News Column

States Salivating Over Boeing 777X Prospects

November 20, 2013

Brian M. Rosenthal, The Seattle Times

boeing 777x
Boeing 777X (Boeing)

Nov. 20--A week after union Machinists at Boeing rejected a contract that would have guaranteed the 777X be built in Washington, the aerospace giant has talked to at least a half-dozen states about the future plane.

Officials in Alabama, California, Kansas, South Carolina and Utah said Tuesday their states have talked with the company about a new airplane-assembly plant, while a spokesman for Gov. Jay Inslee said Washington's efforts have never stopped.

Georgia and Texas have also expressed interest, but officials there would not say whether they've actually spoken with Boeing executives.

The conversations, a mix of phone calls and in-person meetings, some initiated by Boeing and others by state economic-development offices, were described as preliminary.

Boeing spokesman Doug Alder declined to discuss specifics but reiterated that the company is exploring all options for where to build the bigger, more fuel-efficient version of the 777 widebody jet.

CEO Jim McNerney said at the Dubai Air Show this week that he expects a decision within three months -- a time frame that is forcing states to move aggressively.

Officials in several states expressed confidence about their chances.

Spencer Eccles, the executive director of Utah Gov. Gary Herbert's Office of Economic Development, bragged that his state was last year named by Forbes Magazine as the most "business-friendly" in the nation.

Tim Chase, the president of the Greater Wichita (Kan.) Economic Development Coalition, argued his city is considered the "aviation capital of the world."

And Southern California congressman Dana Rohrabacher noted Long Beach already builds "the most heralded aircraft on the planet," Boeing's C-17 giant military transport.

"We may not have it in the bag," he said, "but we've got it on the platter."

Boeing will likely consider several factors in deciding where to build the plane, including logistics, tax incentives, regulatory costs and utility expenses.

Already, Washington lawmakers have approved $8.7 billion in tax incentives over 16 years if Boeing builds the plane here.

But Jeannette Goldsmith, a South Carolina-based site-selection consultant, said a major driver will be the quantity and quality of the local workforce.

"Nine times out of 10, workforce is going to be the No. 1 factor," she said.

Goldsmith served as a top adviser the last time Boeing held an open competition for a new plane, in 2003, when it chose to place its original Dreamliner line in Everett after Washington agreed to tax incentives valued at $3.2 billion over 20 years.

That year, Boeing took eight months to decide after studying submissions from 38 states, Goldsmith said.

The consultant, who is not working on the current competition, said a three-month time frame is "incredibly fast" and may rule out sites where Boeing does not have a presence.

Long Beach home

The company has a presence in Long Beach, a West Coast port city. The C-17 is expected to end production in 2015, potentially leaving some 5,000 Boeing workers there jobless.

The 777X is expected to start production in 2017.

"The timing certainly makes sense," said California lawmaker Al Muratsuchi, a Democrat who leads the state Assembly's Select Committee on Aerospace.

Muratsuchi noted that earlier this year, the California Legislature passed three incentives that could apply to Boeing's move: a sales-tax exemption on manufacturing, biotechnology and research-and-development equipment; a hiring credit; and an income-tax break given at the discretion of Gov. Jerry Brown.

Muratsuchi said he would support additional incentives.

George Burden, financial secretary at United Auto Workers Local 148, which represents the Boeing workers in Long Beach, said his union has already accepted some concessions that Machinists in the Puget Sound area rejected.

For one thing, as of three years ago, new UAW Local 148 workers don't get pensions -- something Machinists here refused to agree to give up.

Brook Taylor, a spokesman for Brown's Office of Business and Economic Development, said the office has been in "constant communication" with Boeing, including about the 777X.

Long Beach Vice Mayor Robert Garcia said local officials are also involved.

Utah Gov. Herbert has been more open than most about his talks with Boeing. He said he met with executives Thursday, the day after the Machinists voted.

Eccles, the economic-development official, touted Utah's low taxes and high quality of life. He said Boeing is "very satisfied" with Salt Lake City's work on tail fabrication for the Dreamliner, indicating the region could be in the mix for part of the 777X work, if not final assembly.

Alabama is known as a hub for space- and rocket-related facilities more than aviation, though Boeing rival Airbus is building a jet plant in Mobile. Boeing has said some 777X engineering will be done in Huntsville.

Tommy Battle, the city's mayor, said it offers something Washington cannot: "a good workforce that continually works and will not have work stoppages" -- as in strikes.

Battle said Boeing-initiated meetings took place last week. "We're just happy to be considered," he said.

North Charleston, S.C., of course, is home to some Dreamliner work and on tap to receive more in the future.

It is considered a longshot for the 777X because officials there will have to focus on ramping up Dreamliner production.

But Scott Hamilton, an Issaquah-based industry analyst, said Boeing has a great relationship with South Carolina and plenty of land to build on. "I wouldn't count it out," he said.

Kansas has not been talked about much.

The area is home to a large number of aviation suppliers and aerospace-engineering companies, plus Airbus.

It already has low taxes, and Chase, of the economic-development council, said additional incentives would be approved.

Sara Belfry, a spokeswoman for Kansas Gov. Sam Brownback, said discussions are general at this point.

A Georgia economic-development official told Reuters the state was "salivating" after the Machinists' vote, and Texas Gov. Rick Perry tweeted days beforehand his state "is a right-to-work state w/ low taxes, smart regulations & skilled workers -- perfect for @Boeing 777x manu!"

Officials in both states declined to comment.

Inslee wants to talk

In Washington, Inslee is expected to speak with Boeing executives and union leaders "in the coming days," spokesman David Postman said.

Several experts and officials said they still view Washington as a front-runner, especially given the tax breaks approved this month.

As Huntsville city worker Kelly Cooper Schrimsher told a Seattle Times reporter after arranging an interview with the mayor:

"Hey, is it true you're offering $8 billion in incentives?"

Yes.

"Oh my gosh. Little Alabama doesn't stand a chance."

Brian M. Rosenthal: 206-464-3195 or brosenthal@seattletimes.com. On Twitter @brianmrosenthal

___

(c)2013 The Seattle Times

Visit The Seattle Times at www.seattletimes.com

Distributed by MCT Information Services

Original headline: States salivating for Boeing 777X feast



Source: (c)2013 The Seattle Times


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