Published: Tuesday, September 29, 2009
State won't sweeten deal for 787 with more tax breaks
Gov. Gregoire makes a case for keeping Boeing’s second 787 line in the state, but offers no more tax incentives.
Has Washington state done enough to land the Boeing Co.’s second 787 production line?
Gov. Chris Gregoire seems to think so.
Gregoire made public Monday the business case that she recently pitched to Boeing for keeping the 787’s second line in the same state as its first. The case highlights Washington’s favorable business ranking compared to rival states. The state, however, did not roll out another $3 billion in tax incentives as it did in 2003 to land the original 787 line in Everett.
Boeing is expected to announce the location for its second line by the end of the year. Washington isn’t the only state putting together a case. After Boeing bought its supplier Vought’s 787 parts factory in South Carolina, the state became a contender for the second line.
“Boeing can site a second 787 assembly line in Washington with confidence that the world’s best airplanes can be built at a competitive cost,” Gregoire wrote in her business case.
But not everyone shared Gregoire’s enthusiasm.
“Instead of issuing reports, we should be taking action like we did in 2003 when we made major reforms to the unemployment insurance system to land the first 787 line,” said Sen. Mike Hewitt, R-Walla Walla.
Boeing said it appreciated the thoroughness of the report but emphasized that it still views workers compensation and unemployment insurance costs as too high.
“While Washington state has made progress, there is still work to do to deal with the high costs of doing business,” Boeing spokesman Bernard Choi said.
Gregoire’s report cites several recent reports that rank Washington’s business climate favorably. Forbes magazine bumped Washington up to second best state in the country to do business. And Moody’s estimates that Washington will emerge from the recession by year’s end, six months ahead of South Carolina.
The governor’s report also highlights the state’s skilled work force as a means of lowering risk to Boeing. Workers in Everett already have an advantage over workers elsewhere when it comes to the steep learning curve associated with producing a new airplane. That alone could save the Boeing Co. thousands of hours of labor and costly errors, said Bill McSherry, the governor’s aerospace advisor.
Local analyst Scott Hamilton, with Issaquah-based Leeham Co., also sees the state’s work force as one of its selling points. Early this year, Hamilton thought it likely that Boeing would pick another state for its second 787 line. Since then, Boeing has delayed the first flight and delivery of its popular 787 again. On Monday, Hamilton said it would be “folly” for Boeing to locate its second line elsewhere given the continued risks to the 787 program.
“Boeing cannot afford any more risks,” Hamilton said.
“It has been the IAM in Everett that Boeing has had to rely on to fix the problems coming out of Charleston, Italy and Japan,” Hamilton said.
Although Boeing officials give credit, like Hamilton, to the company’s experienced work force in Everett, they’ve been quick to criticize organized labor over strikes, such as the 57-day Machinists walkout last year.
South Carolina politicians have noted that state’s scarce union presence. Machinists at Boeing’s facility there recently voted out of union representation. Just last week, South Carolina’s Rep. Chip Limehouse, R-Charleston, told The Post and Courier newspaper that the state is offering Boeing a deal “too good to pass up.”
South Carolina hasn’t made public what it’s willing to do to land the second 787 line. But Snohomish County Executive Aaron Reardon worries that state may put a better offer on the table than did Washington.
Like Walla Walla’s Hewitt, Reardon found the governor’s business case lacking. Instead, he would have liked to see it address issues — workers compensation, unemployment insurance and workforce training — that Boeing has raised repeatedly.
While “it appears Washington is losing the competition to South Carolina, some (lawmakers) in Olympia still seem to think that everything is fine,” Reardon said.
The Associated Press contributed to this story.
Gov. Chris Gregoire seems to think so.
Gregoire made public Monday the business case that she recently pitched to Boeing for keeping the 787’s second line in the same state as its first. The case highlights Washington’s favorable business ranking compared to rival states. The state, however, did not roll out another $3 billion in tax incentives as it did in 2003 to land the original 787 line in Everett.
Boeing is expected to announce the location for its second line by the end of the year. Washington isn’t the only state putting together a case. After Boeing bought its supplier Vought’s 787 parts factory in South Carolina, the state became a contender for the second line.
“Boeing can site a second 787 assembly line in Washington with confidence that the world’s best airplanes can be built at a competitive cost,” Gregoire wrote in her business case.
But not everyone shared Gregoire’s enthusiasm.
“Instead of issuing reports, we should be taking action like we did in 2003 when we made major reforms to the unemployment insurance system to land the first 787 line,” said Sen. Mike Hewitt, R-Walla Walla.
Boeing said it appreciated the thoroughness of the report but emphasized that it still views workers compensation and unemployment insurance costs as too high.
“While Washington state has made progress, there is still work to do to deal with the high costs of doing business,” Boeing spokesman Bernard Choi said.
Gregoire’s report cites several recent reports that rank Washington’s business climate favorably. Forbes magazine bumped Washington up to second best state in the country to do business. And Moody’s estimates that Washington will emerge from the recession by year’s end, six months ahead of South Carolina.
The governor’s report also highlights the state’s skilled work force as a means of lowering risk to Boeing. Workers in Everett already have an advantage over workers elsewhere when it comes to the steep learning curve associated with producing a new airplane. That alone could save the Boeing Co. thousands of hours of labor and costly errors, said Bill McSherry, the governor’s aerospace advisor.
Local analyst Scott Hamilton, with Issaquah-based Leeham Co., also sees the state’s work force as one of its selling points. Early this year, Hamilton thought it likely that Boeing would pick another state for its second 787 line. Since then, Boeing has delayed the first flight and delivery of its popular 787 again. On Monday, Hamilton said it would be “folly” for Boeing to locate its second line elsewhere given the continued risks to the 787 program.
“Boeing cannot afford any more risks,” Hamilton said.
“It has been the IAM in Everett that Boeing has had to rely on to fix the problems coming out of Charleston, Italy and Japan,” Hamilton said.
Although Boeing officials give credit, like Hamilton, to the company’s experienced work force in Everett, they’ve been quick to criticize organized labor over strikes, such as the 57-day Machinists walkout last year.
South Carolina politicians have noted that state’s scarce union presence. Machinists at Boeing’s facility there recently voted out of union representation. Just last week, South Carolina’s Rep. Chip Limehouse, R-Charleston, told The Post and Courier newspaper that the state is offering Boeing a deal “too good to pass up.”
South Carolina hasn’t made public what it’s willing to do to land the second 787 line. But Snohomish County Executive Aaron Reardon worries that state may put a better offer on the table than did Washington.
Like Walla Walla’s Hewitt, Reardon found the governor’s business case lacking. Instead, he would have liked to see it address issues — workers compensation, unemployment insurance and workforce training — that Boeing has raised repeatedly.
While “it appears Washington is losing the competition to South Carolina, some (lawmakers) in Olympia still seem to think that everything is fine,” Reardon said.
The Associated Press contributed to this story.
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