Building an economy that works … for everyone

Last week the 787 finally made it up into the air for its first test flight. I watched its smooth take-off, and cheered, along with thousands of other citizens in our state. It seemed like we could claim again another milestone for flight, thanks to the Machinists and engineers who put this plane together.

Even Boeing’s Chicago-based CEO, Jim McNerney, declared, “I’m proud of the team here. … For the foreseeable future, the majority of (Boeing’s) airplanes, the 787 and every other airplane we do, will be done right here.”

Of course, he also stated that North Charleston, S.C., “will become an independent site over time and will become an alternative site for airplanes in the decades to come.”

So it is no wonder that the Machinists and engineers I spoke with the day after were guarded in their enthusiasm. They would love to believe that Boeing would keep its promise. But they are a little jaded given Boeing’s pre-flight announcements. Two weeks ago Boeing made official its plans to build a duplicative 787 assembly operation in South Carolina. And then the company “consolidated” in St. Louis all of its charitable giving and “let go” its vice president in charge of philanthropic efforts in the Northwest. Well, Happy Holidays to us.

Why does Boeing insist on spending its stockholders’ money in South Carolina, a state with no history of aircraft production, a workforce that has little knowledge about building planes, and an education system that produces mediocrity?

Washington’s K-12 students outperform South Carolina students in every academic area. South Carolina’s high school graduation rate is the fourth worst in the nation. Only 13 percent of South Carolina’s community college students earn an associate’s degree within three years. That’s the second worst rate in the country, and is no way to build a highly skilled workforce to assemble sophisticated pieces into a 21st century airplane.

So again, why? Didn’t we give Boeing a $3 billion tax break to build the 787 right here? Don’t we have the technical and engineering capital that enables Boeing to remain the cutting-edge best in the world? Isn’t our community college system designed to meet Boeing’s needs for skilled workers? The answer is yes, but…

The “but” has much more to do with the fact that when Boeing merged with McDonnell Douglas in 1996, Boeing kept the name, but McDonnell Douglas called the shots. The CEO of the merged company immediately began the process to move Boeing headquarters out of Washington. Now Boeing will migrate to South Carolina because it is not really our Boeing anymore. It’s McDonnell Douglas, dressed up in Boeing’s colors.

The new camouflaged corporation is looking first and foremost for a compliant state with compliant workers and a compliant legislature that will give the company everything it wants. South Carolina is the perfect place. Its unemployment rate is higher than ours. Its unemployment benefits are much lower. Its governor even tried to reject federal stimulus money.

But something is missing from Boeing’s business fundamentals. Initially the company sub-contracted the 787 aft fuselages to a Texas company with production in South Carolina. That got so screwed up that Boeing had to buy out that plant and get its Puget Sound workers to make the necessary engineering and mechanical fixes. In fact, while Boeing likes to blame the Machinists’ strike last year for its move to South Carolina, it is those Machinists and their engineering colleagues who, with every misstep on the 787 made by out-of-state and out-of-country contractors, have saved Boeing’s bacon.

In the meantime, Boeing’s profit center sits right here in Puget Sound. Each union-made 737 generates about $60 million in gross revenues. That explains Boeing’s profitability, even while pouring billions into the contracted-out development of the 787.

Our economy, our workers and our education system are focused on building planes and making profits. If Boeing wants to move, we should be recruiting Airbus from Europe, Bombardier from Canada, and Embrayer from Brazil to build their airplanes here. As the dollar falls in value, production in Washington will enable them to sell more planes in the United States. Boeing might not like it, but Boeing is a global corporation. It has divested itself of any loyalty to Washington. Bringing in new companies will encourage competitive aerospace manufacturing. And that is the essence of true capitalism!

John Burbank is executive director of the Economic Opportunity Institute in Seattle (www.eoionline.org). His e-mail address is john@eoionline.org.

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