Politics from the Palouse to Puget Sound

Sunday, December 16, 2007

NEWS FLASH -Wal Mart Controls Airplane Parts Industry

Pay in aerospace is low for non-Boeing workers

It appears Wal Mart isn't the only place the unions don't think of as the worker's paradise it should be. This story from today's Seattle Times is sure to be ignored by our PARDners. I can't wait to see them packing for those road trips to protest the construction of new aircraft parts factories run by Wal Mart like employers that have the temerity to want to make a profit and stay in business. I wonder how many of C&D's employees are forced to seek public assistance? Oh, the humanity!

Since March a recruiting banner visible from Interstate 5 has hung on the fence outside C&D Zodiac's airplane-parts plant in Marysville: "Now hiring highly motivated and dependable people."

The hiring drive is fueled by two big contracts for the 787 Dreamliner. C&D will add a third shift and operate 24 hours a day by 2010, said manufacturing manager Ron Spliethof.

Yet the hundreds of assembly jobs at C&D are mostly unskilled, entry-level positions. At the factory earlier this year, a close-knit team of young Asian immigrant women applied the finishing touches to aircraft interior panels. Adjacent production cells were manned by other immigrants and young people not long out of high school.

The pay reflects that. More than two-thirds of C&D's 369 production workers earned between minimum wage and $15 an hour last year, according to data filed with the state. At the top end, that's base pay of about $31,000 a year.

Washington passed a massive package of tax breaks for aerospace manufacturing in 2003, intended to keep assembly of the Dreamliner in the state and invigorate the broader aerospace industry that clusters here like maintenance vehicles around a jumbo jet.

Outside of Boeing, however, the tax breaks are boosting companies that pay mostly low wages, according to pay and employment data that aerospace companies filed to receive the tax benefits.

The previously unpublished wage data analyzed by The Seattle Times show that among 161 companies claiming the state tax breaks for aerospace last year, almost half the non-Boeing production workers earned no more than $15 per hour. At Boeing, just 4 percent of production workers were below that level.

"We've always thought of aerospace manufacturing as being a very high-skill, high-productivity and therefore lucrative sector," said Alan Tonelson, a research analyst with the U.S. Business and Industry Council, which lobbies nationally on behalf of small- to medium-size private manufacturing companies. Shown the data on non-Boeing aerospace jobs, he said, "These wages are mediocre at best."

The Times analysis, based on data companies submitted to the Department of Revenue, reveals the flinty reality of the industry — outside Boeing, the hours are long and the pay is hardly sky-high:

• In 2006, more than 66,000 workers in the state worked at companies claiming the aerospace-tax breaks. Nearly four-fifths were at Boeing's commercial-jet plants and the remaining 14,000 at small- to medium-size aerospace-supplier facilities.

• Only 20 percent of the non-Boeing aerospace-production workers earn more than $20 per hour — about $42,000 annual base pay. At Boeing, it's 92 percent.

That means more than four-fifths of the non-Boeing aerospace-production workers earned less than the average wage of all Washington workers in 2006, which according to the Employment Security Department was almost $43,000.

• The 2006 median-wage rate for a non-Boeing aerospace-production worker in Washington was just over $15 per hour, compared to nearly $28 per hour for a Boeing production worker.

As part of a longtime strategy, Boeing has outsourced lower-level parts and design work to suppliers who can do it more cheaply, not just overseas but also right here in Washington state.

That angers Machinist union leaders, who lobbied hard in 2003 to help pass the tax breaks that now support local companies paying low wages for work once done at Boeing.

Though Boeing union jobs have always paid a premium, veteran Machinists recall that back in the late 1970s machine shops around the Puget Sound region offered alternative blue-collar jobs at attractive pay.

Today, with the decline of nonaerospace manufacturing and aerospace suppliers squeezed to reduce costs, well-paid alternatives to Boeing are fewer.

It's creating "an aluminum ceiling," in the words of industry analyst Richard Aboulafia. "It implies almost a two-class system that emerges in aerospace manufacturing."

Entry-level jobs

The 787 Dreamliner is a breakthrough airplane, built out of composite plastic in large pieces around the world and assembled in Everett. Due to fly by next March, its sales have outpaced those of any previous Boeing jet. The company's future rests upon its success.

Under the 2003 legislation that ensured Boeing would put the plane together in Washington, each recipient of the aerospace tax reductions and credits is required to file an annual report detailing its employment, pay rates and benefits.

Gov. Christine Gregoire said the tax incentives bolster the entire industry, and the lower-paying positions provide a living for those "who won't otherwise get a job" or who are just stepping on the career ladder.

"I started as a clerk typist," said Gregoire in an interview. As governor, she added, "I need those entry-level jobs in this state."

She expects wages to rise as the aviation boom continues.

"Once those companies get the skilled, trained workers they need ... they are going to have to raise wages," Gregoire said.

To be fair, demographics exaggerate the disparity between the Boeing and non-Boeing wages.

Many suppliers have been hiring younger workers. But because of union rules, the vast majority of the Boeing workforce is senior and earns top-of-the-pay-scale wages.

Yet the only fast-track wage ladder evident is at Boeing, and it's provided by the unions.

When Boeing hires new mechanics today, the entry-level wage is just $11.75 an hour, not much higher than the $10 per hour at C&D. But the Machinists union contract ensures that in just six years that mechanic will top the initial pay scale at $26 an hour.

At the suppliers, few workers have climbed as high, according to the state wage data.

Blue-collar engineers

Engineers are not exempt from the outsourcing pressure, or from the lower pay.

The data show less than 1 percent of Boeing's engineering staff earns $20 an hour or less. At Tyee Aircraft in Everett, by contrast, that's the rate for the majority of its small engineering staff.

"You tend to get inexperienced people and spend a great deal of time in training and teaching," said Jim Mullen, Tyee vice president of engineering and product development. "It's about the only way a little guy like ourselves can compete."

Close to Boeing's final-assembly plant in Everett, Tyee supplies Boeing's Dreamliner with aircraft tie rods — the connecting rods that brace internal bulkheads, hold galleys or airplane lavatories in place, and anchor heavy stowbins so they don't plow forward into the flight deck when a plane brakes upon a heavy landing.

Tyee outsourced to Mexico the production of the basic tie-rod tubes. Its own workers finish and assemble the rods and also do the engineering design work.

During a visit by The Times last spring, Tyee engineer Dan Valleroy showed off on his computer screen the design of a small 787 tie rod capable of holding the weight of a Ford Ranger pickup.

Valleroy, 52, was a blue-collar tool-and-die maker by trade. Three years into his 18 years at Tyee, he transitioned to white-collar engineering work.

He has no engineering degree. He's learned what he knows through in-house training and on-the-job practice. Classes toward a degree in engineering at a local community college have been "on the back burner" for more than a year.

"Boeing tells us what they want, and we design it from there," Valleroy said. "I do some design, then build the actual prototype parts and test them."

His Tyee engineering colleague Jess Washabaugh, 46, was a mechanic for 10 years at Goodrich's Paine Field aircraft-maintenance facility. With a two-year associate's degree in engineering graphics, Washabaugh helped design the machinery Tyee uses to assemble the rods. His pay still isn't as high as when he was a Goodrich mechanic, but "it's getting there," Washabaugh said.

Five of the firm's nine engineering workers earned between $10 and $20 an hour in 2006.

On the plus side, the wage distribution for Tyee's production workers was healthier than at most other local suppliers — a third earn more than $20 an hour.

Hahn Vo, 29, puts together plastic composite tubes and metal end fittings to complete the tie rods Valleroy helped design.

Vo, who has been in the U.S. six years, studied economics at a university in Vietnam. Her sister-in-law, a Tyee supervisor, helped her get hired three years ago.

Sitting at a bench, surrounded by co-workers in Tyee's final assembly room, Vo puts together up to 1,000 tie rods a day.

Over the fence

Machinists union district President Tom Wroblewski points out that when Boeing outsources well-paid union work to suppliers that pay half as much, it's not always going overseas.

"In some cases, Boeing throws our work right over the fence," he said.

In addition to 787 parts, C&D, previously known as Northwest Composites and now a subsidiary of French aerospace conglomerate Zodiac, makes the interiors for Boeing's 767.

"That's work we did," said Wroblewski of the 767 interiors. "It was never our intention, when we worked with the legislators and the governor to give tax incentives, that they'd bring in folks paying these kind of wages."

Wroblewski complains particularly of tax-break-supported companies that fiercely resist his union's attempts to organize their workers.

The Machinists tried and failed to unionize Toray Composites in Tacoma, which supplies the carbon-fiber raw material for the Dreamliner. According to a federal labor filing, Toray spent more than $200,000 in late 2005 on three consultants who led meetings to persuade employees not to join a union.

The 2006 wage data show that 78 percent of Toray's 217 production workers earned $15 an hour or less. Toray declined to comment.

For Wroblewski, the state wage data demonstrates that "it pays to belong to a union."

Yet the very success of the Machinists union in raising its members' wages gives impetus to Boeing's outsourcing.

John Monroe, a former Boeing executive who now works for Snohomish County and the state to bring aerospace jobs to the region, said the shifting of work such as the 767 interiors fabrication to C&D — while "really unfortunate" for the Boeing production workers — is inescapable.

"From the Boeing standpoint, this is goodness," Monroe said. "They still get high-quality parts and they don't pay as much."

"Boeing has to lower its costs. If that means parts made by a nonunion shop, that's just the way it is. You've got to make a profit," he added. "They can't pay you $20 an hour to have you build something that somebody across the street can build for $10 an hour."

Not a career

On a C&D factory tour in February, it was clear that for some workers the aerospace industry is little more than a temporary job.

In one production cell, workers cut holes from the plastic panels. In the next, they cured the panels in small ovens. Successively, they sanded and cleaned the panels, squirted adhesive into screw holes, and glued the edges of the decorative surface ply for a smooth finish.

Two young men in white lab coats who filled and sanded panels didn't seem to view their jobs as first steps in a manufacturing career.

Adabert Aday, 23, born in the Philippines, has worked at C&D more than three years. He works second shift and is designated an in-line inspector.

Each morning before work Aday, muscled like a bodybuilder, works out at the gym and attends classes part-time at Everett Community College, where he studies computer programming.

Aday's workmate Bryce Hagen, 21, had worked at C&D for two years. In April, overwhelmed by the pressure to work a 50-hour week while going to school, Hagen quit to take a part-time job at Costco that allowed more time to study.

"It was a lot of fun" at C&D, Hagen said after he'd left. "Most of the people hired there were younger, my age."

Starting at C&D straight out of high school, how did he learn what he needed to do the work?

"You would just observe other employees work and figure it out for yourself," Hagen said. "Those who couldn't figure it out didn't last."

Nearby, some half-dozen Asian immigrant women finished the interior panels. Manager Spliethof, 44, praised them as ideally suited for the meticulous hand work — "They pay more attention to detail."

C&D's $10-an-hour entry-level starting pay is boosted $1.25 for those working second shift from 3 p.m. to 11:30 p.m., and another dollar for those assigned as "inspectors." Training is "on-the-job," Spliethof said.

Ironically, while C&D certainly benefits from the state's aerospace-tax incentives, its location close to the Dreamliner final assembly site isn't all that relevant.

C&D's 787 parts go to the major global partners in Japan, Kansas and South Carolina — not to Everett.

As Spliethof acknowledges, this work would likely have come to Marysville even if Boeing had decided to build the jet somewhere else — and the 2003 tax breaks had never been passed.

Dominic Gates: 206-464-2963 or dgates@seattletimes.com

Justin Mayo: jmayo@seattletimes.com

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