglas. But no event was more significant than Boeing’s
1997 merger with McDonnell Douglas.
“The joke was that McDonnell Douglas bought Boeing with Boe-
ing’s money,” says Connie Kelliher, longtime spokesperson for Aero-
space Machinists District Lodge 751. “They took on the practices
of the company that had gone out of the commercial aviation busi-
ness.”
In theory, Boeing was buying McDonnell Douglas, but after the
merger, a majority of top executives and board members seemed to
have come from McDonnell Douglas, and the company headquarters
was moved to Chicago.
Pre-merger, management’s focus had been the product; post-
merger, the focus, laser-like, was on the stock price. Shareholder
value became the mantra of company leaders, and a disproportionate
share of financial rewards went into the pockets of shareholders and
executives.
On the other hand, workers were in for a bumpy ride, with non-
stop cost-cutting, extensive outsourcing, pervasive technological
change, “flavor-of-the-month” management initiatives, and wave af-
ter wave of layoffs.
Engineering and design were computerized: Engineers became
much more productive, and fewer were needed.
In manufacturing, lean production techniques borrowed from
Toyota reduced the amount of space, time, material and people
needed to make planes. Over 1,500 executives, managers, and front-
line employees were sent to Japan to study Toyota’s methods from
1993 to 1998. The results were impressive. The 737 NG — which
took three shifts of workers 22 days to assemble in 1999 — took two
shifts of workers 11 days in 2005.
Some parts, such as engines, had always been made by other
companies, but after the merger, the number of parts made by outside
vendors greatly increased. Eventually, parts research and develop-
ment — even capital investment, risk and return — were outsourced
to Boeing “partners” in the 787 Dreamliner project. And core com-
petencies like wings were offshored to Japan.
Boeing’s story, as the authors suggest in the title, is the story of the
American workplace. “Turbulence: Boeing and the State of Ameri-
can Workers and Managers” is Boeing’s story. Favorably reviewed in
the New York Times and Seattle Times, the book is now in its third
printing.
Its authors are political scientist Edward S. Greenberg of the Uni-
versity of Colorado, comparative sociologist Leon Grunberg and
psychologist Sarah Moore of University of Puget Sound, and Col-
orado market researcher Patricia Sikora. The Northwest Labor Press
interviewed Grunberg and Moore together by phone Feb. 8.
MARCH 18, 2011
turbulence is that the company became more efficient. But the down-
side was you had morale that went through the toilet across the
board, from engineers to machinists. People became cynical, disaf-
fected, disappointed in the company. The outsourcing strategy threat-
ened the company’s survival. From an economic point of view it was
a disaster. So on balance, I’d say what they did in those 10 to 15
years was needlessly damaging to some of the good things about the
old Boeing. I think some of the smarter people within Boeing know
that they need to rebuild and repair some of the damage that was
done.
Maybe they could have made those lean manufacturing im-
provements, but not in a way that affected morale so negatively?
Grunberg: I don’t think the lean manufacturing stuff, at least in
our study, was the thing that hurt morale. I think it was much more
the careless, cavalier attitude to layoffs. They would hire several
thousand and then a couple years later lay off several thousand. It
created tremendous uncertainty.
Didn’t that happen periodically before?
Grunberg: It used to happen before, but it was just a business cy-
cle thing.
So if you were laid off before, you’d say, “Boeing’s doing
poorly, so I’m being laid off,” but now if you’re laid off, you say,
“Boeing’s doing fine, yet they’re sending jobs overseas and lay-
ing me off.” That doesn’t make you feel good about coming back.
Grunberg: It’s a different feeling when you take into account that
layoffs are part of the new business strategy.
The changes in management philosophy and practice that
you observed at Boeing seem to be under way across the board
in corporate America.
Grunberg: I think the philosophy is a focus on short-term share-
holder value.
Can you define that?
Grunberg: It means responding to Wall Street demands for high
quarterly returns. Especially when Boeing merged with McDonnell
Douglas, a whole bunch of people came in from McDonnell Dou-
glas, and that seemed to change the ethos and governing philosophy.
They became much more focused on meeting Wall Street expecta-
tions from quarter to quarter — rather than thinking about the health
of the company over years.
How are those two approaches different in practice?
Grunberg: Outsourcing became much more dramatic with the
787. Instead of just outsourcing manufacturing, they outsourced the
design of parts for the plane, and also for the partners to share some
of the risk and cost of designing and producing parts. It was a way to
offload risky investment in a new product. By doing that, it makes
their balance sheet look a little better temporarily … but in the end it
actually cost them three years of delay and billions of extra costs and
late fines they had to pay to customers.
How have Boeing workers reacted to the book?
Moore: No one who’s a Boeing worker has said, “That’s not my
experience.” Exactly the opposite.
Grunberg: We’ve had a lot of Boeing people e-mailing us telling
us we’ve got the story right.
In the book you talk about some positive changes also, like
greater opportunities for women. And you don’t paint too rosy a
picture of a “golden age.” Still, I think the overall reaction when
you read this book is to think that the 10 years of changes didn’t
benefit the workers all that much.
Moore: To be fair, there are some people who really liked the
changes, who thrive under a different kind of Boeing. But that
seemed to be the minority. By and large, people were reeling. People
in the initial survey in 1996 who left Boeing after that felt they were
so much better off. I think what it highlights is how stressful it was to
be at the company.
Grunberg: I would say the positive that came out of this decade of
NORTHWEST LABOR PRESS
At one point in the book, a manager says, “This isn’t your fa-
ther’s company.” And I can imagine in the manager’s voice that
being a positive thing, and in the workers’ears it being a terrible
thing. In your father’s company there was lifelong employment,
and it felt like a family.
Grunberg: Boeing employees told us, “If I’m just a number to
them, then they’re just a paycheck to me.”
Moore: A lot of different management initiatives were being im-
ported from Japan, that workers would talk about cynically, like a
“flavor of the month.” Like the 5 Ss. One of the Ss was “sweeping,”
to make sure your work site is clean. I think it felt somewhat patron-
izing.
Did that undermine workers’ opinion of managers’ compe-
tence?
Moore: Absolutely. It was just a joke. They didn’t take any of it se-
riously after a while, because it was just one thing after another.
All these changes: Did they have a health impact, in terms of
stress, on Boeing employees?
Moore: It’s hard to demonstrate causality, but the most powerful
piece of empirical evidence we have is the comparison between
workers continuously employed at the company and those who left.
We measured them all at the beginning, and controlled for age and
health. We found those who stayed had more depression and higher
blood pressure than those who left. We also had interview data where
people linked the heart attack they had with stress on the job.
Your study ends in 2006. What results do you think you would
you get if you did a 2011 update?
Moore: We actually have interviewed a few people since 2006. In
2006, there was additional optimism about the 787. It felt like maybe
Boeing was returning to that innovative. creative company they had
first worked for.
Grunberg: They had 800-plus orders, so job security looked a lit-
tle better at that time.
Moore: But a lot of the problems we now know of were not visi-
ble. I think now everybody just shakes their head about how poorly
that program has gone.
What impact do you hope the book will have?
Grunberg: Well, we hope that the Boeing top management will
seriously change where they’re going, take a longer-term view and
actually appreciate the skills that they have in-house, across the
board, from engineers to machinists. Once you break these relation-
ships, they’re hard to repair, and I think they’re understanding that
right now.
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