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 The cycle was so predictable that Boeing workers had a phrase for
it: "Headcount goes by rate."
Now that longstanding cycle has broken down.
The world's largest plane maker is in the midst of its biggest
peacetime boom, churning out 20 percent more planes than when the
last big cycle peaked in the 1990s.
But it is doing so with one-third fewer workers. In their place,
Boeing is turning to robots and outsourcing.
In the past year, Boeing installed four banks of two-story riveting
machines at the factory that makes its 737 aircraft in Renton,
Washington. When it switched them on in May, the age-old clatter of
hand-held rivet guns gave way to the whispery hiss of the 60-ton
robots, which Boeing says can work twice as fast as people, with
two-thirds fewer defects.
At its sprawling plant in Everett, Washington, Boeing has installed
robotic arms to drill and rivet together fuselages for the 777
jetliner.
The machines are "taking what is in the neighborhood of 50,000 to
70,000 fasteners in the 777 fuselage that are today applied by hand
and automating them," Boeing Chief Executive Dennis Muilenburg said
in a speech at an aerospace trade fair in Seattle in September.
It's a "huge transformation in how we build airplanes."
Boeing says automation is essential to improve quality and worker
safety, lower costs and keep up with its European rival Airbus,
which also is automating and churning out more planes to meet
worldwide growth in air travel.
But while Boeing says the robots have not caused any layoffs, the
company is not predicting significant job growth either.
"Increased automation means we can go higher in rates with a stable
workforce," Barry Lewis, head of wing manufacturing operations at
Boeing's 737 plant, said during a recent factory tour.
BROKEN CYCLE
Manufacturing job loss is well documented at auto plants, textile
mills and other U.S. factories. More than 6 million such jobs
disappeared between 2000 and 2009 as companies automated and sent
work overseas, according to the Bureau of Labor Statistics.
Now the shift is coming to Boeing. The company's airplane unit has
hired about 33,000 people since employment bottomed out at about
50,000 in 2006, a bust spurred by the 9/11 attacks. But that 66
percent increase in labor has allowed Boeing to make almost twice as
many planes, meaning the ratio of workers to planes has plummeted.
The plane maker's current backlog of 5,600 plane orders worth $426
billion dwarfs the $94 billion tally during its last boom in the
late 1990s. But today's workforce is about one-third smaller -
83,000 compared with 122,300 when Boeing's employment last peaked in
1998. Back then, Boeing made 564 planes a year, about 217 workers
per plane. This year it aims to make 760 planes, using about 109
workers per plane, and the figure is falling.
Amid the biggest commercial aircraft boom in its history, Boeing's
airplane division employs fewer workers per plane than during all
other booms since World War II.
"Boeing and Airbus are catching up with the rest of manufacturing,"
said Robert Reich, a professor of public policy at the University of
California at Berkeley and former labor secretary in the Clinton
Administration. "There will be no let up in the loss of
manufacturing jobs."
Boeing's employment growth stopped in 2013, the year Washington
state approved $8.7 billion in tax credits for the industry. In
return for the incentives, companies were supposed to "maintain and
grow" aerospace jobs in the state.
Since then Boeing has shed nearly 3,000 jobs in Washington, fueling
tensions with its unions and state officials.
Machinist and engineering unions, which represent about 51,000
Boeing workers, have joined with state legislators sponsoring
measures that would tie the tax credits to job and wage targets.
"The frustration level in the community is high," said state Rep.
Mike Sells, a Washington Democrat whose district includes Boeing's
largest factory, which makes the 747, 767, 777 and 787. "We need to
be able to show real hard numbers to the public if we're going to be
granting these exemptions."
CHANGING LABOR
As recently as 2012, teams of workers drilled and riveted 777
fuselages. That year, as Boeing increased output of 777s by 18
percent, it began using machines to drill the holes. Now, robot arms
are drilling and installing the rivets. Similar robot arms covered
with protective cloth are now painting 777 wings, applying a more
precise coat than people can.
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European rival Airbus also is automating, and industry experts say
it is doing so at a faster pace than Boeing, partly driven by rigid
labor laws in Europe that made it difficult to lay off workers in a
downturn. The European giant is working on technology to more easily
configure robots and run them with common software. It also is
testing a system that uses hand tools laden with sensors and Google
Glass-type headsets to validate that workers install parts
correctly. Airbus plans to implement the system with the A330 this
year.
"After that, we deploy it globally," said Sebastien Boria,
technology leader for the future aircraft factory at Airbus.
Boeing and Airbus decline to say how much manual labor the machines
save. At Boeing, production time will be cut in half while quality
and safety improve, Walter Odisho, vice president of manufacturing
at Boeing Commercial Airplanes and a recent hire from Toyota, said
in an interview.
Suppliers say the machines reduce the need for human labor
substantially. Electroimpact, which created the two-story
wing-riveting machines installed at Boeing’s 737 factory, said older
machines required workers to frequently change tools the machines
used, a process that could take an hour if employees were on break.
Electroimpact cut the time to five minutes on the new machines by
automating the tool change. It has since cut the time to 80 seconds.
On the 777 line, the labor savings from automated riveting could be
more than 100-fold. One person can run eight sets of robot arms that
each do the work of 16 people, replacing 128 workers, said Surinder
Lamba, president of Apache Aerospace Inc, a Washington state company
that supplies tooling to all of Boeing's commercial jet programs.
"The lights out factory is already happening," he said. "Not because
we don't want lights but because we want to run 24-7. No Christmas.
No lunch. No breaks."
FEWER JOBS
Outsourcing also is limiting Boeing's U.S. job count. Boeing said in
September it would open a factory in China, its first outside the
U.S., to complete, paint and deliver 737s for the Chinese market.
Boeing says the plant is necessary to meet rising 737 output, and
won't cause layoffs or reduce work in the U.S.
Boeing is also sourcing more parts outside its factories, reducing
its own costs. In 2005, Boeing sold facilities in Wichita, Kansas,
that made 737 fuselages. The hulls are still made in Wichita, but
now Spirit AeroSystems Holdings employs the workers, not Boeing.
Around that time, Boeing developed a radically different production
system for its 787 Dreamliner. Large industrial partners around the
globe make wings, fuselages and other big pieces, and Boeing joins
them together at factories in Everett and in South Carolina with
minimal automation.
Partly in response to production snarls from outsourcing large parts
of the 787, Boeing brought wings and other work back in-house for
the 777X jet it is now developing.
But Boeing is pressing suppliers to cut costs so it can sell its
airplanes for less, prompting many to automate, too. After taking
over Boeing's facility in 2005, Spirit reduced its workforce by 15
percent. It has since continued to install robots, and recently
announced plans to invest $100 million in further automating its
plants.
And Boeing's plans for its next-generation factories suggest it will
rely on robots even more in the future. Innovation in the factory is
now as important as innovation in aircraft design, Muilenburg said.
Not all politicians and leaders have grasped the new reality at
Boeing, said Richard Aboulafia, an aerospace analyst at the Teal
Group. "But even when they do, what choice do they have? Across the
economy, high-skill, high-wage manufacturing jobs are becoming
scarcer every year."
(Reporting by Alwyn Scott. Editing by Joseph White and John
Pickering)
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