Boeing’s salaried nonmanagement employees in Washington state are expressing disappointment that, after a year of record profits, next month the company will pay out bonuses considerably smaller than last year’s.
The annual bonuses Boeing will pay out next month to engineers and other salaried nonmanagement staff will be substantially lower than last year’s, news that is frustrating employees after the jet maker just announced record profits.
In a message to employees Friday, Boeing Commercial Airplanes chief Ray Conner said that “many team members have reached out to me expressing disappointment.”
He said the unit’s performance, though surpassing the preset targets, did not “far exceed” the targets as it did the previous year.
Boeing will pay out bonuses totaling $191.4 million to 42,000 eligible staff in Washington state.
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The Feb. 26 payout is down from $334 million in 2013.
The payout for 2014 is not directly comparable to the one received last year, in that 13,000 managers have been taken out of this incentive plan and will be paid bonuses from a separately calculated management incentive plan.
However, even allowing for that shrinkage in the number of people involved, the annual incentive plan payout is still well down from the previous one.
In 2014, Boeing’s white-collar staff received 16 to 17 days’ extra pay, depending on which unit they worked in.
This year, the payout in those same units amounts to between 12.25 and 12.75 days of extra pay.
Companywide, Boeing will pay out bonuses totaling $407 million in February to 92,154 white-collar, nonmanagement employees.
That compares with $675 million paid out last year to about 108,000 employees.
“I can understand the team’s passion around this topic in light of Boeing’s announcement this week of record revenues and profits,” Conner wrote to employees, before going on to try to explain why the bonuses were lower.
In Boeing’s annual white-collar incentive plans, employee performance is measured against “economic profit” targets that are set in advance by company leadership.
While employees topped that target, there were a series of problems that arose through the year, Conner wrote.
“We were behind schedule on airplane deliveries and broke our commitment dates to customers,” Conner said. This appears to be a reference to jet deliveries scheduled for late in the year that had to be pushed out into 2015.
For example, American Airlines, which was supposed to get its first 787 Dreamliner last November, didn’t get the first one until this month. At the time, this and other delivery delays were attributed to a shortage of business-class seats from suppliers including Zodiac of France.
Conner also told employees that “we had lower-than-planned operating earnings on the 787 program and needed to spend more cash in our effort to stabilize the production system.”
In 2014, various problems dragged on Dreamliner production, including slow deliveries in the first four months of the year from the North Charleston, S.C., 787 fuselage plants.
Last June, after the South Carolina workforce succeeded in getting the problems there under some control, Boeing paid out between $3,000 to $4,000 each to some 7,500 North Charleston production workers and $2,500 to about 900 engineers, managers and office workers there.
Conner’s message to employees also said the commercial airplanes unit was hurt “by a portion of the Tanker issues from earlier in the year.”
The tanker problems led to a $425 million charge in July, due to wiring design flaws that necessitated pulling out wire bundles from four tankers already built and rewiring them completely.
Conner ended his message by saying, “I am committed to working toward higher payouts under this plan (for) 2015 and beyond.”
Despite its problems, Boeing on Wednesday announced a record 2014 net profit of $5.4 billion.
Those receiving the bonuses include some 22,000 engineers and technical staff who are members of the white-collar Society of Professional Engineering Employees in Aerospace (SPEEA).
SPEEA spokesman Bill Dugovich said “employees once again are taking the hit for management’s bad decisions.”
“It’s very disappointing the Boeing Company would continue to push down employees while they are making record profits,” Dugovich added.
Boeing’s production workers have a separate bonus plan as part of the International Association of Machinists (IAM) contract pegged to productivity, safety and quality metrics. The Machinists won’t learn until next week what their bonuses will be.