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Gregoire seeks new incentives for Boeing to stay

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By Michelle Dunlop, Herald Writer
Published:
EVERETT -- Gov. Chris Gregoire has called for a new state council to coordinate efforts to keep the Boeing Co. and other aerospace companies in Washington.
The move came Thursday in response to a study that suggests Washington is losing its competitive edge, particularly to southern states. Earlier this year, state lawmakers gave the OK for the study, fearing Boeing might locate a second production line for its 787 Dreamliner elsewhere.
"There's a lot in the report that confirms we're ahead of the competition," Gregoire said during a press conference Thursday.
But "this is not a day to say rest on our laurels."
Deloitte Consulting was commissioned by Snohomish County's Economic Development Council to conduct the study. The state paid $250,000 for it. Deloitte compared the business environment for aerospace in Washington to that of Kansas, North Carolina, South Carolina and Texas.
The study shows Washington's "disadvantages outweigh the advantages" when it comes to attracting and retaining aerospace companies. Many of the state's "disadvantages" come as no surprise to Washington politicians including high wages, difficult union relations and a high cost of living. Washington also has fallen behind other states in terms of aerospace training, the study shows.
Gregoire's aerospace council would coordinate worker training programs at community and technical colleges, as well as at four-year universities. The council also would recruit aerospace companies and provide policy advice to the governor and the Legislature.
The governor dismissed the need for a central aerospace training center, an idea previously floated by the Aerospace Futures Alliance and the basis of a bill by Rep. Mike Sells, D-Everett.
"I think based on this report that a different approach is best for us," she said.
Gregoire also downplayed a call for lowering the burden on business for Washington's workers compensation or unemployment insurance. Boeing officials repeatedly have emphasized these points.
To win the initial 787 Dreamliner assembly line in 2003, state lawmakers approved $3.2 billion in tax incentives to Boeing and aerospace suppliers. Boeing has not announced its plans for a second 787 production line. The company has won nearly 900 orders for the fuel-efficient Dreamliner but has fallen nearly two years behind schedule on delivery.
Snohomish County Executive Aaron Reardon, who was briefed on the report last week, said the Legislature needs to act this session to reform unemployment insurance and workers compensation laws and create a centralized training center for aerospace workers.
"It's admirable the state wants to continue the work started in 2003," he said in response to the governor's proposal.
"But the state has lost ground since 2003. The momentum established in 2003 should have been continued the last six years and it hasn't," he said.
Aerospace represents a $36 billion industry for Washington. Boeing is Snohomish County's largest employer, making up nearly 22 percent of the county's wages.
"There is no question the aerospace industry is extremely competitive here at home and around the globe," said Scott Carson, president of Boeing Commercial Airplanes, in a statement. "As we have said in the past, we all need to work together to make Washington a better place for all businesses to compete."
The study also found that workers for Boeing's rival, Airbus, have been increasingly more productive than Boeing workers, requiring fewer employees to produce more commercial aircraft. The study suggests that union relations in Washington are among the state's disadvantages.
"The frequency and high costs of work stoppages, fairly or unfairly, reflect negatively on Washington," the study said.
Larry Brown, legislative director for the Aerospace Machinists Local 751, said he hopes the council encourages better communication among workers and managers because the industry is too valuable to the state "to be further damaged" by strife.
"(Workers) have proven they are tough enough to stand up to Boeing," Brown said. "Now we have to prove we are smart enough to make this work."

Herald writer Jerry Cornfield contributed to this report.

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