Boeing: A Changing Landscape for Engineers

We follow up on our previous article on The Boeing Company (NYSE:BA), where we discussed the trends in engineer tenure at the company. The Financial Times (FT) recently reported that the average tenure of Boeing engineers has dropped over the past decade. In this article, we will analyze the implications of this trend on Boeing's product development process, institutional knowledge retention, and the company's recruitment and retention strategies.

The FT report highlights that the average tenure of Boeing engineers has decreased significantly over the past decade. This trend has raised concerns about the retention of institutional knowledge and expertise within the company. As Boeing continues to invest in research and development, attract global talent, and foster a culture of innovation, it is crucial to understand how this trend impacts the company's long-term prospects.

Firstly, the decrease in average tenure may affect the diversity of ideas and perspectives in Boeing's product development process. A more transient workforce may lead to a loss of institutional knowledge and a lack of continuity in the development of new products. However, Boeing's commitment to attracting global talent and fostering a culture of collaboration and knowledge sharing may help mitigate this effect. The company's Technical Fellows program, which consists of nearly 1,900 technical experts in over 40 disciplines and technologies, contributes to a diverse and inclusive product development process.

Secondly, the trend of decreasing average tenure may impact the retention of institutional knowledge and expertise within Boeing. A lower average tenure could indicate that employees are leaving the company before they have the opportunity to fully share their expertise with newer employees or contribute to the company's long-term strategic goals. To address this challenge, Boeing has implemented various initiatives to foster knowledge sharing and mentorship. For example, the Boeing Technical Fellowship program allows technical experts to be deployed across the company to solve complex challenges. Additionally, Boeing's commitment to continuous improvement and innovation suggests that the company is actively working to preserve and build upon its institutional knowledge, even as employee tenure may be decreasing.

Lastly, the trend of decreasing average tenure may impact Boeing's recruitment and retention strategies. To address this challenge, Boeing has adapted its strategies by focusing on attracting and retaining global talent, as well as investing in the development of its employees. The company has committed to attracting the very best people from across the world, hiring across multiple engineering disciplines and at all levels of experience. Boeing's partnerships with universities and research institutions, such as Cambridge University and Georgia Tech, provide fresh perspectives and cutting-edge ideas, further enhancing the diversity of thought in Boeing's product development process.

In conclusion, the decrease in average tenure of Boeing engineers over the past decade has raised concerns about the retention of institutional knowledge and expertise within the company. However, Boeing's commitment to attracting global talent, fostering a culture of collaboration and knowledge sharing, and investing in the development of its employees may help mitigate the impact of this trend. As Boeing continues to innovate and adapt to changing market conditions, it is essential to monitor the trends in engineer tenure and their impact on the company's long-term prospects.

We maintain our Hold rating on BA, as we believe the near-term upside in the stock has been adequately reflected. Investors should wait patiently for a pullback first before adding more positions to improve their potential for outperformance.