Thursday, October 26, 2017

Boeing temporarily rehiring retired mechanics as it struggles to fill jetliner orders

Business is so strong for aircraft builder Boeing that it is temporarily rehiring "several hundred" retired mechanics in Washington state to help it meet production demands.

Also, the manufacturer is looking to hire new employees as it struggles to meet commercial aircraft orders that have been piling up.

On Wednesday, Boeing announced a record 202 commercial airplane deliveries in the third quarter, up from 188 aircraft delivered in the year-ago quarter. The latest quarter included delivery of 24 of the 737-MAX aircraft, even as engine issues have been an ongoing challenge.

According to Boeing, the production rate on the 737 aircraft program increased from 42 to 47 planes per month, and it confirmed plans to ramp up the 787 Dreamliner rate from 12 to 14 aircraft per month in 2019.

Analysts say Boeing's order book on its 787 Dreamliner and 737-MAX jets are strong as airlines move to replace older planes with more efficient models and expand routes.

"We have been on a trend of reduced employment in the last few years," Boeing CEO Dennis Muilenburg said Wednesday after the company reported third-quarter financial results. However, he said the company's recent action to bring back some retirees will "help us on some of our production programs and commercial airplanes."

Muilenburg said the retirees offer "unique knowledge capabilities where we can quickly apply their expertise to our production lines."

Paul Bergman, a Boeing spokesman, said the company is doing "modest hiring across manufacturing skills" and approached recently retired mechanics with certain skills to offer them "up to six-month re-employment that could start as soon as this month."

According to Bergman, "Bringing in experienced mechanics will also allow us to hire and train new employees during this period." The company didn't release the exact number it plans to rehire for the short term but said it was "several hundred."

The local machinists union signed off on the temporary rehire plan.

"We thought it was a positive thing for the company to hire back people," said Jon Holden, president of International Association of Machinists and Aerospace Workers Union District Lodge 751. "At the same time, they were looking at hiring people permanently as well."

Added Holden, "What's good about the deal for past retirees is, they get a benefit and to continue earning their pensions while they come back to work."

Reports have suggested Boeing could bring back up to 800 retirees. The hiring follows the company, America's largest exporter of manufactured products, cutting more than 20,000 jobs since 2012, many in the Puget Sound region of Washington.

"This is all the proof you need that they cut too deep," said Richard Aboulafia, vice president of analysis at Virginia-based industry consultancy Teal Group. "They just cut to enhance profitability."

Boeing's CEO said that employment needs in the business vary at times because there are "areas of growth and we have other areas of decline. You can see the ebbs and flows of the workforce that come with a big global industrial company."

Meantime, Boeing also appears to be showing interest in hiring from aerospace training centers, such as the Washington Aerospace Training and Research Center in Everett, Washington. The center has a 12-week program where students can get trained in assembly mechanics, electrical assembly, quality assurance, composites and tooling, among other things.

"They learn specific skill sets for the Boeing Company and other aerospace companies," said Larry Cluphf, executive director of the WATR Center. "Just in this last week, we had over 22 students called up for interviews."

Boeing has about 710 Dreamliner aircraft orders in its backlog, or roughly five years' worth of production for the mid-size wide-body plane. For the 737, the company has an order backlog of more than 4,470 aircraft, mostly for the 737-MAX model.

Overall, Boeing's backlog of commercial airplanes stood at $412.2 billion at the end of the third quarter, the company said Wednesday. Chief Financial Officer Greg Smith said its backlog of about 5,700 commercial aircraft equates to more than seven years in production.

"Even though the top line has been growing, they have been having production issues transitioning from the 737 to the 737-MAX," said Aboulafia. He said another challenge facing Boeing has been the company's most profitable jetliner, the wide-body 777 model, has been hit by a downturn in twin-aisle demand and overcapacity.

At present, Boeing has about 66,000 workers in Washington state out of a total global workforce of about 142,000. Final assembly of the 737-MAX is at the company's Renton factory, and the Dreamliner's assembly takes place at the Boeing plant in Everett.

Boeing also may look to add new workers or bring back retirees to help support its delayed KC-46 Air Force tanker program in Everett. The Air Force plans to buy more than 170 of the KC-46 planes, a version of Boeing's 767 wide-body aircraft, to replace the force's aging aerial tankers, which date back to the 1950s.

Muilenburg said on the Boeing conference call Wednesday that the Air Force tanker program experienced "additional cost growth due to incorporating changes into additional production aircraft," but he said it remains on track to deliver the first 18 aerial tankers next year.

"We remain very confident in the long-term value of this franchise," he said.

(Jeff Daniels - CNBC)

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