The Boeing Co. is adding jobs, racking up orders for its airplanes and charging up the local economy again after four down years for the aerospace industry.
Proof that Boeing is back as the lead dog in Snohomish County’s economic recovery came Wednesday in the company’s quarterly report.
The aerospace giant reported that it received orders for 417 airplanes during the first six months of the year, easily outpacing the 262 orders for all of 2004.
“Driven by its industry leading 737, 777 and 787 product lines, commercial airplanes expects to see significant growth in airplane deliveries, revenue and earnings,” said James Bell, Boeing’s chief financial officer.
Orders for the Everett-built 747 and 767 also came in, allowing decisions about the future of those jetliners to be delayed until 2006 at the earliest, Bell added.
Less than two years ago, the company was laying off thousands of workers in the Puget Sound region. During the past year, however, Boeing and other aerospace contractors in the region have been hiring again.
“I think you can safely say the whole sector has turned the corner,” said Donna Thompson, a labor market analyst with the Employment Security Department.
Boeing’s turnaround is beginning to ripple through the local economy. Clearly, its employment boost is tightening the labor market. The unemployment rate has fallen from 6.5 percent last summer to 4.9 percent in June.
Linda Johannes, general manager for Everett Mall, said she’s concerned about how many qualified job candidates will be around when the mall’s new stores open in October.
“Retail hiring has become extremely difficult, and we anticipate the upcoming Christmas season to be even harder,” she said. “As Boeing hires, so do other companies. That reduces unemployment, which is wonderful, but it does make things harder for us.”
John Dickson, president of Frontier Bank, said he thinks Boeing is helping to extend the strong housing market.
“If Boeing is hiring, it’s bringing people into the economy who are buying houses,” he said. “I think you can draw a direct correlation. There are also the trickle-down aspects of those businesses that do things for Boeing.”
Tom Hoban, chief executive officer of Everett-based Coast Real Estate Services, said apartment rentals that his firm oversees are showing signs of improvement.
“Apartments have reduced concessions – the move-in specials and giveaways that they had to offer to attract tenants,” Hoban said. “And we’re noticing that late payments are getting smaller. People are more stable in their employment. All these things come from a ripple effect tied to Boeing’s recent hiring.”
Despite myriad efforts to diversify the local economy and reduce Boeing’s boom-and-bust cycle, the company casts a huge shadow here.
The Snohomish County Economic Development Council estimates that 25 percent of the county’s jobs and 40 percent of the wages earned here are in the manufacturing sector, which is dominated by Boeing and related aerospace companies.
It’s not just Boeing that’s booming again for the first time since the 2001 terrorist attacks depressed the airline industry. On Wednesday, the parent company of European jet maker Airbus also announced strong second quarter results, as well as order and delivery numbers that are on target to beat Boeing’s for the third year in a row.
In fact, the second quarter was the best three-month period ever in terms of commercial airplanes ordered, with 70 percent of those airplanes ordered from Boeing, said Phil Abbott, editor of London-based Aerospace Market News.
“These guys have certainly started to recover their market share, in a very big way,” Abbott said in an e-mail.
Boeing expects to delivery 320 airplanes this year and close to 400 in 2006. Those are vast improvements over the 285 deliveries last year and 281 in 2003, but still down from preceding years.
Bell, Boeing’s CFO, said second-quarter revenue for the company’s commercial airplanes division rose 20 percent, to $6.8 billion, compared with the same period in 2004. The order backlog for airplanes rose 26 percent.
The news pushed Boeing stock to nearly $68 a share during Wednesday’s trading, and it closed at $66.70, a price not seen since summer 2001.
Paul Nesbit, aerospace analyst with JSA Research, said with the company’s growing orders and the “phenomenal” response to the new 787 Dreamliner, based in Everett, Boeing’s plants should stay busy.
“The rate of production of their aircraft should be increasing through at least 2009,” he said.
That sustained upswing may not result in as many jobs as in the past at Boeing’s Everett plant, as more airplane parts are made elsewhere. But it still will have a huge effect, Hoban said. Optimism about the 787, for example, often is mentioned by the big investment companies snapping up apartment complexes and other commercial property in the area.
“People need to know what Boeing’s going to do to have a barometer of sorts on where this economy is going, both directly and indirectly,” he said. “There’s the direct reaction of jobs and the indirect reaction that makes people feel better about the business decisions they’re making.”
Herald writers Amy Rolph and Mike Benbow contributed to this article.
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