1. The Boeing Boom? So over.
The headlines over the past several weeks about layoffs and other cutbacks at Boeing (excellent coverage in the Seattle Times by Dominic Gates) have started showing up in the state’s employment statistics.
As reported by Washington’s Employment Security Department, the payroll head count in Washington’s aerospace industry in April declined for the first time in three years. From the most recent cyclical low in May 2010, Boeing, suppliers and allied industries had added jobs at the rate of more than 500 a month. That pushed aerospace employment in Washington from 80,100 to 97,300, a 21% increase. The April decline was 700, reducing the head count to 96,600.
As reported by the Wall Street Journal, Boeing CEO Jim McNerney told investors last week that the company wants to convert its backlog to cash so that it can push returns to shareholders back to the level that prevailed before the Great Financial Panic of 2008, roughly 80% of free cash flow. Boeing plans to reduce both capital spending and development spending, despite the fact it wants to launch new versions of both the 777 and the 787.
Less capital spending and less development spending means Boeing will need fewer people with pocket protectors. And even as it is increasing production of the 737 and, in time, perhaps the 777, it obviously expects employees on those programs to get more efficient.
Whether they wear white or blue collars, aerospace workers are some of the highest paid in Washington’s economy. The state’s latest Quarterly Census of Employment and Wages (QCEW), available here, puts average pay as of last year’s third quarter in the “transportation equipment” manufacturing sector at $1,731 per week, or about $90,000 a year. That sector includes truck-making (Paccar) and some shipbuilding as well as Boeing. And, by the way, that’s wages, not including benefits such as health care and 401(k) contributions. That compares with a statewide weekly wage of just over $1,000.
The bottom line is this: The Boeing Boom — and it is fair to call it that — is now clearly in the rear view mirror.
2. Building Boom in Bellevue. On a positive note, how about Kemper Freeman Jr. and his plans to boost the family-owned Kemper Development Co.’s footprint in Bellevue by roughly 50% with $2 billion of new space, including hotel, retail, apartments, parking, &c &c.
True, as The Seattle Times reported, his plans come with some asterisks. Freeman still has to line up tenants and financing. But nobody ever made any money selling the Freeman family of Bellevue short. Work is to start next year and to be completed by 2016.
3. New wealth and new jobs. Seattle’s Tableau Software, nurtured during its infancy in a Capitol Hill basement, went public two weeks ago, minting some new millionaires among the founders and early investors. Tableau’s products make it possible, so the Seattle Times reported, for everyone from the chief executive to the receptionist to analyze the so-called “big data” that any decent-size company collects today on its customers and other contacts.
What caught my eye was not so much the pop in the stock price, though that was impressive, from the $31 public offering price to the low $50s, as the fact that Tableau, which until now has been absent from my radar screen, has nearly 900 employees and that that number could be “in the high thousands” five years from now.
On average, people who work on software are the highest paid in Washington’s economy. That same census of wages puts average weekly pay in “publishing except internet” at $5,389 statewide, $5,871 in King County. The statewide average comes to a bit over $280,000 annually, the King County average a bit over $305,000 a year. Again, those are wages, not including benefits. Those kinds of numbers help explain why Kemper Development’s “Bellevue Collection” of space devoted to shopping, entertainment, eating and meeting (and sleeping in the Grand Hyatt) is doing so well.
I suspect that if you asked the average resident of the Seattle area to name the region’s big dogs in software, you would come up with a relatively short list that would include Microsoft, Adobe, Google, and perhaps one or two game developers. The point is that there are lots of software companies operating more or less under the radar, creating jobs and prospering. They represent at least one bright spot as we go into another downdraft in aerospace.
4. Unleash the dragon? The recent “big picture” headline that caught my eye was the New York Times report that China is planning to let market forces and private business play a larger role in its economy. Everything I read suggests that the odds are long, that the “prince-lings” holding the reins of power will be loathe to loosen them. Yet reform has the potential, as The Times put it, to unleash “the creative energies of a nation with the world’s second-largest economy.” Stay tuned. What happens in China, for good or ill, affects every one of us.