Seattle Forecast: Gloomy

Boeing Layoffs Are Latest in Long Series of Setbacks for City

By Alec Klein Washington Post Staff Writer Friday, October 12, 2001; Page E01

SEATTLE

Aftershocks from last month's terrorist attacks are still being felt here at Park Avenue and North Sixth Street, a cold stretch of asphalt and concrete where American flags flutter and employees heading home from nearby Boeing Co. wonder whether they will have a job in the morning.

"It's going to get pretty bad," said a 45-year-old mechanical engineer.

Earlier this week, the dark, blustery skies overhead seemed to presage the financial storm building over the Pacific Northwest. Boeing, a symbol of American military might and corporate power, will begin sending out layoff notices today in the first stage of a cutback that could hit as many as 30,000 workers -- about a third of its commercial airplanes division -- by the end of next year. Two-thirds of the cuts are expected to fall on this region, which is already reeling from the global economic slowdown.

Throughout the nation, communities are grappling with the aftermath of the Sept. 11 attacks on the World Trade Center and Pentagon, struggling with a falloff in tourism, declining sales and tightening security. Despite its distance from Ground Zero in Lower Manhattan, the Northwest is facing much of the same economic fallout: The Port of Seattle is in a sudden cash crunch, while hotels and convention halls are desperately seeking customers.

But few regions have witnessed anything like the scope of Boeing's massive job cutbacks, among the first attributed to the hijackers who transformed the company's commercial airliners into weapons of mass destruction, ramming them into the World Trade Center and the Pentagon, killing thousands.

"It hurt deeply," John Warner, Boeing's chief administrative officer, said in an interview yesterday. "It is shock and dismay, here an instrument of peace to be turned in this fashion. It was just absolutely horrifying. We all feel we've been violated."

It has only gotten worse for Boeing workers.

Little more than a week after the attacks, the aerospace giant said it would be forced to scale back the production of commercial airliners as major carriers hemorrhaged huge losses, laid off tens of thousands of employees and reduced flight schedules.

The impact will be felt widely: For every Boeing job lost, 1.7 jobs will be wiped out in related industries, according to the Greater Seattle Chamber of Commerce. As many as 20,000 of the Boeing layoffs may occur in the Seattle area alone, resulting in an additional 34,000 jobs lost by Boeing suppliers, subcontractors and others.

"Yes, this is a very difficult set of circumstances," said Bob Watt, the chamber's president and chief executive. "I think our resilience is being tested."

Boeing veterans have been through busts before, going back to the 1960s. But they said this is different. The layoffs follow the company's decision earlier this year to move its headquarters to Chicago. "Boeing is part of the social fabric here, regrettably a fabric that's being ripped apart by the company's policies," said Charles Bofferding, executive director of the Society of Professional Engineering Employees in Aerospace, a union representing about 25,000 Boeing workers.

"It's kind of like we're losing our innocence," said Bofferding, 45, who worked at Boeing as an engineer for 11 years. "We're losing our sense of community. That's a terrible thing. Do companies anymore feel an allegiance or an alliance with their workers, or is it only with their shareholders, and their workers be damned?"

Warner, who is also a Boeing senior vice president, called the layoffs a "difficult decision." But he said the best way the company can serve its employees is by sustaining itself financially. "All of us have to do what we need to do to remain competitive," he said.

To that end, Warner led the recent effort to move Boeing's headquarters. The decision, announced in March, was in part a demonstration that Boeing is a diversified company, not beholden to its commercial airline unit here. But it shook Seattle leaders.

Like much of the nation, the Northwest's economy was already beginning to show signs of fraying: Dot-com firms, overbuilt on a lot of hype, began to go belly up. The real estate market, in turn, started to soften. The region also was feeling the effects of the energy crisis from neighboring California. On top of that, there was a drought and an earthquake.

"It was a really tough year, and that's an understatement," said Mary Jean Ryan, director of Seattle's office of economic development. "The speed of this whole thing has just been phenomenal, and it's all pre-9/11."

The latest cutbacks harken back to another bleak Boeing period, about 30 years ago, when massive layoffs prompted someone to put up a billboard that asked for the last person in Seattle to turn out the lights.

This time, city elders are hoping that the region is more diversified economically -- with the likes of tech giant Microsoft Corp. and a small but burgeoning biotechnology conclave -- so that it can absorb the Boeing blow.

For now, much of the community's pride rests in the hands of the Seattle Mariners as the baseball team forges ahead in the playoffs after a season of record wins and attendance. Ichiro Suzuki, the Japanese outfielder who had a big year, has prompted planeloads of Japanese tourists to come stateside. And the joke around town is that, for Seattle, an appropriate economic stimulus package would be a Mariners World Series title.

Still, the fear is that Seattle may not recover anytime soon. "Navigating our economic future: Is the sky the limit or are we losing altitude?" asks a postcard invitation to an upcoming event featuring Boeing and sponsored by the nonprofit Economic Development Council of Seattle & King County.

One of the hardest-hit sectors is the Port of Seattle. In a region in which one in three jobs depends on international trade, the port was already showing signs of weakness before Sept. 11, the result of the global slowdown. The terrorist attacks only compounded the problem.

"We absolutely felt the impact immediately," said Mic Dinsmore, the port's chief executive. "Revenue plummeted -- I mean not marginally, but plummeted."

The federal government's unprecedented step of shutting down all of the nation's airports after the attacks suffocated sites such as Seattle-Tacoma International Airport, one of the facilities operated by the port authority. Although business has begun to pick up again, Dinsmore said the port now faces a $32 million shortfall as a result of the financial damage done to the airport.

"That's pretty devastating," he said. "Those are substantial numbers." With rising costs, diminishing revenue and the prospects of job cuts in the region, he said, "these are frightening times."

It also has been a scary time for the tourism trade, a Seattle staple. As in many other communities, hotel occupancies here fell and conventions canceled in the wake of the attacks.

"It was like the bottom fell out," said Steven C. Morris, president of Seattle's Convention and Visitors Bureau.

The toll is apparent at Seattle's Pike Place Market, a tourist haven, where the crowds are thinner than usual, retail sales are down, and the typically festive mood has been subdued.

"There's been a noticeable difference," said Keith "The Bear" Bish, who hawks big slabs of silver-gilled king salmon.

Kari Lemke, a Pike Place customer from Daytona Beach, Fla., admitted, "I'm somewhat anxious about [the attacks], but I have to travel for my job."

To rev up business in the area, the convention bureau has resorted to big hotel discounting, moving up the start of its "Seattle Super Saving" program to Oct. 1 from the week before Thanksgiving. Officials also are looking to tap new markets, offering tour packages for Russian travelers. Seattle Mayor Paul Schell (D), for his part, said he has been promoting what he calls "being a tourist in your own hometown" in an attempt to get people "out of a civic fetal position."

The mayor said "it's a changed world out there," but he wasn't speaking only of the terrorist attacks. Boeing's layoffs also were tough to take. Because the airline industry was struggling before the attacks, he said he wondered whether the layoffs had already been planned. "There was some suspicion that we were being taken advantage of," Schell said.

Warner, the Boeing executive, denied this, saying the layoffs were "totally incremental, based on the tragedy."

Regardless, city officials remain committed to keeping Boeing a major presence here as it builds new commercial airliners that could generate jobs. Among the planes the company plans to develop is the sonic cruiser, which would transport travelers at almost the speed of sound. Boeing won't say where the sonic cruiser will be manufactured, leaving it open to competition now. Seattle officials, aware of the company's stance, are considering how they can woo Boeing, discussing improvements to the region's clogged transportation system and regulatory process.

"Boeing has changed more than the terrorist attacks what we do as an economic development group," said Richard Chapman, vice president of corporate advisory services at the Economic Development Council, an organization funded by public and private entities, including Boeing. "We have to focus on a recruiting case."

Microsoft, too, is concerned about the impact of the Boeing layoffs. "It's a big deal," said Bob Herbold, executive vice president at the Redmond, Wash., software maker. "You'll see fewer jobs in the Northwest, which means less tax revenue, and that means the state will have to do some belt tightening."

So the Pacific Northwest is girding for a drawn-out recovery. Among those waiting and wondering is Christina Fleming, who sits at an espresso stand near the Boeing complex, hand on chin, hoping for customers who aren't coming by like they used to.

"We were doing better before the bombing," she said. "After the bombing, it slowed down. Then they announced the layoffs, and people didn't want to spend money."

http://www.washingtonpost.com/ac2/wp-dyn/A46648-2001Oct11?language=printer

-- Martin Thompson (mthom1927@aol.com), October 12, 2001