Jobs at Major Air Carriers Vanishing in Mass Layoffs

June 6, 2005
Jobs at Northwest and other major air carriers are vanishing in waves of mass layoffs. At Northwest, the latest round of cuts means an additional 600 mechanic jobs will be gone in the Twin Cities by this summer.

Bob Hansen used to fix airplanes, now he refuses to get on one. And he no longer talks to friends he left behind when he was laid off at Northwest Airlines two years ago.

"I don't want to hear about it anymore," he said. Northwest Airlines two years ago.

For the first year after the layoff, he tried to think big. He took classes in entrepreneurship and landed financing to buy an auto parts business. Then he backed away. "I just figured, I'm not that big of a gambler," said Hansen, 44, of Forest Lake. Northwest Airlines two years ago.

Now he works on machines that make metal castings at a Blaine foundry. The pay is much less than he was making at Northwest. A foundry doesn't offer perks like free flights. Northwest Airlines two years ago.

But those jobs at Northwest and other major air carriers are vanishing in waves of mass layoffs. Northwest Airlines two years ago.

At Northwest, the latest round of cuts means an additional 600 mechanic jobs will be gone in the Twin Cities by this summer. That means about 45 percent of 9,300 mechanics and related workers employed by the company just four years ago will have lost their jobs.

And more cuts could be on the way: Northwest, in contract talks with the union representing mechanics, has proposed eliminating 2,000 more jobs, with some 1,200 of those cuts aimed at the Twin Cities.

It all means there are a lot of Bob Hansens out there, workers who've discovered that a layoff or furlough, as it's called in the airline game is anything but temporary.

"The jobs have permanently disappeared," said Ted Ludwig, president of the Aircraft Mechanics Fraternal Association at Northwest.

Like most other airlines, Northwest has been sending an increasing amount of its aircraft maintenance work to outside contractors in the U.S. and Asia while slashing its in-house mechanic work force.

For Northwest, which has lost about $3 billion on its operations since the start of 2001, outsourcing is a key component of its strategy to cut costs and compete with industry rivals. Many of those rivals, particularly low-fare carriers such as Southwest, have outsourced aircraft maintenance much more extensively than Northwest.

"It's the economics,'' said Steven Casley, principal and co-founder of the Back Aviation Solutions consulting firm. "You've got high-quality third-party providers in more rural parts of the country, where the cost of living is lower. They can have cheaper labor rates.''

Not long ago, fixing aircraft for a major airline was a plum job. Mechanics could earn north of $70,000, with great benefits and seemingly iron-clad job security. State officials saw it as a key to economic growth: They envisioned hundreds of new mechanic jobs in Duluth. At the request of Northwest, state technical schools ramped up training programs for future mechanics.

Then came an industry slowdown, the Sept. 11 attacks, war in Iraq, bird flu in Asia, and eye-popping jet-fuel price spikes.

The mechanics who remain with Northwest tend to be a bit gray about the temples. Their average age is now 53. Very few are under 40.

The gray hair isn't all from age. Working under uncertain conditions in a volatile industry is stressful, workers say.

Val Hardy, 49, of Coon Rapids, has worked 16 years with Northwest Airlines but that's not enough seniority to save his job. He expects to be laid off Aug. 1. Meanwhile, he said, morale is low. "At least I know where I'm headed."

Hardy has had some time to plan. He ticked through a list of new jobs he has considered: dental hygienist, X-ray technician, and nurse. His latest idea is to go back to school, get a master's degree in clinical psychology and eventually become a therapist. "Life will go on," he said. "I have to keep trying to remember, the Lord will provide."

Perhaps, but in smaller quantities. Whether mechanics find completely new careers or land similar jobs in an industry that has shed so many jobs, many have had to face major cuts in pay.

Erik Carlson, 27, was laid off two years ago. After attending Lake Superior College in Duluth to get his private pilot's license, the Lake Park, Minn., man now works as an aviation technician at a Fargo airplane repair station, for less than half the pay.

"It hurts," he said. "It's a lifestyle change." To make ends meet, he and his wife sold land, sold a car and generally downsized their way of life.

Looking back, he recalls the agony several years ago of a daily ritual at a jet maintenance base in Duluth: scrutinizing the list of mechanics' names ranked by seniority.

As the days ticked by, he watched his name drop further down the list. Then he learned his wife was pregnant. As the more senior mechanics bumped those with less seniority out of their jobs, he wondered what day his number would be up.

Finally, in March 2003 he got his pink slip with no one left to bump further below him.

Carlson did get a callback from Northwest but decided against going back. He saw other mechanics who had moved from Detroit bumping others out of their jobs in Duluth, just to get laid off themselves shortly thereafter.

In order to keep his $34 per hour airline mechanic job, Hubert McIntosh, 42, moved his wife and four children from Atlanta, Ga., to the Twin Cities in 2002.

Then, a month later, he was bumped. He did the same to someone in Duluth, where, after a few months, someone else bumped him out of his job.

So he moved to Chicago. He was there less than a month when he was laid off for good. Now he works for $17.28 per hour as a technician in a titanium laboratory outside of Las Vegas. If he stays until 2007, which he plans on, he'll receive a pay boost to $19.50.

McIntosh, like many, thought the union contract gave mechanics job security. But when confronted by major unforeseen events such as the terrorist attacks or the Iraq war, Northwest invoked the "force majeure" clause of its contract with the mechanics. That allowed the airline to void some key contractual restrictions and lay off thousands.

Now, as many are finding out, not only was it a layoff, but it also was a permanent change in lifestyle and career. The prestige of working their way to the top of the industry has all but vanished, along with the jobs.

Those who could swing it financially, or had the heart, entered retraining programs offered by the state's dislocated-worker programs. But the response to retraining offers was somewhat underwhelming.

In one grant, aimed at providing training for three years beginning March 2003, the state served 906 airline workers one-third of them mechanics through retraining or other services. It expected to serve more than twice that number. It was forced to return $2 million of the $8 million grant.

Many workers couldn't afford to take two years to retrain. Others simply expected to return at some point to their mechanic jobs. "Now they see the handwriting on the wall, but at the time did they? No," said Jamie Fitzpatrick, who monitors the federal dislocated-worker grants for the state.

Those who did retrain often found far lower wages in their new jobs.

Less than 80 percent found jobs in the fields for which they retrained. The median wage of $20.97 per hour (the state could not break out what the mechanics made after retraining) compares to about $35 an hour for the union mechanic jobs.

When Kay Franey, who works for Hennepin County, first started talking with the mechanics, they were shocked to hear the starting wage they could expect in some fields.

In some of the construction trades, starting annual salaries hovered around $35,000 to $45,000. "I said, 'Yeah, when you change fields, you will go back to starting wages.' " None of those who received jobs in the fields for which they retrained, many in the medical field, were earning $70,000 annually.

Many airline mechanics have worked their way up from small operations at boondocks airports to jobs with Northwest, one of the major carriers in the industry.

Carlson, for one, graduated from high school in 1994, when demand for his skills was strong. A high school counselor recommended aviation mechanics because he liked working on equipment and had grown up helping his father in his repair shop. After he received his airframe and power plant license and worked for a small operation, Northwest hired him in 1997. "I thought I had it made," he recalled.

Just as their stars were rising, industry and economic forces came along to sink mechanics like Carlson. Many of the jobs lost since the 2001 recession have been wiped out because outsourcing is a structural, rather than cyclical change. As in other businesses, the airline industry's employment structure is permanently changing.

"If you want to work at a vendor for less pay, and a lot worse working conditions, you can still work on airplanes," said Ludwig, but most of the outsourcing firms in the U.S. are in the South, in states like Alabama, North Carolina and Texas.

When benefits are included, U.S. airlines have been paying their mechanics an average of $65 an hour, according to Back Aviation's Casley. That compares with about $45 an hour for labor at most third-party maintenance firms in the U.S. and $40 an hour at maintenance operations in Asia and $35 in Latin America.

Barring a move south, many mechanics have struggled to find jobs that are on the same level, while changing careers at middle age is daunting.

Take Rick Embry, 40, who worked for Northwest for seven years until he was laid off in 2003. He moved close to Phoenix, where he attends school to be a helicopter pilot. To finance school and living expenses, he sold his home in New Hope, which he and his wife had remodeled from top to bottom. "Right now I'm on edge because things are tight."

Selling it was heartbreaking. "These are everyday things that you work for and it seems everything went up in smoke." Financial stress strained the couple's marriage and they separated. His wife, a flight attendant for Northwest, lives at a "crash pad" in Hopkins while he rents a one-bedroom apartment in Gilbert, Ariz.

When he was hired at Northwest in 1996 and started as a mechanic in 1997 after working at small third party vendor paying $9.50 per hour he was ecstatic. "I had an ear-to-ear grin," he said. With the hiring Northwest was doing at the time, it didn't take too much time before he had 1,500 mechanics below him in terms of seniority.

When the layoffs started, his future quickly unwound. "When we left there, the saying was, 'If you think the news is bad today, wait until tomorrow.' "