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South Carolina Wants a Big Chunk of Boeing 7E7 Production |
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Written On: December 17, 2004 |
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A year ago, Seattle was abuzz with excitement when Boeing announced it would build the 7E7 Dreamliner in Everett.
While everyone from Gov. Locke to community leaders celebrated the proclamation, people should remember that the promise of the 7E7 has yet to be fulfilled – and won’t be for several years. Production of the new high tech airplane does not begin to ramp up until 2006, and the first 7E7 will not roll off the assembly line until 2008.
A lot could happen between now and then.
Our state and local elected officials need to be mindful of the fact that, in today’s fast-paced global economy, three years is an eternity. Other states and countries are aggressively courting Washington companies and jobs, and it’s still possible that those 1,200 assembly jobs could go elsewhere if Washington becomes unfriendly to business and piles on news taxes and fees.
Take South Carolina for example. Vought Aircraft Industries and Italy’s Alenia Aeronautica formed a new venture to make fuselage sections for the new Boeing airplane – and South Carolina wants those jobs. In fact, the state just announced $166 million in tax incentives to lure the $560 million aircraft complex to the Charleston International Airport.
To South Carolina, it’s worth it to spend $180,000 in tax incentives for each of the 645 jobs because state and local leaders know those new aircraft jobs spin off other new employment with subcontractors, suppliers, and the service industry.
Meanwhile, in Europe, Airbus just finished another year ahead of Boeing in commercial aircraft sales. Over the next 40 years, Airbus, heavily subsidized by several European governments, projects that more than 17,000 new airplanes will be needed, and it intends to increase its market share at Boeing’s expense.
Airbus’ strategy is no mystery. They’re going after Boeing on price, fuel efficiency, and design. They plan to provide airplanes that move more people, more efficiently and over longer distances.
If Washington lawmakers raise taxes, fees, and operating costs – making it harder for Boeing to compete – they will be helping Airbus in its battle against Boeing.
The other thing our legislators and new governor in particular need to remember is what made the difference in Boeing’s decision to centralize the 7E7 production here as opposed elsewhere.
One key factor was the bold decision by Gov. Locke and the 2003 Legislature to reform the state’s unemployment insurance system. Lawmakers in Olympia vividly remember Boeing’s commercial airplane CEO Alan Mulally testifying that, of all the places the company operates, Washington had the highest unemployment insurance costs—bar none!
Today, there are rumblings that unions, distraught over the 2003 unemployment changes, are seeking to overturn those reforms just as they start to kick in. Wrong move!
According to the Washington Alliance for a Competitive Economy (WashACE) 2005 Competitiveness Redbook, Washington’s $695 per employee cost for unemployment insurance is the highest in the nation. High-wage Alaska is second at $650, and South Carolina (remember their aircraft complex deal?) is 35th at $140.
While Boeing is in a fishbowl for everyone to see, those same cost pressures affect all employers in our state who struggle every day against competitors from China to Charleston.
The point is the 2005 Legislature and new governor better keep both eyes keenly focused on what it takes for our state to provide jobs and careers. Turning back the clock on needed reforms is not an option if we want to crack a bottle of champagne against the fuselage of the first Dreamliner in Everett in a couple of years.
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