States competing for Boeing 777X jobs project

By Reid Wilson

December 1, 2013 - The Washington Post

When Boeing’s machinists union rejected a long-term contract proposal last month, the workers who voted against the aerospace giant’s offer inadvertently set off a nationwide competition — for their jobs.

Boeing had offered the new contract, which would have cut some pension benefits and given workers a $10,000 signing bonus, in exchange for a long-term commitment to build the new 777X long-haul aircraft at the company’s factories in Washington’s Puget Sound region. But members of the International Association of Machinists voted against that deal by a 2 to 1 margin amid anger over what they saw as an insufficient offer.

Boeing barely waited for the ink to dry on the election results before it began calling other states in search of a new assembly site.

“I think the first phone call that Boeing made was to Utah. We didn’t call them. They called us,” Utah Gov. Gary R. Herbert (R) said in an interview. With potentially tens of thousands of jobs in the balance, Herbert cleared his calendar. “We adjusted our schedule to accommodate them.”

The Boeing executive who contacted Herbert, offering the chance to compete for tens of thousands of jobs and billions of dollars in economic activity, joked: “I’m the most popular guy in the country right now.”

Utah is one of a dozen states the aerospace giant has contacted in recent weeks as it searches for a new assembly site for the 777X. Doug Adler Jr., a Boeing spokesman, refused to list the states that received requests for proposals, but that list includes California, South Carolina, Texas and Missouri, according to sources and local reports. Boeing employs more than 2,000 workers in Alabama, Arizona and Pennsylvania.

Those states have until Dec. 10 to craft proposals that, in many cases, include tax breaks and incentives valued at hundreds of millions of dollars.

On Friday, Missouri Gov. Jay Nixon (D) called his state legislature back into session to consider a $150 million package of tax breaks in an effort to win the Boeing assembly lines. The legislature will meet Monday, and Nixon said he wants the measures passed this week.

“Building this next-generation commercial aircraft in Missouri would create thousands of jobs across our state and secure our position as a hub for advanced aerospace manufacturing — and that’s why I am committed to competing for and winning this project,” Nixon said in a statement.

The office of Washington Gov. Jay Inslee (D) said that the 777 program alone, one of several production lines in the state, supported 56,000 jobs last year. Boeing and its associated industries generated $76 billion in economic activity in Washington in 2012.

The Puget Sound region, where Boeing was founded in 1916, remains home to more than 83,000 Boeing jobs, far more than any other state. But the aerospace giant has been slowly divesting itself from Washington in recent years, first moving its corporate headquarters to Chicago, then opening a major construction facility in North Charleston, S.C. Boeing said this year that it would move several hundred engineering jobs to Long Beach, Calif.

The lines that produce the 777X could be next. Even before the union vote took place, top officials in states such as South Carolina and California were lobbying to host the new long-haul aircraft.

“We stay in good contact with Boeing, because they obviously are a great corporate friend to South Carolina,” Gov. Nikki Haley (R) said in an interview. “We were in touch prior [to the vote], as it was happening.”

In California, the “governor’s office of business and economic development maintains a strong relationship with Boeing, and we are actively working to expand all facets of their operations in California,” said spokesman Brook Taylor.

The states are spotlighting their existing capacity, and their ability to help Boeing maintain a future workforce. Herbert and Haley said they are working to increase aerospace and advanced manufacturing programs in local community and technical colleges. Nixon’s proposal in Missouri would do the same. Herbert pointed to an 800,000-square-foot facility that Boeing is operating in his state, while Haley said it was a good sign that the company recently bought an additional 500 acres near its North Charleston facility and committed an additional $1.2 billion.

Washington has pushed hard to keep the 777X line. The union’s vote to reject the contract came just days after Washington legislators passed the largest corporate tax break in the nation’s history, valued at nearly $9 billion over almost three decades. Washington has also been asked for a proposal, and Inslee is working behind the scenes to get the union and Boeing back to the bargaining table.

“The governor also is asking Boeing and the [International Association of Machinists and Aerospace Workers] to return to the table and renew talks about a contract. He’s done that in private conversations with both sides and has more conversations planned in the coming days,” said David Postman, an Inslee spokesman.

Boeing has told the states that it wants to move quickly to identify a new assembly plant. “There’s some sense of urgency,” Herbert said. “This is not something they want to drag out for a long period of time.”