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Published: Tuesday, October 1, 2013, 7:01 p.m.

Will 777X land here? An exec's long pause

EVERETT -- A Boeing Co. executive's silence Tuesday spoke volumes about whether Washington will be the place where the company assembles the next generation of the popular 777 jetliner.
Boeing Senior Vice President Pat Shanahan, who is general manager of commercial-airplane programs, sat silently in front of aerospace executives and civic leaders for nearly half a minute before carefully saying what everyone assumed: No decision's been made.
"It's not about the pros and cons," Shanahan said in response to a question about what Washington's cons are. "It's about trying to understand what are your options."
Boeing, he said, is focused on defining the 777X in consultation with customers. Eventually it will decide how to build the plane.
"You can quote me on this," Shanahan said at the Governor's Aerospace Summit at Comcast Arena. "We'll be very thoughtful to not repeat some of the experiences with the 787."
He was referring, of course, to program-delaying problems that emerged once substandard assemblies and systems designed and built by suppliers first began arriving at the Everett factory. Company executives have been inferring for some time that the 777X program will involve less outsourcing.
"That doesn't mean we'll be ultra-conservative and we won't be ultra-aggressive," he said. "We'll be very prudent in our decision-making."
Boeing is expected to announce the launch the 777X program at the Dubai Air Show next month, and sometime after that it will announce where it will design and assemble the jetliner.
The firm now builds the 777 at Paine Field in Snohomish County, seemingly giving Washington an edge against other states competing for the work.
But Boeing officials are concerned about the effect of pending regulatory changes here and could choose to do the work in South Carolina, where it builds some 787s and has been buying up land in North Charleston.
Gov. Jay Inslee is acutely aware there are hundreds of jobs and millions of tax dollars at stake.
In 2012, Boeing employed 19,800 people in the production of the 777, roughly a quarter of all its commercial-airplane jobs in the state, according to a new study. Those workers earned an estimated $2.5 billion in wages, the study found.
That's only a sliver of an aerospace industry which is getting bigger and making a greater impact on the state economy.
Led by Boeing, aerospace jobs accounted for 11 percent of all wages and nearly 50 percent of all exports in the state in 2012, according to the study of the industry's impact released Tuesday.
And taxpayers are getting a decent return on the use of their dollars.
Between 2004 and 2012, Washington provided $1 billion worth of tax breaks and spent nearly $400 million to train workers and on capital projects benefiting the industry, according to the report prepared by Community Attributes Inc.
That direct and indirect investment yielded $4 billion in revenue for state coffers, of which $3 billion could be attributed solely to Boeing, analysts found.
Today Inslee is to speak at the summit and is expected to cite some of the figures to the crowd of aerospace leaders.
He is also expected to draw a bead on the state's intensive effort to convince Boeing to keep as much of the work designing and assembling the 777X here.
To date, Inslee has directed the Department of Commerce to consider potential 777X projects to be of "statewide significance" to ensure faster permitting. There's also been a $2 million loan pledged to preparing of a 42-acre site at Paine Field.
And he's asked a bipartisan panel of lawmakers to craft strategies on issues certain to be factors in Boeing's decision-making process, including transportation, taxes, worker compensation and regulation.
One of the more stubborn issues involves a potential change in the estimate of how much fish Washingtonians eat, of all things. A higher fish-consumption rate could mean tougher water-quality standards.
When Shanahan and two other aerospace executives on a panel were asked to cite three imaginary opinion-article headlines addressing things they'd like to convey to Washington residents, Shanahan's first one was, "Unachievable environmental regulations do more bad than good."
"I worry that we'll set a standard that's harmful to business," he added.
Afterward, he told reporters what the state does with regard to water quality could require millions of dollars worth of renovations at the 737 plant in Renton, on the south shore of Lake Washington.
"We want a clean Lake Washington but we want to build lots of 737 maxes in Renton," he said.
The summit, which is hosted by the Aerospace Futures Alliance, concludes today.
Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com.

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