OLYMPIA — Historically, when the state tries to help the aerospace industry, its effort centers on what will keep the Boeing Co. building passenger planes in Washington.
Now, state leaders are being urged to broaden their approach and start assisting aerospace firms which may not build plan
es but do make products for use by the military and in space.
With the right incentives, they’re told, this long-ignored sector will prosper rapidly in the state.
“It’s an untapped area we need to look into,” said Linda Lanham, executive director of the Aerospace Futures Alliance. “We keep putting it on the back burner, and I think we can’t do that any longer. Otherwise we’re going to start losing companies.”
Defense is a frontier of the aerospace industry that the state is beginning to tend to more directly and seriously, Director of Commerce Rogers Weed said.
One immediate example is aiding companies that make unmanned aerial vehicles.
It’s an area the Governor’s Council on Aerospace will focus on in the coming months. The panel, of which Weed is chairman, cites the evolution of Insitu as an example of the potential. The Bingen-based firm, now a Boeing subsidiary, has grown from fewer than 12 employees in 2002 to more than 600 in 2009.
Earlier this year, Lanham, who serves on the council, helped write legislation to give builders of unmanned vehicles the same tax breaks and incentives enjoyed by Boeing and its suppliers for commercial jets. The biggest piece is a 40 percent cut in the business and occupation tax rate paid on a company’s gross revenues.
“We’re really serious about it,” Lanham said. “It certainly would be a boost for Washington state.
Rep. Marko Liias, D-Edmonds, said he’ll introduce the bill in 2011.
“Absolutely,” he said. “This has the potential, I think, to really help grow thousands of jobs around the state.”
There are those who hope the council considers offering the tax break to every aerospace company doing defense- and commercial space-related projects.
“I would encourage them to do that,” said Rosemary Brester, chief executive officer of Hobart Machined Products, which makes components for rockets.
She said there is a “huge presence” of companies doing space work, many of which will vie for work on future generations of shuttles and other space exploration vehicles.
But extending the business and occupation tax break is not cheap.
If makers of unmanned vehicles had the break today, the state would receive $474,000 less in tax revenues this fiscal year and $604,000 in the next, according to state Department of Revenue estimates.
Granting the tax break to all aerospace businesses doing defense and space work would cost the state $32.6 million in those two years, the department estimated.
That’s only one side of the balance sheet, Brester said.
“You’ll see that revenue gained back and more brought in as companies look to make new purchases and hire more people,” she said. “It certainly would be a benefit to bringing more companies here.”
For Liias, changing the tax law for unmanned vehicles alone would move the state closer to his goal of treating all aerospace companies the same.
Getting to that point is vital in the view of Snohomish County Executive Aaron Reardon, who’s been critical of state legislative leaders’ approach to helping the industry as a whole.
“Having a concerted focus on aerospace in all areas will help keep what we have and allow us to diversify and expand,” he said. “Aerospace is aerospace and making the state as competitive as we can will make a difference with recruitment efforts and expansion efforts.”
Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com
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