County’s fiscal well-being soars or slumps with Boeing

EVERETT — With its 100th birthday only seven months away, the Boeing Co. looks good for its age.

It is coming off a big year in which it delivered more than 700 commercial airplanes from assembly production lines in Washington and South Carolina, conducted the first test flights of a new aerial refueling tanker for the military and continued erecting the massive building where the 777X’s composite material wings will be made.

Boeing’s centennial year can be as successful as 2015 was if the aerospace giant can dodge labor strife during contract negotiations with its engineers union, continue cutting costs from 787 assembly, get the tanker through flight and system testing without any problems, smoothly increase its 737 production rate, and be ready to start assembling 777X jetliners in 2017.

The Chicago-based company’s defense division is also trying to get the federal government to reconsider who will design and build the Air Force’s new long-range strike bomber. Northrop Grumman won the contract, worth up to $60 billion, in October. Boeing and its partner, Lockheed Martin, formally protested the decision the next month.

That might seem like a daunting to-do list for most companies. But Boeing is not most companies. It has deep resources — talent, cash, political connections, to name a few — to throw at challenges.

Boeing’s fortunes can cast sunshine or shadows on Snohomish County’s economy. Civic and private sector leaders say they see sunny days ahead.

The aerospace giant, which came to Everett in 1967, is the engine of a county economy that sustained one of the lowest unemployment rates in the state throughout 2015.

But clouds linger.

County unemployment, which dipped below 4 percent in the spring, hit 5 percent in November, according to state figures.

Boeing has cut its statewide workforce by more than 3,000 since November 2013 when it received a tax break extension from the state as part of the deal that brought the 777X program to Everett.

There are other challenges with planes, politicians and workers that could dampen investor spirits in the coming months.

Issues with KC-46 refueling tankers need resolving if the company hopes to assemble and deliver 18 of them to the U.S. Air Force by August 2017. Unsurprisingly, analysts are skeptical Boeing will meet its deadline.

This is a critical year for the 777X program as it transitions from designing the new generation jetliner to establishing the assembly line in Everett for production to begin in 2017.

Meanwhile, a restless labor force could be a source of headaches for corporate execs.

The contract with aerospace engineers expires this year. Leaders of the state’s 20,000-strong Society of Professional Engineering Employees in Aerospace are bracing for difficult negotiations on a new deal. Management and workers have clashed in recent years at Boeing, which had a very fierce and public fight with Machinists over a contract extension in 2013.

A labor dispute this year would be an unwanted distraction in what is supposed to be a gala year for Boeing. Avoiding one, though, could be difficult.

Aerospace engineers are peeved. They’ve seen their numbers dwindle through layoffs, buyouts and transfers after Boeing secured a tax break extension that could save the company $8.7 billion through 2040.

They will join with Machinists to press lawmakers in 2016 to scale back the lucrative tax break if Boeing continues moving jobs to other states.

At the forefront will be Rep. June Robinson, D-Everett, who intends to resurrect her bill requiring Boeing to sustain a minimum number of jobs in Washington in order to receive the entire tax break.

Boeing isn’t the only measuring stick for Snohomish County’s rebounding economy.

Housing prices are higher in many parts of the county than a year ago. People are in a buying mood and the supply is tight which should keep sales prices high so long as the market doesn’t stagnate. Developers are looking for available land.

There are job openings in many sectors of public service. There’s a need for teachers, cops, state troopers, mental health workers and even assistant attorney generals.

With Washington’s economy mostly clear of the Great Recession, its most powerful labor unions are ready to take the fight on wages and benefits statewide.

They are giving up on state lawmakers and the governor to increase the state’s minimum wage and plan to ask voters to do it themselves with an initiative that could lead to a wage of at least $13 an hour. This same ballot measure also would require businesses to provide paid sick leave.

The outcome could resonate through the aerospace industry in Snohomish County, where there are many employed by aerospace suppliers and support businesses who do not earn $13 an hour.

Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com.

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