Boeing suppliers first hit

The coming waves of Boeing layoffs will likely hit suppliers first, then subassembly workers, then eventually wash over the Renton and Everett employees who put commercial jets together.

In past layoff cycles, cuts typically came first at the beginning of the manufacturing process among The Boeing Co.'s sprawling family of suppliers and component manufacturers. The company has already indicated the layoffs could start as quickly as two months and will continue through the end of 2002.

This time, workers in Wichita, Kan., Portland, Spokane and Auburn will receive the first notices warning of potential layoffs, the International Association of Machinists said yesterday.

"If you turn off the spigot the water still has to roll downhill," said Charles Bofferding, executive director of the Society of Professional Engineering Employees in Aerospace.

Boeing is rushing to reduce its work force as airlines lose massive amounts of revenue and traffic in the wake of the Sept. 11 terrorists attacks. Airlines will now need fewer planes, and Boeing is reworking its production schedules because it will need far fewer workers.

"It generally (in the past) starts with all of our partners and suppliers around the world, plus all the detail parts and subassemblies and then gradually (hits) us here in Seattle in final assembly," Boeing Commercial Airplane President Alan Mulally said at a luncheon address yesterday.

Together, plane makers and parts suppliers are likely to lose $2 billion in sales this year alone and $6.5 billion in 2003 as air travel slows in the wake of last week's attacks, aerospace industry officials estimated.

Boeing executives sat down with union officials yesterday to begin discussing the job cuts. While executives didn't rule out voluntary layoffs, they said early retirement buyouts are "highly unlikely," according to a statement posted by The Machinists District Lodge 751 on its Web site yesterday.

Both sides face a new situation as some airlines teeter on the verge of bankruptcy, the economy slows and the public avoids flying.

"We don't have anything to compare it to," said Dick Schneider, aerospace coordinator for the Machinists. "We are now plowing new ground on this."

Boeing, however, could begin sending out warning notices in the next two weeks, according to the Machinists union. A warning notice tells an employee that he or she could be laid off after 60 days.

The engineering union, however, doesn't expect any of its members to be laid off before the end of the year.

Nationwide, U.S. airlines this week announced plans to lay off roughly 70,000 workers.

Airlines are only flying about 75 percent of their normal schedules, and planes on average are only about 30 percent full, according to Mulally.

In addition, advanced airline bookings are down 38 percent to 40 percent, as the public steers clear of flying after terrorists used commercial jetliners to destroy the World Trade Center and damage the Pentagon, Mulally said.

The drought of passengers has forced Boeing to expect a steep drop in demand for commercial jets. In response, it is slashing production schedules for the coming years.

While, the company planned to produce 538 planes this year, "we will be very fortunate to deliver 500 and that is really dependent on working every finance issue with out customers," Mulally said in a luncheon address to the Greater Seattle Chamber of Commerce yesterday.

As a result, the company could be forced to retain, or park, as many as 38 finished aircraft this year, he added.

To assist struggling carriers, Boeing is offering to keep some planes, within Boeing Capital Corp., Mulally said, and then lease those planes to the airlines.

The world's largest aircraft manufacturer offered its anxious workers a glimmer of hope.

The company has been making job offers for almost a year, contingent on receiving the $200 billion Joint Strike Fighter contract next month.

That contract could generate some 3,000 Puget Sound area-jobs, according to company spokesman Randy Harrison.

Boeing employees will now receive preference for the remaining, mostly white-collar, jobs, Harrison said.

The layoffs continue to reverberate through the Puget Sound business community.

"A lot of my accounts rely on Boeing," said John Grande, owner of a Seattle graphic design agency, Grande Designs. "If Boeing lays off, a lot of my clients are going to be affected."

That impact could easily trickle down to Grande Designs, whose clients include aircraft parts manufacturers, fabrication companies and other Boeing suppliers. His 2-year-old firm consists of himself and three design associates.

But LaQuita Hester, president of a diversity-oriented employment agency, sees some light through the dark clouds.

When companies are laying off workers, they often have to hire temporary employees to get by, she noted.

Her 8-year-old firm, Diverse Employment Inc., does 90 percent of its business in temporary workers.

Lisa Chick, executive director of the Seattle office of City Year, a non-profit community service organization, also was trying to remain positive after hearing Mulally's speech, but it wasn't easy.

"We'll probably have more of a struggle than we thought we were going to have, seeking funds from the community," she said. City Year, an affiliate of AmeriCorps -- the domestic Peace Corps -- has already seen a downturn in its corporate donations.

"But a lot of people are going to be looking for hope," Chick said.

"People are going to be looking to turn to positive things. I hope we can give the community some hope."

This report includes information Bloomberg News and The Associated Press. Seattle P-I reporters Neil Modie and James Wallace contributed to this report. P-I reporter Paul Nyhan can be reached at 206-448-8145 or paulnyhan@seattlepi.com

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