What if Boeing leaves?

Imagine Washington state without the Boeing Company.

That’s a plausible scenario in today’s turbulent economic times, according to this introduction to an in-depth study of that impact by the Washington Alliance for a Competitive Economy and the Washington Research Council.

Last fall, the introduction notes, Boeing Commercial Airplanes CEO Scott Carson hinted as much in his candid keynote address to business leaders at the Prosperity Partnership’s annual luncheon in Seattle.

In his remarks to the public-private partnership for economic development, Carson described the intense pressures the aerospace giant faces in a globally competitive market.

“Location is a choice,” said Carson.

Where a business chooses to locate makes a strategic difference in its ability to compete effectively. Public policies — taxes, education, workforce training, regulation and transportation corridors — play a critical role.

Many observers interpreted Carson’s comments as a not-so-subtle reminder to public officials not to take the company’s presence for granted, according to the introduction.

The study notes that most state residents recognize the value of a global manufacturing company: the direct jobs, the charitable contributions, the cluster of suppliers, and multiplier effect as good wages flow through the community.

What would it mean to us if Boeing, the state’s largest private employer, were to disappear from the economy? Now the Washington Research Council has quantified this for us in this Competitiveness Brief. The results are dramatic. For example:

n Since each Boeing job supports nearly three additional jobs in the state, the company’s total departure would mean a permanent reduction of 285,000 jobs.

n Without the draw of aerospace employment, housing prices would fall by as much as 6.5 percent by 2030.

n Statewide personal income would decline by nearly 9 percent.

The “competitiveness brief” published last April by WashACE (the Washington Alliance for a Competitive Economy) goes into greater detail, outlining two withdrawal scenarios that show the impact would be severe, underscoring the company’s importance to the state.

That, however, was not the sole reason for this report. Carson’s expressed concern for the state business climate — telling it as it is with respect to Boeing — is echoed by thousands of other Washington employers, large and small, from virtually every sector in the economy.

Carson closed his speech by outlining four steps that lawmakers could take this year to improve the business climate:

1. Develop a sustainable budget that preserves essential public services without raising taxes.

2. Target higher education investments to programs that contribute directly to economic growth and recommit to education accountability.

3. Emphasize timely completion of authorized transportation projects for which funding has been committed.

4. Reform the state unemployment and workers’ compensation programs to prevent uncompetitive increases in employer costs.

Those are not simply Boeing issues, although they matter a great deal to the aerospace giant. And, as the WashACE/Washington Research Council report underscores, Boeing matters a great deal to Washington.

The Boeing Company is the state’s largest private employer. The 75,496 people working at the company in Washington at the end of March 2009 accounted for 2.7 percent of the state’s nonfarm employment.

From Sept. 2001 to June 2004, the company shed 27,000 jobs (from 80,000 to 52,800) in response to the collapse in demand for commercial airliners following the 9/11 terrorist attacks. As a result, the 2001 recession was longer and deeper in the central Puget Sound region than in most other parts of the country.

In the Boeing study, various scenarios are evaluated, from the impact of a complete withdrawal of Boeing from the state in one year, 2013, or a phased withdrawl in equal increments over 10 years.

[Editor’s Comment: The entire detailed study is too long to reprint in the Snohomish County Business Journal but given the seriousness of the very real possibility of Boeing moving some or all of its manufacturing facilities out of state this report should be read by everyone in the business community and state government. Unfortunately, there was little evidence in the recent legislative session that anyone in government is ready to make the significant changes in taxation, education and related business friendly needs that Boeing — and other businesses — have been clamoring for over many years. Now, other states are becoming increasingly competitive and they’re picturing Boeing’s future growth in their state, not ours. The WashACE study deserves serious attention, not just shelf space with other ignored studies. — John Wolcott, Editor]

The Washington Alliance for a Competitive Economy is a coalition of business organizations working together to build economic opportunity for all Washingtonians. For more information, visit www.washace.com. Copies of the Boeing impact study are available from the Washington Research Council at www.researchcouncil.org.