State’s $3.2 billion in incentives sway Boeing
Published 9:00 pm Tuesday, December 16, 2003
Analysts said from the start of the Boeing Co.’s 7E7 site-selection process that the Puget Sound area was the company’s best option.
In the end, that’s what it came down to, Boeing executives said Monday — a $3.2 billion state tax incentive offset the higher cost of doing business here, and that tipped the scales toward Everett.
"There (was) not enough difference there to make much difference," Boeing chief executive Harry Stonecipher said of other offers.
The tax package was part of a broader effort that included highway improvements, large-scale reform of the state’s unemployment insurance and workers compensation systems, and a $15.5 million pier to help Boeing speed the shipment of parts to its Everett factory.
The goal was to make Boeing an offer it couldn’t refuse, Gov. Gary Locke said.
"We wanted to make ourselves equal or better than any of the other states, so that it would have to be a matter of politics or some corporate strategy for Boeing to ignore that we were the most compelling option," he said.
The effort also built on long-standing relationships government officials had built with Boeing officials over the years.
"We really laid the foundation for this work 12 years ago," said Paul Roberts, Everett city planning director.
Locke said a state team of analysts did its own research to determine the cost of building the 7E7 in other states as compared to Washington.
"Boeing never came to us and said, ‘This is how much we need,’" Locke said. "We did our own analysis and figured out what we needed to do."
Locke said the research included everything from the cost of labor in competing states to the cost of gasoline, electricity and freight.
The analysts ended up with a package that went well beyond what many legislators were thinking about, Locke said. He said he tried to prepare them for the tax incentive proposal by telling them to "take a big gulp."
"Some of them were thinking $100 million here, $200 million there," he said. "But they did it without blinking."
In a June special session, the Legislature approved the plan, which:
In addition:
Mike Bair, the executive in charge of the 7E7 program, said the company still is in talks with others about the air freight program. Several air cargo companies are interested, he said.
Washington’s package balanced out the higher cost of doing business here, and made it possible for Boeing to consider its other strengths, Stonecipher said.
After that, Puget Sound’s skilled workforce and the existing Boeing infrastructure sealed the deal, Bair said.
"The Everett facilities are basically ready. It’s all there," Bair added.
"A skilled and talented and motivated team was a real plus for Puget Sound," said Alan Mulally, Boeing’s commercial airplanes chief executive officer.
The state’s involvement this time was in contrast to what happened the last time Boeing sought to expand its factory, Roberts said.
"Years ago when we worked with Boeing to build the 777, we were nudging the state to accommodate Boeing," Roberts said. "This time, the state stepped up — the governor and the Legislature stepped up."
The economic benefits include the direct and indirect jobs and a commitment from Boeing that it will stay in Everett for the long run, said Snohomish County Economic Development Council president Deborah Knutson.
And it goes beyond that, she added. "In the long run, we can say Boeing picked us because we made the best business sense."
Herald writers Victor Balta, Eric Fetters, Janice Podsada and Lukas Velush contributed to this story.
