Notes from the Executive Director

Challenges, Principles & Priorities

Challenges are opportunities. They are opportunities to demonstrate your principles and your priorities. This is a hard column to write. Boeing is facing significant challenges, and frankly I am not too impressed with the reactions I've seen so far.

Boeing announced that, due to industry downturns, they would need to reduce Boeing Commercial Airplanes headcount by 30% over the next 18 months. The plan is to get 10% out thedoor ASAP (with December 14th as a possible date). In the September 25th Wall Street Journal article titled "Boeing will Retain its Profitability Despite Revenue Drop, Condit Says", Phil Condit is quoted "...we can hold our profit levels." [FYI: Boeing net earnings in 2000 were $2.1 Billion. The Boeing website lists 2001 earnings through June 30 as $2.077 Billion (a 100% increase over the $1.038 Billion for the same period last year).]

The issue is not "will Boeing go out of business" - it is "who will bear the pain."

The short version of the story is that we formed a joint layoff mitigation team and every one of our suggestions was rejected. This included reduced hours, voluntary layoff with benefits, retirement incentives, bringing back outsourced work and a host of other ideas. The acceptance criteria Boeing used were: 1) did it cost any money, and 2) was there any potential to adversely impact skill mix.

I consider this a challenge for SPEEA. Our response: we refuse to accept NO for an answer. We will take another run at developing and promoting plans that move us forward. Plans that honor employees and treat them as part of the solution and not the problem. We refuse to give up on Boeing or its people. We believe that employees are the engine that moves a company forward and must be treated with respect. We will push for a better balancing of Boeing shareholder and Boeing employee interests. Our plan is for Boeing to move forward in the future. We believe that careful consideration must be given to how people are treated now and to the fact that even those not directly affected will witness how their co-workers were treated. Messages are being sent to Boeing's workforce about top management's real commitment and priorities.

The messages being sent today aren't helping anyone. Not even shareholders.

Look at the Stock price chart for the Dow Jones Industrial Average, Boeing (BA) and Southwest Airlines (LUV). Note that all took a significant hit after the markets opened on Sept 17th. Southwest CEO James F. Parker is quoted in Business Week "We are willing to suffer some damage, even to our stock price, to protect the jobs of our people." Boeing announced that they would hold profits and cut people. Certainly there were other factors, but the stock for Southwest stabilized while Boeing continued to drop. My guess is that employee morale at both companies had similar movements that will impact long-term prospects for both companies. This may not show up on the short-term balance sheet, but is important to our long-term health.

Certainly we are facing severe challenges and we need to take action. However, actions and the order in which they are taken tell employees how they are valued and where they stand in the priority list. For SPEEA, employees are our TOP priority and we are pushing as hard as we can to get employee perspective into the processes that are affecting us now.

What happens now will affect us all for decades to come. The way SPEEA and Boeing interact to address these challenges will set the tone for labor-relations for decades. The message sent to employees can range from "You are a valued part of the team" to "You are a cost to be cut when cash is short".

How we react to these challenges will demonstrate our principles and priorities. Let's make them ones that can move us all forward - both today and tomorrow.