Yasuhiko Obara Yasobara, Wikimedia Commons
No, this isn't our grandfathers' Boeing Co. anymore. Nor, according to all the signs, will it be the Puget Sound area's Boeing Co. much longer. What, if anything, should be done about it?
House Speaker Frank Chopp, at a Crosscut editorial lunch earlier this week, indicated the matter presently was "between Boeing and the union" (see below) and that it did not seem appropriate for senior elected officials to get involved. U.S. Rep. Norm Dicks, a longtime advocate both for Boeing and for labor, and other member of our congressional delegation have said as much, with the implication being that labor needs to make some concessions in order to save jobs for itself and for the region.
Boeing's likely partial exodus has been clear since the company moved its corporate headquarters to Chicago in 2001. The outsourcing trend in aircraft production then speeded up, with offshore sources providing pieces for assembly in the United States.
In 2003, Boeing solicited bids for the final-assembly plant for the 787 Dreamliner — the plane still not flying because, among other things, the wings can't be made to fit properly with the fuselage. Despite the fact of state-level budget crises at the time (not as deep as the present ones), 19 states proffered bids. When Washington state won the competition, bidders elsewhere felt they had been used by Boeing to leverage Washington subsidies the company otherwise could not get.
Our subsidy package totaled $3.2 billion, which amounted to $160,000 per year, for 20 years, for each of the approximately 1,000 jobs Boeing estimated would be involved in Dreamliner assembly. (The jobs, by the way, are projected to average about $65,000 per year in pay). Opinion polling indicated that local citizens wanted to do what was necessary to save Boeing jobs in the region. Then-Gov. Gary Locke projected that, beyond the 1,000 direct Boeing jobs, as many as 17,000 spinoff jobs and $60-70 million in annual tax dollars were involved. Some independent analysts challenged those numbers as being unrealistically high. We do not know who was right because, in late-2009, the Dreamliner quite literally is not yet off the ground.
Now, here comes Boeing again.
The company has inspired an effort at its South Carolina facilities to decertify the Machinists union there. Here, it has demanded that Machinists make a no-strike pledge and other concessions — or else. Or else it will take assembly operations elsewhere, presumably to a deunionized South Carolina operation.
The request for a no-strike pledge is one which no self-respecting union would make. Giving up the right to strike is a concession which removes a union's most basic right, and one that would put the Machinists behind the eight ball in all future dealings with the company. One suspects the Boeing demand is being made in the expectation that the Machinists will reject it, thus presenting a pretext for a Flight to the South.
In the meantime, Boeing is again talking about the need for fresh public subsidies to keep it "competitive." This appears to be a four-stage operation: First, deunionize South Carolina. Second, blackmail local Machinists. Third, extort fresh multibillion-dollar subsidies from Washington state taxpayers. Fourth, take the money and jobs and run.
Word in the investment and business communities is that only one or two present Boeing board members still support maintaining the company's Washington operations in the present form. If so, the second production line for the 787 and a new line for the 737 would probably shift to South Carolina or another Southern state.
What should Chopp, Dicks and other Members of Congress, Sens. Patty Murray and Maria Cantwell, Gov. Chris Gregoire, and other state, county, and local leaders do in this circumstance?
- Should they "leave it between Boeing and the union?" That is a mismatch wholly in the company's favor.
- Should they yield once more to fresh Boeing subsidy demands? You pay a blackmailer once and he keeps coming back for more.
- Should they tell the company they value the primary and secondary jobs and tax revenues they generate but that more multibillion-dollar favors are not in the cards? Moreover, taxpayers cannot substitute public dollars for private dollars lost because of Boeing's flawed business plan.
In recent years we have seen Boeing transformed from a proud local company, staffed by a skilled and motivated workforce, to one which has become synonymous with bullying tactics with the Defense Department, the Congress, its workers, and the localities in which it operates. It has crossed legal and ethical lines which have created resistance whenever it bids on a big federal contract. Meantime, its original business — the design and production of commercial aircraft — has suffered. Witness the Dreamliner's many delays.
Boeing's relationship with our state, counties, and localities raises more general questions about the factors that create and generate new jobs in any geographic location. If you ask an independent economist to list such factors, the list will include a skilled and educated workforce; a tax system encouraging investment and economic growth; honest and efficient government; a modern transportation system; general liveability, including supply of affordable housing and range of leisure-time activity; and a temperate climate.
Make your own check list concerning the above factors. Do multibillion-dollar subsidies for Boeing fulfill any of them? This approach to business growth is perilous. The sum total of Washington state and local-level subsidies for Boeing, Microsoft, and other chosen companies and sectors presently is more than three times the size of the state's biennial budget. These subsidies cut a far larger hole in the state revenue base than any past or prospective Tim Eyman initiative. Moreover, they favor some companies and sectors over others and distort rational economic decision-making.
This is all grist for present and later discussion. Right now, though, we need to decide on an approach to Boeing as it begins a new shakedown effort. "Leaving it to the company and the union" won't do it.
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