By Dave Somers and Leonardo Baldacinni
When we are out in the community, many people ask: What have the aerospace tax incentives done for us?
In a nutshell, aerospace tax incentives are helping strengthen the economy in Snohomish County and Washington state. Reducing or eliminating them based on arbitrary job numbers at Boeing is potentially detrimental to the economic health of Snohomish County. We don’t believe proposals to roll back the incentives are good for the aerospace industry and the hundreds of thousands of workers across Washington who rely on the industry’s family-wage jobs.
Dave Somers, Snohomish County executive: Washington state is the center of aerospace in our country and Snohomish County is the heart of it all. Hundreds of local companies help produce the lion’s share of all U.S. commercial airplanes and our workers have benefited as a result. It’s a tremendous economic asset that is now threatened by global economic pressures and potential shifts in trade and economic policy.
We have watched the commitment Boeing made to build the 777X and its Composite Wing Center in Snohomish County finally come to fruition. Boeing’s more than $1 billion investment in Everett to construct the facility helped support a construction industry that had been sluggish after the Great Recession. Now that the plant is built, other companies from Snohomish County are equipping it with tools, automation and parts, preparing for production to begin. Skilled workers have already started their jobs inside the new facility and more will follow.
We value these aerospace jobs and the hard-working people who fill them. This investment, a direct result of the tax incentives, has created jobs — and will continue creating jobs — in aerospace and outside of aerospace for decades to come.
Leonardo Baldacinni, CEO, Umbra Cuscinetti, Inc.: Umbra Cuscinetti considers our company part of the success story of the incentives. We chose to locate in Washington primarily because of Boeing. Umbra employs approximately 120 people in Everett making a range of products, and we are hiring for good, living wage jobs with the opportunity for advancement and training.
It is not an overstatement to say that the incentives have been part of the success of Umbra and that of the entire aerospace industry in Snohomish County. In addition to work orders from Boeing stemming from their use of the incentives allowing us to hire more workers, Umbra uses the incentives to help provide good pay and benefits to our employees, and to continually replace our old equipment with new technology. We are not alone. Nearly 350 companies in Washington state also rely on them.
Background on the tax incentives: First enacted by the Legislature in 2003, and extended in 2013, the intent of the aerospace tax incentives was to keep Washington state’s aerospace sector competitive relative to other states. A recent economic impact study conducted by an independent research firm found the aerospace industry has grown to include more than 1,400 aerospace and related companies, large and small, employing more than 136,000 workers across nearly every county in the state. This shows the Legislature’s incentive package is working for aerospace and for Washington.
The incentives are also a good deal for taxpayers and workers. An analysis conducted by the state shows that the aerospace tax incentives will likely generate more than $21.3 billion in state and local tax revenue over 16 years. This is a 3-to-1 return on investment, where every $1 invested generates $3 in economic activity. This money pays for vital public services including education, social services and infrastructure at a time when the state has serious budget challenges.
It’s not just aerospace-related jobs that benefit from the incentives. The Washington aerospace industry indirectly supports more than 116,000 jobs in other industries, including retail, restaurants, construction and more. For every direct job in aerospace, an additional 1.7 jobs are created. That’s a total impact of more than 250,000 jobs right here in Washington state!
Boeing has made huge investments as a result of the incentives. This includes the more than $1 billion investment to build the 777X here in Washington. Aerospace businesses across the state are now seeing work orders for the 777X, resulting in added jobs, reinvestment in small businesses, increased spending with vendors, and additional investments in local economies. This is as true in Snohomish County as it is anywhere else in Washington.
Recent market pressures have unfortunately forced Boeing to reduce its employment numbers companywide, putting some of our friends and neighbors out of work. Orders for Boeing planes can fluctuate widely over time, and the company needs to be able to adapt in real time to changing market and economic forces.
During the 10-year period between 2007 and 2016, Boeing’s jet orders have fluctuated between a low of 240 in 2009 and a high of 1,506 in 2013. For 2016 Boeing had a net 787 orders for its planes.
This trend has continued into and through the Great Recession. This is why the incentives are so important. They keep the industry competitive in good times and bad. This is a natural, necessary part of a competitive global business environment. Ensuring job security is an important goal, but mandating employment levels won’t achieve it. The cyclical nature of the aerospace industry demands flexibility from the entire industry.
The proposals currently under consideration in Olympia to tie the tax incentives to job numbers would not strengthen companies like Umbra or others in the industry, and they could significantly impact our local economy. During this time of change and uncertainty in our country and the world, we encourage our state leaders to continue working together to protect our aerospace industry and the family wage jobs it supports.
Snohomish County is first in manufacturing in the state and has the second lowest unemployment. Snohomish County’s aerospace companies are the best in the world. Let’s keep them this way.
Dave Somers is the Snohomish County executive. Leonardo Baldacinni is the chief executive of Umbra Cuscinetti, Inc.