|
 |
|
|
|
Landing the 7E7 helps all employers |
|
|
|
Written On: July/August 2003 |
|
|
|
Written By: By Paul Schlienz |
|
|
|
Boeing’s 7E7 is coming. Will Washington be ready for the 7E7?
Public officials, business leaders and labor representatives throughout Washington are scrambling to make sure the 7E7 project lands here.
“Increasingly, the focus is on making Washington a more attractive place for Boeing to do business, which is an ongoing process,” AWB President Don Brunell said. Brunell is a member of Gov. Gary Locke’s Action Team, charged with landing the 7E7 project.
Where the 7E7 will ultimately be assembled will be known by the end of 2003. If the 7E7 is built in Washington, it could help revive the state’s economy.
The 7E7 will be a 200- to 250-seat super-efficient plane capable of flying between 7,000 and 8,000 nautical miles at similar speeds to the 777 and 747. The market potential for the 7E7 is estimated at 3,000 units over the next 20 years.
Boeing plans to formally offer the plane to customers in 2004. Production would likely begin in 2005. By 2008, the 7E7 is expected to be in service.
7E7 could add up to 1,200 Boeing jobs
Boeing anticipates the project will create roughly between 800 and 1,200 final assembly jobs plus an undetermined number of other workers in the 7E7 program. According to a report commissioned by the Snohomish County Work Force Development Council, the 7E7 could pump $1.5 billion into Washington’s economy and create 4,000 Boeing jobs, 3,500 new jobs among Boeing’s subcontractors and suppliers, and 12,500 nonaerospace jobs.
“It would be wonderful for me and for the other suppliers in our region,” said Rosemary Brester of Hobart Machined Products, a 12-person Boeing supplier near Issaquah. “If the 7E7 is built in Washington, we would have to double the size of our company.”
Within recent memory, whenever Boeing announced plans to build a new commercial jetliner, the news was greeted with joy and anticipation throughout the Puget Sound region. After all, Boeing, founded in Seattle in 1916, has built all of its commercial jetliners in Washington. Ten years ago, a plane like the 7E7 would almost certainly have been assembled at Boeing’s gigantic Everett plant.
Those days are gone forever. Boeing, headquartered in Chicago since 2001, is considering sites throughout the United States for 7E7 assembly. Despite Washington’s long history with Boeing, it is far from certain the project will come to Washington.
Boeing’s move to Chicago was wake-up call
Washington’s ailing business climate has long been a major concern for Boeing.
Testifying before Washington’s House Labor Committee in 2002, Boeing Commercial Airplanes CEO Alan Mulally focused on the state’s shortcomings in transportation, taxes, energy, education, unemployment insurance, and regulations.
“In every one of these areas, the State of Washington is not competitive,” Mulally said. “Meaning it costs us more to operate here.”
Gov. Locke and many legislators have responded top Mulally’s warnings. The issues are not new. AWB, through the Washington Alliance for a Competitive Economy (WashACE), identified those same issues four years ago and worked with the governor and legislative leader to make the state more competitive.
“We’ve made progress but we have a lot of catching up to do,” Brunell said.
State Senator Luke Esser (R-Bellevue), a member of a legislative task force working to bring the 7E7 to Washington, hopes Washington did enough in its late scramble on the 7E7. He believes the issue of competitiveness transcends the 7E7 siting process.
“Hopefully, if Washington lands the 7E7, it will help us to stabilize the 60,000 existing Boeing jobs in the state,” Esser said.
Boeing has published a list of criteria for its 7E7 assembly site that mirror the WashACE and governor’s competitiveness reports.
Washington has advantages
As Boeing’s long-time assembly site for its commercial airplanes, Washington scores well on such requirements as suitable runway provisions for the 7E7, proximity to a port capable of 24-hour operation, easy access to railroads and Interstate highways, and available buildings and related infrastructure to accommodate 7E7 final assembly. Washington also has a trained labor force, good local flying weather and the required local utilities.
Unfortunately, Washington loses ground with its highly regulated, highly taxed business environment. The high cost of doing business in the state becomes painfully obvious when Washington is compared with other states.
Take the issue of unemployment insurance. Boeing pays $772 per employee in unemployment taxes annually in Washington. This is highest unemployment insurance rate Boeing pays not just in the United States, but in the entire world. In contrast, Oregon charges Boeing $482 per employee, California takes $378, Kansas levies $105, Arizona costs $38 and Texas snags a mere $36. Some foreign competitors, such as Hong Kong, do not have unemployment insurance.
California, Arizona and Texas are likely to compete against Washington for final assembly of the 7E7 while Kansas is promoting itself to Boeing as a component supplier for the 7E7.
Can Washington improve its chances of landing the 7E7 within such a short window of opportunity?
Some of the hard work needed to entice Boeing has already been done. The 2003 Legislative Session has been notable for its passage of a transportation improvement package, streamlining regulatory and permitting processes and avoiding new business taxes.
“We have to remember improving the state’s business climate is an ongoing process to benefit all employers,” Brunell said. “We can’t just say we fixed it in 2003 and then move on to building up the costs of government again. Our competitors are constantly finding ways to lure jobs and employers to their state or country.”
Washington has the dubious distinction of losing an estimated 60,000 manufacturing jobs since July 2000.
“That is one in six jobs that are gone, and we lead the nation in the percentage of manufacturing jobs lost at 17.6 percent according to the National Association of Manufacturers.”
“The aerospace [Boeing] and the aluminum industry, a primary Boeing supplier, have been hit hard,” Brunell said. “Job losses in aluminum are due to the skyrocketing costs of electricity. Electricity, which traditionally has been low cost and reliable for Boeing and aluminum reduction works, was an offsetting factor for high labor and regulatory costs. Not anymore. That significant cost advantage disappeared two years ago and is unlikely to return.”
“We, the citizens of the state of Washington, have some big decisions to make,” Mulally warned. “Are we going to move up in competitiveness? Ifwe’re not, we’ll know it. We don’t have to say anything to each other. [Boeing] will keep moving to a world where we can operate as a business.”
Now the question becomes: Is Washington finally listening?
|
|
|
|
