Everett, Wash.
Published: Tuesday, February 10, 2009

Aerospace analysts nervous for Boeing

Bumpy labor relations and protectionist trade policy could hurt the region

By Michelle Dunlop
Herald Writer

 LYNNWOOD -- The sky isn't falling on the commercial jet market, but it will be a bit stormy over the next few years, an analyst predicted at a regional aerospace conference Monday.

"I'm worried about the next six to 12 months because, frankly, there's a lot we don't know," said Richard Aboulafia, who watches the aerospace industry for the Teal Group.

The commercial jet market likely will decline over the next few years amid global economic troubles and rebound in 2013, Aboulafia said during the first day of the Pacific Northwest Aerospace Alliance conference, which continues today. Overall, Aboulafia sees the next few years as an "unusually long cyclic downturn." Despite robust backlogs, both Airbus and the Boeing Co. need to worry more about jet deferrals than outright cancellations.

However, a few bad decisions could make matters worse, Aboulafia warned. For instance, if the U.S. government pushes a "Buy America" clause, other countries could retaliate. While "Buy America" would benefit Boeing's bid to build the next aerial refueling tanker for the Air Force, a decline in globalization would hurt the company ultimately, he said.

"The biggest danger is if nations turn inward and stop engaging in trade," Aboulafia said.

Aboulafia sees good things ahead for Boeing's rival, Airbus, once the European jetmaker brings its A350 XWB jet to market. The mostly composite jet is set to be delivered in 2013. Airbus wouldn't be in such a promising position had Boeing been able to deliver its 787 jet on time, the analyst said. Boeing's Dreamliner is roughly two years late, and the Chicago-based company has been pumping research and development resources into the 787 since its schedule slipped.

As for Boeing's future in the Puget Sound region, Aboulafia reiterated a statement he made during last year's Machinists' strike: Boeing likely will move to a right-to-work state, perhaps in the South, over the next few decades.

"I cannot imagine them building the next new airplane in Washington," he said.

Linda Lanham, director of the state's Aerospace Futures Alliance, is working to fix that. The group has been lobbying state legislators to reduce the unemployment taxes for businesses in Washington, she said. And the alliance has been trying to get federal money to create a training center in the state.

Like Aboulafia, Lanham sees Southern states as tough competitors in landing the next new Boeing plane program. Southern states are offering aggressive incentives and don't have labor unions, which Boeing has struggled with in Washington.

Seeing a "strong possibility" that Boeing will move elsewhere, Lanham warned, "we need to stay competitive."
© 2009The Daily Herald Co., Everett, WA