Boeing chief Ray Conner defends his tough dealings with local unions, says he foresees no new work transfers, and insists the state gets good value from the tax breaks. He plans thousands of new hires here and a recruiting initiative in local schools.
Boeing Commercial Airplanes chief Ray Conner pushed back forcefully in an interview this week against criticism of the company for moving jobs out of the region.
Anticipating a wave of employee retirements in the next few years, he said Boeing will launch a recruiting initiative in local high schools to help propel the hiring of up to 30,000 replacement workers.
And he said Boeing has no plans in the foreseeable future for more of the recent controversial transfers of engineering jobs to other locations.
Conner defended Boeing’s hard line with its unions as driven by the intensity of its bare-knuckle sales competition with European rival Airbus.
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“Boy, we can do great things,” he said in a rare one-on-one interview. “But we’re going to have to really tighten up here. Because the other guys are good.”
He recalled a recent visit to Long Beach, Calif., the former home of the Douglas Aircraft Co. where Boeing is winding down production of the C-17 military-transport jet, marking the end of aircraft assembly in that state.
“You see abandoned buildings and you see a place that’s gone from over 50,000 people at one point in time, to like, 1,300,” Conner said. “That’s just something that we can’t let happen to the Boeing Company.”
Conner acknowledged the bitterness left by the 777X labor deal that froze the pension plan of Machinists union members at Boeing.
He admitted that some of the recent work transfers — more than 6,000 local engineering jobs in total were earmarked to move out of state — had been handled poorly, leaving employees uncertain about their future.
But citing the fiercely competitive jet-airplane market, he said such “tough decisions” were necessary.
Conner was most passionate in dismissing the notion Boeing is not delivering on the promises it made in return for the aerospace tax breaks the state Legislature extended through 2040 to win the 777X work.
“You’ve seen what we’re doing in Everett? Do you see how many jobs we’re putting into Everett?” Conner asked. “We’re busting at the seams. We don’t have enough places to park people.”
Citing Boeing’s investment of more than $1 billion in building new 777X wing and fuselage facilities in Everett, a complex where about 40,000 employees work, he pointed to the hundreds of construction jobs that work has also added.
“We have stood by our commitment,” Conner insisted.
Conner, a 38-year company veteran who turns 60 next month, joined Boeing in 1977 as a mechanic on the Renton 727 assembly line.
He grew up in Tukwila in a Boeing family. His dad also was a mechanic who worked his way into management. Conner and his brother, also a Machinist, went out on a 45-day strike just a few months after Conner started with the company.
Yet Conner said he saw an opportunity to better himself because Boeing “had every job you could think of. You could do whatever you wanted.”
After the company paid for him to get an MBA, he first moved up into airplane sales and then into program management.
Tapped to head the Commercial Airplanes unit three years ago, Conner is now a Boeing vice chairman. Last year, he got $16 million in total compensation and also was granted shares worth more than $7 million that will vest in three years “to encourage him to forgo an opportunity to retire.”
Asked about the chasm between executive and worker pay in the U.S., Conner, who still lives in the same Bellevue house he bought 30 years ago, said, “That’s not what drives me.”
“For the work that I’m doing, the market says this is what the pay is,” Conner said. “Do I think it’s right or wrong? … I don’t even know. I mean, it is what it is.”
While he is a Pacific Northwesterner and someone who came up through the ranks, Conner said that when he weighs decisions about having work done here or elsewhere, “I’m going to make the best decision for us on a competitive basis.”
“It has to be because we are the best ones to do this,” said Conner. “I have a great compassion for this place. But I’m also a steward of this company.”
Boeing and the IAM
Such tough-mindedness characterized Conner’s negotiations with the International Association of Machinists (IAM) in 2013 over the deal that won Everett the 777X.
When management presented the union with an ultimatum — give up the traditional pension or the work goes elsewhere — employees felt their future threatened, and after much turmoil narrowly voted to accept the deal.
Conner said the company had little choice because it was “staring at this huge pension obligation.”
“Sometimes you have to make these tough decisions in order to make change, and certainly it felt like a threat,” Conner said. “I certainly respect the emotion that comes with that. It was a very tough time, no question.”
The company offered the best package it could to compensate for the loss of the pension, including hefty 401(k) contributions, he said.
Conner said he’s hopeful that now, with the dust settled, “people realize it’s not probably as drastic and difficult as it may have appeared initially.”
The IAM has played hardball with the company, too, Conner said, citing the 2008 strike in the midst of the global financial collapse
“Jeez, that felt like a threat, too,” Conner said. “They were very tough.”
Now that the 777X deal has extended the Machinists’ contract through 2024, Conner said he hopes this enforced period of labor peace will “change the culture going forward, for the long term.”
Boeing and its engineers
As for relations with his white-collar staff, Conner expressed regret over how the company handled the transfer of about 1,000 engineering jobs in Boeing’s Research and Technology unit over the past year. Families were left hanging for many months, not knowing their fate.
“I understand how that would feel for people,” Conner said. “I absolutely do.”
He said that when further local engineering work was transferred later, he tried to find other Boeing jobs for as many displaced employees as possible.
Conner defended the various work transfers as a way of retaining top engineering talent at Boeing defense sites around the country that could otherwise have been lost due to the downturn in military business.
He insisted it’s a mistake to think Boeing doesn’t value its local engineers and he offered the reassurance that no further big transfers of work are currently planned.
“Where we are today, at least as we see it right now, that’s where we are going to be,” Conner said.
He added that because of a big demographic wave of employees retiring in the next few years, the Puget Sound region can look forward to Boeing hiring 20,000 to 30,000 people by the end of the decade to replace them.
Conner revealed he is personally pushing a previously undisclosed education effort that will see Boeing go into local high schools and community colleges to recruit future workers.
Beginning “within this next year,” he aims to replicate what’s done in Germany and other European countries by offering entry-level apprenticeships to young people.
He said students in the sophomore or junior year of high school should learn of the opportunity for “a really good, middle-class paying job at the Boeing Company” and what courses are needed to get there.
“Then, when they graduate, they can move right into those jobs,” Conner said. “Not every kid should go to college, at least when they’re coming out of high school. Right? … I want them to know that there’s an opportunity for them here.”
Those opportunities will be at a harder-edged company than the Boeing of old.
“The world has changed dramatically since I first hired in,” Conner said. “The competitive environment is nothing like I’ve ever seen before.”