OLYMPIA — Few industries carry as much economic heft in Washington state as aerospace, and few words in the lexicon of the Legislature incite as much passion as Boeing.
Last year, the Boeing Co. was in the spotlight with its competition for the location of a second production line for the 787. It chose South Carolina.
Since then aerospace and its biggest company have been noticeably absent from most conversations around the state Capitol.
In a recent interview, The Herald asked Gov. Chris Gregoire about the state of aerospace in Washington and the status of the company’s relations with her and lawmakers.
The conversation began with the state’s efforts to help Boeing secure the $35 billion contract to build the next generation of air refueling tankers. Gregoire is forming a multi-state coalition to support the company’s bid and plans a major announcement on its strategy Feb. 22 in Washington, D.C.
Question: What will the coalition do beyond cheer leading?
Answer: Its No. 1 task is to promote the tanker, to show how we’re all ready and how we’re going to work together. This is not a one-time thing. It isn’t about one state. It’s so competitive now. So it is about all the states involved in aerospace working together to maintain our (nation’s) leadership in the race. I know everybody focuses on Airbus as though that is the big competition but China is the growing competition.
Q. Will you commit resources from your discretionary budget for this effort?
A. Not at this point. I haven’t got a dime.
Q. This week three aviation analysts predicted Boeing would get the tanker contract. They reasoned that with the death of Rep. John Murtha, D-Pa., and with Rep. Norm Dicks, D-Wash., expected to succeed him as head of the defense spending committee it was a lock. Do you agree?
A. No. I don’t see that making the difference. Norm and John were friends. I understand Norm had turned Congressman Murtha away from his push for a split-buy (half to Boeing, half to Northrop-EADS). I think Boeing has an advantage now because the RFP (request for proposal) is going to be fair. I think the reason you’re hearing now that Airbus may not bid is because they know if the RFP is fair they don’t have the better bid.
Q. You and lawmakers spent a lot of time in the 2009 session talking about Boeing and the aerospace industry. This session is much quieter. What’s changed?
A. There’s a new focus. A year ago it was all about Boeing. Now it is about an industry sector in the state of Washington, and that sector is aerospace. There is as much incentive now to work for aerospace companies in this state that are suppliers to Airbus and Boeing as any time I’ve ever seen.
A year ago it was all about Boeing and it was all about other businesses walking along behind Boeing. They’re not doing that this year. Boeing has come in and been a constructive partner and player here. The other companies are coming in and standing on their own and being constructive in what they want to happen in this legislative session. All of that hype of a year ago has diminished. The commitment to the aerospace industry has not diminished.
Q. What do you think of the bills targeting Boeing’s tax incentives? That must not have sent a positive message to the company.
A. I had warned Jim Albaugh (president and chief executive of Boeing Commercial Airplanes). I warned him the day he called me about the second 787 (line). I said, “Jim you need to know there will be push back because there are legislators who believe they negotiated a deal for the 787 and they’re going to feel angry and upset, and I am asking you to be patient about that.” Then, when the bills hit, I sent a message through that they’re not going to happen, but this is what I was talking about.
Q. Regarding the second 787 line: How much did South Carolina offer in tax incentives? A lot less than Washington.
A. Yes. It’s like $900 million. There’s over $3 billion on the table here. There’s a lot of angst upstairs (in the Legislature) about South Carolina not offering them anything more than we did and the talk outside about “Look how much they offered; we should have offered more,” but we did offer more. Multiples of it.
Let me be honest with you, I think they are going through a mourning period up there. There are plenty of people who believe rightly or wrongly, the deal they cut was for the 787, not the first line but the 787, period. Those bills? That’s the anger that’s associated with all of that.
Q. Are you feeling Boeing is here for the long haul?
A. At the launch, Jim (McNerney, Boeing chief executive) was very clear with (chief of staff) Jay (Manning) that this is the home of Boeing and it’s going to stay the home of Boeing. My job is to translate that attitude into guaranteeing that’s true. So we can’t do anything stupid upstairs and I don’t see anything stupid going on. We also have got to try to meet the needs of the company as well as the entire aerospace industry.
Q. You met recently with members of the Aerospace Futures Alliance. What do they want in 2010?
A. They reiterated the biggest challenge we have in this state is that we have an aging work force and we do not have enough of the skilled, trained work force they need. That’s where these guys are trying to focus. Sure they’re trying to do everything they can to make it clear we want the tanker. But between them and the council on aerospace we really have got to focus on what good does it do us to keep recruiting companies if we can’t meet their work force needs.
Q. The Council on Aerospace you created by executive order last year cited it in its first report.
A. That workforce problem is real. If we don’t step up to that we’re going to hurt ourselves dramatically. There is no company in the state that doesn’t say (the council is) not right in what they’re doing.
Q. No company applauded the council’s first report when it came out in January. You’ve made no public comments on its work either. Overall, the response has been subdued and leads me to wonder if you were underwhelmed.
A. I get what you want. You wanted fireworks to go off. Before you can have fireworks go off, you better get everybody to the table working together. That may seem like a mundane challenge. In these times and under these circumstances that is a pretty big deal.
So, yeah, there weren’t any fireworks in the thing but it seems to me that they have all the right people at the table, they’re having good dialogue, they’re identifying the problem, they’re agreeing on the problem and they are at least starting to take steps toward solving it.
Q. The council didn’t disappoint you by not addressing larger concerns such as reforms of workers compensation and unemployment insurance?
A. I really didn’t have expectations that they were going to come through with some big dramatic thing at this point. When you talk about building relationships much of the beginning is all about building trust. I told (chairman) Rogers (Weed) that’s task No. 1, just getting people to be open and candid with each other. Build up some trust so that we can make some dramatic changes in the future.
Q. Is there anything in the report you plan to advance through budget or policy this session.
A. Not this session. We’re building toward next session.
Q. Why not?
A. I don’t have a dime to my name. What dime I did have was my discretionary WIA (Workforce Investment Act) money, and I gave it to (the alliance). And I can’t see any policy that needs to be developed right now.
Let me come back to what their challenge was: Get all the players at the table, get them to work together and build trust. The No. 1 thing was what does Airbus enjoy and the only thing that Airbus enjoys in Europe that we don’t have that I can see is really competition-related is how do you join up the private sector with the public sector in training capacity. That’s what the center in Everett is to do and the center in Spokane. So, look at the change that’s been made in one year to advance that.
Q. What about workers compensation reform. You brought it up in a speech at an aerospace summit in Spokane. You had a group looking at changes. What happened?
A. Workers’ comp is a complicated area, I have learned this. There is a problem in the system. No one denies that. I brought everybody to the table and they made progress, no question about it. There wasn’t enough time. There were no negative feelings when they parted company, but they each wanted to go their own way, advance their own legislative agenda.
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