Atlas shrugged at Boeing

By Joe Schembrie
web posted March 20, 2000

In Ayn Rand's novel, Atlas Shrugged, the 'mind-workers' -- business people, scientists, engineers, the creative individuals -- go on a worldwide strike. At the Boeing Company, real life just might have imitated art.

Last month, thousands of Boeing engineers walked off their jobs when their union and the company failed to agree over medical benefits. While this sounds at first like a typical collectivist labor-management dispute, it has a libertarian twist.

Boeing's engineering union is voluntary and open shop. It's as much a natural entity of a free market as any entrepreneurial firm. Boeing itself, however, is veritably a child of government. Huge federal government military contracts in World War II and the Cold War equipped Boeing with vast facilities, expertise, and profits, enabling the company to become America's biggest defense contractor and lone manufacturer of commercial jetliners. Boeing today survives off federal pork and enjoys enormous clout in Washington DC.

Maybe that's why its executives behave like government bureaucrats at their worst.

A couple years ago, I was an engineer in Boeing's Customer Engineering organization -- and came to realize that Dilbert is a documentary. The managers were constantly brown-nosing and networking in useless meetings. They evaded all decisions, and were never available for consultation. They demurred hiring more engineers for production but eagerly promoted more managers for empire-building. They were there to create problems.

CEO Phil Condit rose to the top after a stint as Chief Engineer on the 777 airplane project, where he ran a hundred percent over budget and billions of dollars in the hole. Today he presides over the first corporate quarterly losses in half a century. His so-called 'leadership style' is to proclaim sweeping initiatives -- downsizing, mega-mergers, buyouts, new programs, new processes, record production increases -- for the sake of impressing financial market analysts and cashing in his stock options over the short run. But the long run came all too soon -- in just three years of Condit misdirection, Boeing has lost half its stock value and half its commercial market share.

Although the corporate leaders arose from Engineering, they did so by betraying their own kind. With management as the aristocracy and blue-collar workers protected by a closed-shop union, engineers have become the corporate whipping boy of choice. Boeing executives relish saying things like, "Boeing isn't an engineering company," and even, "Boeing doesn't need engineers!"

"Shoot the engineers and begin production!" seems to be a fond dream of Boeing's clueless management, but in reality, military, civil, and commercial aircraft (and spacecraft) are so complex that they cannot be produced without engineering support. The engineer's strike is finally driving this lesson home.

The cause of the strike has little to do with the trivial dispute over medical benefits. The strike is a long-simmering response to the way that Boeing contemptuously treats its engineers. The last straw came during the latest round of union negotiations, when the blue-collar worker's union won huge concessions from the company -- and engineers were told to tighten their belts. Boeing blue-collar wages are often higher than the salaries of Boeing engineers, who get paid twenty percent less than engineers elsewhere. Management's arrogant attitude was just too much this time, and so the engineers walked. It's estimated that somewhere between one-tenth and one-fourth of the engineers kept right on walking during the strike to other companies, where they'll receive more money and more respect.

It's true that Boeing engineers were never forced to work at the company, and that the company's stock shares are privately owned. But clearly here, the engineers are the creators of objective wealth, while management is doing everything it can to suckle off the government subsidy teat. The federal government is responsible for producing the virtual defense-contractor monopoly in the United States, by financially rewarding defense contractors for the 'efficiencies' (yet to materialize) brought about by corporate mega-merging. Open-shop aerospace-specialized workers such as engineers are now finding their careers held hostage by this government-created, -supported, and -enforced monopoly.

And in a truly friction-free market economy, Boeing's outrageously incompetent corporate management would have been instantly fired by angry shareholders at the click of a mouse. Instead, thanks to 'government reform,' big business leaders are protected by special legislation and lengthy legal delay periods that allow the execs time to threaten to wreck the company's balance sheet, rendering it unattractive for corporate takeover by more competent management teams. To preserve the autonomous power of its management elite, Boeing has often trod the path of self-immolation recently.

This time, though, to much astonishment, Atlas the Engineer shrugged off the quasi-bureaucratic managerial parasites at Boeing and made them pay attention. And if we want to preserve the USA's technological dominance in the global aerospace industry, we'd better start paying attention too.

Joe Schembrie is a senior writer with Enter Stage Right.

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