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Tax-break Boeing needs to get to work

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By John Burbank
Published:
So how about that $8.7 billion tax give-away Boeing just received to build the 777X? We have been here before. In 2003, the Legislature excused Boeing from $4 billion in taxes, in order to build the 787 in our state. What happened to that $4 billion? Over $1 billion was used to construct a copycat 787 facility in South Carolina. The other $3 billion? Some went into outsourcing construction of 787 parts all over the world, which were then shipped back to Everett, there to be snapped together. Only the pieces did not snap together and the Everett machinists and engineers had to re-jigger the pieces in order to make the 787 fly right. The result of this brilliant outsourcing strategy is that the 787 is about $14 billion over budget. And several years late. And how about those batteries?
Is Boeing management inept enough to do this again with the 777X? Its own customers would not appreciate that. "All we said to (Boeing) was, 'Please don't do to 777X what you did to the (787)... Don't do that to us." Those are the words of Emirates CEO Tim Clark, the 777X biggest customer. Or how about Qatar Airways Chief Executive Akbar Al Akbar, the second largest 777X purchaser: "Frankly, we would rather everything was built in one place, and I think Boeing from the 787 experience have learnt a lesson."
Boeing has given itself three months to decide on a 777X assembly location. When you put all the pieces on the table, there shouldn't even be a competition. Everett machinists and engineers produce 100 jets per year. No other state has this experienced and dedicated workforce. No other state can match our aerospace training and transportation infrastructure. No other state has our network of aerospace contractors. And no other state has offered such a plum in tax giveaways, for better or worse!
The Legislature stated that "the people of Washington have benefited enormously from the presence of the aerospace industry in Washington state..." The Legislature could have also stated that Boeing has benefitted enormously thanks to thousands of engineers and mechanics in the aerospace industry, the transportation infrastructure, the state's investment in engineering schools at the University of Washington and other universities and community colleges and our focus on workforce development specifically for Boeing.
But is Boeing profitable? Is the pope Catholic? $1 billion in 2003, $3 billion in 2006, $4 billion in 2010, $5.6 billion last year. So Boeing has the profits, they have the infrastructure, they have the intellectual and engineering know-how, they have the machinists' expertise. And they just got a huge tax giveaway. So it is a green light for Washington state ... except for those pesky machinists. Should the machinists just bow down to Boeing? Should they agree to break up their own labor force into two or three tiers? Should they agree to a 30 percent increase in health care costs? Should they abandon their pensions, which deliver decent, not extravagant, but dependable checks, in retirement?
Here is the thing: The machinists don't need to approve a new contract. They already have one that runs for another three years. It is a legally binding agreement between the Boeing Co. and the International Association of Machinists and Aerospace Workers IAM. It was the machinists, after all, who proposed a 10-year contract a few years ago. It was Boeing that ran away from that proposal for labor peace and productivity. It was the machinists who exposed Boeing's breaking of federal labor law, when the company actually wrote that it was moving production to South Carolina to undercut the union. And it was the machinists who agreed to drop this unfair labor practice charge in exchange for the current contract.
What Boeing needs to do is focus on building the best airplanes in the world, instead of taking away hard-won benefits, defunding the Boeing pension, and seeking out a "union-free" environment. We have helped Boeing enough. Now it is time for Boeing to get to work on the 777X, right here in Washington. That would be a productive partnership.

John Burbank is the Executive Director of the Economic Opportunity Institute (www.eoionline.org). He can be reached at john@eoionline.org

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