WE ARE NOW

Learn more →
Emsi
Request Info

The Impact of Boeing’s Long Beach Plant Closure and How Workforce Practitioners Can Respond Using Data

September 3, 2014 by Emsi Burning Glass

Boeing Case Study-01Expected, but jarring. That might be the best way to describe the Boeing Company’s April announcement that it would close its massive C-17 plant in Long Beach, California, by mid-2015.

For more than seven decades, the 1.1-million-square-foot plant has been a fixture of the Long Beach landscape and economy. The Douglas Aircraft Company (a forerunner to McDonnell Douglas) began supplying aircraft to the Air Force at the site in 1941, just before the U.S. entered World War II. McDonnell Douglas merged with Boeing in 1997, by which time the C-17 Globemaster III—a four-engine military cargo jet—was in full production in Long Beach.

But more recently, orders for military aircraft started to dry up, and talks of shutting down the site took place off and on over six years. So, yes, the news that the Long Beach plant was closing came as no surprise. Yet the ripple effects of Boeing’s decision will still run deep—far deeper than direct impact of the 1,400 hourly and salaried aircraft assemblers, aerospace technicians, and others who have already or will soon be out of jobs or transplanted to other Boeing locations.

  • The closure will cause nearly 3,800 job losses in and around Long Beach in other industries, foremost in health care, retail trade, and other service sectors.
  • Regional higher education institutions, at least one of which primarily exists to train aircraft maintenance workers, will likely have to adjust or ratchet down some of their offerings.
  • The onus will fall on workforce practitioners to help direct laid-off workers to other job opportunities in Southern California.

In this article, we will walk through these impacts as well as some of the ways that workforce and economic developers can use data on their local economies to respond to—or even prevent—similar closures.

I. The Impact on the Long Beach Economy

Though declining for years, aircraft manufacturing remains an important industry in Southern California—one that pays well and has deep regional supply chains. Los Angeles County alone has 8,800 aerospace engineers, a concentration 3.5 times greater than the national average. These engineers make $56.78 per hour in median earnings, about $7 per hour more than national median and equivalent to $118,000 a year.

The airplanes produced in Long Beach are exported all over the world, bringing outside money into the region and supporting resident-serving industries (e.g., grocers, restaurants, doctor’s offices).

Boeing_25mile_Map_2To estimate the economic impact of the Boeing closure, we used EMSI’s input-output model (housed in Analyst, our data research tool) and focused on a 25-mile ZIP code radius from the C-17 plant. We chose to use EMSI’s ZIP code data rather than county data, largely because the sheer size of L.A. County makes it unlikely that workers would commute from one end of the county to the other. (The Boeing plant is located in the southern coastal section of L.A. County, just northwest of the Orange County line.)

According to local officials, the Boeing plant closure is expected to yield 1,410 displaced jobs, the majority of which are hourly positions for aircraft mechanics, aerospace engineering techs, and miscellaneous production workers. We subtracted 1,410 jobs from the aircraft manufacturing industry in our IO model to get the following impacts for the 25-mile radius Long Beach region:

  • An overall job loss of 5,191 (the loss of 3,781 jobs in other industries plus the 1,410 already gone). In other words, for every laid-off worker, 2.68 jobs in other industries will also disappear (a job multiplier of 3.68).
  • A $417 million reduction in regional earnings, $190 million of which stems just from the jobs removed at the plant.
  • $80,435 (average annual earnings) lost per job.

Aside from manufacturing, most of the job losses will occur in the service realm: health care, retail trade, professional, scientific, and technical services, accommodation and food services, and administrative and support services.

Boeing_IO_Industries

At the occupational level, production jobs (e.g., machinists) and administrative support jobs (e.g., office clerks and shipping, receiving, and traffic clerks) will be most affected. The region is also expected to lose 159 jobs for retail salespersons and cashiers because of lower earnings and, thus, reduced spending.

Note: Boeing is moving 1,000 customer support jobs from Washington state to Long Beach, a decision that was announced near the same time as the plant closure. These support jobs are engineering positions, so it’s likely that some of the aerospace engineers and other high-skilled workers (e.g., experienced aircraft mechanics) who lost their jobs will have other job opportunities.

Boeing_IO_Occupations

II. The Impact on Regional Higher Education Institutions

The shuttering of the Boeing plant will also filter down to Long Beach-area colleges, especially community colleges and other institutions that offer technical training. Fewer aircraft manufacturing jobs means students currently in training will enter cutthroat competition with laid-off workers once they reach the marketplace.

Which colleges are we talking about, and what’s the current educational pipeline? Let’s look at two programs that relate to aircraft mechanics and aircraft structures, surfaces, rigging, and systems assemblers as an example.

In our selected Long Beach region (again, a 25-mile radius from the Boeing plant), five colleges in 2013 generated 467 graduates in airframe mechanics and aircraft maintenance technology (CIP 47.0607) and aircraft powerplant technology (CIP 47.0608). The number of completers, most of whom have obtained postsecondary awards, has exceeded 400 per year over the last decade while dipping statewide and taking off nationally.

Assemblers_Mechanics_Program_Trend

These graduates were already facing a stiff job market before the Boeing plant closure. Estimated job openings for aircraft mechanics and aircraft assemblers totaled 349 in 2013, creating a glut of more than 100 graduates if all were to stay in the area to look for jobs. And that surplus is likely to worsen once the laid-off mechanics and assemblers are added to the mix.

Of the five institutions contributing completers for these two aircraft maintenance programs, Crimson Technical College in Inglewood graduated more than half (244) in 2013. Crimson is solely an aviation education provider—its only graduates last year, according to IPEDS, were in the two aforementioned aviation maintenance programs—so it’s almost certain to feel the loss of the Boeing plant more than other schools in the area. Long Beach City College, for example, had seven programs with more graduates in 2013 than its 88 in airframe mechanics and aircraft maintenance technology. Still, all schools in the area should be aware of the potential ramifications that the Boeing closure will have on their graduates.

Outlook for Aerospace Engineers

Aircraft mechanics and assemblers are mid-skilled technical positions. What about the supply-and-demand dynamics for aerospace engineers?

As we mentioned earlier, some engineers will likely find jobs with Boeing in the company’s expanding Southern California engineering design center (read more here), which will alleviate some of the potential oversupply with laid-off engineers flooding the job market. But the picture for aerospace engineering grads from local universities (USC, UCLA, Long Beach State, and the California Institute of Technology) is already noticeably different than the one for mid-skill technical workers.

For one thing, highly skilled engineers tend to be more mobile, and are thus likely to have better job prospects if they are willing to move for work. But for those who want to stay in Long Beach or the surrounding region, there were more estimated job openings in 2013 for aerospace engineers (380) than graduates (299).

Note: EMSI’s annual job openings include regular employment growth or decline and new jobs that come about because of turnover.

occprograms_aerospaceengineers

III. Helping Displaced Workers Transition to New Jobs

The workers who aren’t rehired by Boeing or don’t quickly find other jobs in their fields will be looking at abrupt mid-career transitions—or late-career transitions, as the case may be.

A good portion of Boeing mechanics who are part of the United Aerospace Workers Local 148 union are in their 50s and 60s, according to an article in the International Business Times. And indeed, EMSI’s input-output model showed that 1,397 of the 5,191 estimated job losses from the plant closure (27%) will be among 45-54-year-old men and women (845 for men, 552 for women). Another 899 job cuts will be experienced by men and women ages 55 to 64.

Boeing_IO_Demographics

It’s not easy for older workers to transition to new careers, but there are ways to find good career opportunities that make sense based on their knowledge and skills. We looked at compatible occupations for aircraft structures, surfaces, rigging, and systems assemblers and aircraft mechanics—two of the most affected occupations—using EMSI’s proprietary compatibility index (based on the O*NET system). Here’s what we found.

Compatible Occupations for Aircraft Assemblers

AircraftAssembers--AutomotiveRepairersThe median earnings for aircraft assemblers in the Long Beach region are $16.75 per hour, so there’s definite room for wage improvement. But are there available jobs for workers who need to slide into new careers? Local knowledge needs to be applied here, but the answer based on available data is a clear yes.

The best transition option, based on compatibility, job growth, and wages, might be automotive body repairers. It’s a highly compatible occupation (96 out of 100 on our index, with the biggest skill gap in repairing, as shown in the radar chart) and offers better wages ($19.87 per hour).

But here’s the kicker: EMSI estimates 8% job growth for automotive body repairers in the Long Beach area from 2014 to 2019. And although there aren’t a huge number of job postings from employers for this position, the job posting intensity—a ratio of total postings to de-duplicated postings developed by EMSI—for auto body repairers is much higher in Los Angeles County (8-to-1) than the average for all other occupations in the region (5-to-1). This indicates companies could be working harder to hire for this position.

Average monthly hires over the last year have also topped 250 for auto repairers, well surpassing average monthly unique postings.

JPA_AutoRepairers

Another potential landing spot is in the solar industry as solar photovoltaic installers. This is a small occupation nationwide, but the Long Beach area has just over 100 solar installers, and the wages are much stronger than they are for aircraft assemblers ($26.54). Also, there were 14 average monthly unique job postings and 13 average monthly hires for solar photovoltaic installers in Los Angeles County from Aug. 2013 to Aug. 2014—not a huge sum, but jobs are clearly available.

Compatible Occupations for Aircraft Mechanics

Aircraft mechanics make considerably more on average than aircraft assemblers ($28.32 vs. $16.75 per hour). This makes it tricky to find career pathways with as much earning potential, but there are a few promising options with very high compatibility scores:

  • Mobile heavy equipment mechanics ($27.30 per hour; 79 annual openings from 2014-2019)
  • Electrical and electronics repairers, commercial and industrial equipment ($27.98; 42 annual openings)
  • Industrial machinery mechanics ($26.49; 214 annual openings)

Industrial machinery mechanics offer the lowest median hourly wages of the three we listed, but check out the wage curve compared to aircraft mechanics—workers at the top 10th percentile make more per hour.

Boeing_wagecurve

IV. Steps to Prevent Business Closures or Relocations

It’s one thing to be prepared to take action after an employer closes its doors like Boeing will next year. It’s another thing to take steps beforehand to help prevent an important business from shutting down or relocating to another state.

What are some of the proactive ways to bolster business retention? Here are a few starting points.

Step 1: Understand Your Driver Industries

This is where a targeted industry or sector strategy analysis can be valuable. By looking at key data variables for detailed industries, including regional concentration (measured by location quotient) and growth trends, local practitioners can get a handle on the true drivers of their economy.

Location quotient (LQ) helps planners identify the industries that are unique to their region—and the ones that are most export-oriented. For example, aircraft manufacturing in the Long Beach region (with an LQ of 2.05) is more than twice as concentrated as the national average and accounts for 14,000 jobs. But even more concentrated is other aircraft parts and auxiliary equipment manufacturing, a supply-chain industry with an LQ of 4.85. And while aircraft manufacturing is in major decline (it’s dropped 6,700 jobs since 2010, a 32% loss), aircraft parts and auxiliary equipment manufacturing has gained 1,600 jobs, a 12% jump, and now accounts for more total jobs.

LQcomp_Boeing

For more on LQ and other key driver-industry variables, read our how-to on identifying driver industries in your region.

Step 2: Discover Which Industries Are Underperforming

Some of the target industries you identify might be large and well-concentrated, but perhaps they aren’t performing like they could—or as well as they are nationally. Underperforming industries are at risk of leaving your area, so it’s vital to pinpoint these industries and track how they do over time.

Enter shift-share analysis. Shift share breaks regional job growth into its component parts: 1) growth of the industry at the national level, 2) overall growth of the national economy, and 3) regional competitive effect. This last component explains how much of the change in a given industry is due to some unique competitive advantage (or disadvantage) that the region possesses.

For example, aircraft manufacturing was expected, based on national trends, to lose only 375 jobs from 2010 to 2014 in the Long Beach area. But it actually declined by 6,715 jobs. That negative competitive effect is telling; basically, the industry is doing poorly across the U.S., but it’s doing even more poorly in and around Long Beach.

Other aircraft parts and auxiliary equipment manufacturing, on the other hand, added 368 more jobs than expected (again based on national trends) from 2010 to 2014.

Shiftsharecomp_Boeing

As we documented in our EMSI for Economic Developers series with the Dayton Development Coalition, regional competitiveness is a key variable to determine an industry’s flight risk. It’s a good idea, as always, to identify the specific businesses in these industries.

Step 3: Communicating Impacts

Sometimes the most important thing a local workforce or economic development practitioner can do is rally key decision-makers and policymakers—people who need to understand the ripple effect that the employer’s departure will have on the regional economy. How much will it cost the region to not fight to keep that employer?

This is when input-output models like EMSI’s can really help. We’ve seen several examples (see the case studies in the next section) where EMSI clients have used economic impact numbers to help retain an important business. Data can help craft a powerful story—one that gets people moving toward the same goal.

V. Case Studies

Local workforce and economic development organizations and other practitioners across the country have used EMSI’s data and tools to help retain key businesses or adjust after a key business shuts its doors. Here are a few examples:

  • The Portage County Business Council in Wisconsin used EMSI’s economic impact figures to help convince legislators that the damage of losing Skyward, Inc., a local software company, would be too great. The result: Skyward stayed and is expanding in the region. Read the case study.
  • The Fond du Lac Economic Development Corporation, also in Wisconsin, used EMSI economic impact numbers to convince city, county, and state officials to make a more aggressive bid to keep Mercury Marine, a prominent outboard boat motor producer. The company stayed in Fond du Lac, thanks to the concerted business retention effort. Read the case study.
  • The East Kentucky Concentrated Employment Program (EKCEP) used EMSI data to help win a DOL grant and assist hundreds of laid-off coal mine workers with workforce transition assistance. Read the case study.

About EMSI

Emsi turns labor market data into useful information that helps organizations understand the connection between economies, people, and work. Using sound economic principles and good data, we build user-friendly services that help educational institutions, workforce planners, and regional developers build a better workforce and improve the economic conditions in their regions.

For more on EMSI’s input-output model and employment data—available at the county, MSA, and ZIP code level—or to see data for your region, email Josh Wright. Follow EMSI on Twitter (@DesktopEcon) or check us out on LinkedIn and Facebook.

Want to get notified?