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Will we ever say "no" to Boeing?

The list of concessions to the aerospace giant is a mile long - and growing. How will we know when we've crossed the line?
What else will we give up to keep Boeing in Washington?

What else will we give up to keep Boeing in Washington? ThierryB/Flickr

The "win" of keeping Boeing's 777X project in-state was ugly, but a win nonetheless, and Gov. Jay Inslee and other lawmakers are breathing a sigh of relief that Boeing wasn't "lost" on their watch.

No one seems ready to plunge into the next round of Boeing's sure-to-come demands. As one official told me last week, those who worked so hard to keep Boeing happy want to take at least a few moments to enjoy their victory. But as Dominic Gates, a Seattle Times writer on the Boeing beat, pointed out in his after-the-deal overview, there will be a lot of future opportunities for the aerospace giant to strong-arm the state.

Quoting aerospace consultant Scott Hamilton, Gates writes: "When the jet-maker launches its next new airplanes, likely a 757 replacement around 2019 or a 737 replacement around 2020, 'Boeing will take us through this all over again.' "

Consider these odds and ends:

A governor's task force is still looking at revising the so-called "fish consumption" water quality standards. Boeing and other industries have pressed for lower standards regarding pollutants that can be released. The Department of Ecology is expected to announce new rules sometime early in the year.

The new, stalled state transportation plan? While it wasn't locked in to keep the 777X here, the company does want to see road improvements both in Everett and Paine Field. Alex Pietsch, who heads the state's Office of Aerospace, says Boeing employees travel 8.5 million miles on Washington roads every year; the 777X promises to increase that traffic statewide. Thus, Boeing has a vested interest in improvements on I-405, SR-520 and elsewhere.

Getting the 777X plant permitted rapidly is also on the front burner. The supplemental budget request contains about $1 million in funds for advanced materials research and training programs for the University of Washington and Washington State University.

Other agenda items that pro-business legislators have pushed under the auspices of pleasing Boeing include workers' compensation reform (a GOP priority) and streamlining permitting processes statewide. Sen. Mike Baumgartner, R-Spokane, has also pushed "right to work" legislation aimed at making Washington more competitive with states like South Carolina, where Boeing has already moved a significant amount of work. Inslee doesn't support right to work legislation. Baumgartner's view, according to the Spokesman-Review: "Boeing is the bell cow for the state, but we still need to consider the rest of the herd."

To that end, there might be other concessions made to other businesses in an effort both to please and appease Boeing and do similar favors elsewhere. While the governor and others have argued for dealing with revenue issues by closing tax breaks, Boeing's whopper of a deal (nearly $9 billion in said breaks) makes that a tough barn door to close. In fact, there is talk of spreading some of the Boeing-style B&O tax relief around — to other companies within the aerospace industry. One example: expanding the tax exemptions beyond aircraft manufacturers to include at least some of the more than 1,000 companies doing a wider range of aerospace-related work, such as Planetary Resources, the Bellevue-based asteroid-mining company, or Blue Origin, the Jeff Bezos spacecraft operation in Kent.

Part of the rationale for expansion tax breaks is to grow the Washington aerospace business beyond Boeing, and to support not only the Boeing supply chain but also the new startup ventures that might become the next Boeing — or the Boeing after that. But it's a double-edged proposition: How do you get beyond the aerospace giant without locking in tax breaks and subsidies for a small number of select companies at the expense of bigger, underfunded needs like, say, public education.

And how do you break the extortion cycle?

Even Inslee is talking about that. While he is entitled to take a victory trot, the governor's also expressing exasperation. Last week, referencing the inter-state competition Boeing set off for the 777X, and the multi-billion dollar package Washington was forced to come up with, Inslee told the Associated Press that he "would like to see a national agreement among states to make that sort of subsidy escalation illegal." Inslee would make that so, he said, when he becomes "czar." Some states on the losing side of the Boeing bid expressed disappointment — the governor of Alabama said he felt used — but don't expect any regulations stopping such competition soon.


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Comments:

Posted Wed, Jan 15, 5:44 a.m. Inappropriate

Boeing is the abusive spouse who we just won't break up with because they love us so much. We'd be so much better off in the long run breaking up, but just can't summon the courage to go through the short-term trauma necessary to end this abusive relationship.

Posted Wed, Jan 15, 6:49 a.m. Inappropriate

No further commenting necessary.

Posted Wed, Jan 15, 4:56 p.m. Inappropriate

short term trauma? explain why please

kieth

Posted Wed, Jan 15, 7:36 a.m. Inappropriate

Since we're going to be forced to pay for the bore tunnel overruns we'd better hope Boeing isn't forced out. Without those jobs, the cost of the bore tunnel will destroy our perilous economic balance.

Posted Mon, Jan 20, 2:53 p.m. Inappropriate

Too big to fail? Hope so, and clearly too big to let leave. We've been taken over by corporate giants.

AJ39

Posted Wed, Jan 15, 10:41 a.m. Inappropriate

What is the status of a possible challenge to the WTO regarding the huge tax breaks to Boeing. Won't Airbus bring a suit since subsidies are, in theory, banned under the WTO?

Jerome

jerome

Posted Wed, Jan 15, 10:42 a.m. Inappropriate

Not so sure about the tunnel cost overrun gambit. If I recall it correctly, the statute authorizing the tunnel was very careful to name various elements of the tunnel project (such as utility relocation, et al.) as the responsibility of the "City of Seattle". Note the very precise term, "City of Seattle". Yet, when it comes to overruns the operate term is switched to Seattle "[areas] gaining a benefit", or words to that effect. It does not state City of Seattle. Thus, any tunnel overrun costs, it seems to me, are directly pointed to the downtown waterfront property owners such as those identified in the Allan-Brackett-Shed economic study done for the city a few years ago. Historic Seattle (Ivars, the Great Wheel, Miners Landing, and other associates are clearly in the cross hairs for cost overrun payments. After all, these are the entities who lobbied for and got the tunnel so they could benefit from the removal of the viaduct. It is sort of like being careful about what you wish for.

seebee

Posted Wed, Jan 15, 1:01 p.m. Inappropriate

Reminds me of the ancient joke about the guy who walked into the airport bar and sat down on a stool next to a beautiful woman. He bought her many rounds of drinks and they chatted happily for hours. Finally, he said,

"You know, I really like you a lot and would love to get to know you better. But tomorrow morning I'm flying out to Chicago and won't be returning. But, if it wouldn't insult you, I'd to suggest an idea. I'm a very rich man and can afford what I want. If you will consent to spend just this one night with me, I will happily give you $100,000 cash for your time. Does that idea offend you?"

The lady stared demurely down into her drink for a few moments, then looked up and smiled. "Well, I guess that would be OK."

It now became the guy's turn to be pensive. Then after awhile he stared straight at the woman and said, "You know, how about if instead we make it fifty bucks?"

The woman replied angrily, "Are you out of your mind? Exactly what do you think I am?"

"Well, I think we've determined what you are. Now we're just dickering over the price."

woofer

Posted Wed, Jan 15, 2:27 p.m. Inappropriate

Just scanning Washington state's site proposal for keeping Boeing 777x work here. For those wondering about Boeing and its impact on tax reform, well, don't hold your breath on getting a progressive income tax any time soon. The state sees that as anti-Boeing. Page 22: "Washington State's lack on an income tax combined with other tax incentives for aerospace companies established in 2003, have allowed the industry to prosper."

Posted Wed, Jan 15, 8:25 p.m. Inappropriate

It'd be great if you upload that report and post a link to it.

FWIW, it's more than a stretch for anyone to say the lack of a corporate income tax in this state "allowed the [aircraft] industry to prosper". If there were a reasonable income tax on profitable businesses in this state Boeing's stock price would be exactly where it is now.

Anyone with any corporate finance experience read Crosscut? Let's discuss that issue.

crossrip

Posted Thu, Jan 16, 4:54 a.m. Inappropriate

Child abuse, bullying come to mind.

Forcing families to offset the taxbreaks and subsidies to Boeing that we should have voted on, instead of this method of extortion, is no different than beating the crap out of us and kicking our children in the head.

Doesn't anyone in Olympia have a clue what you're doing?

salmonjim

Posted Fri, Jan 17, 10:35 p.m. Inappropriate

Great piece, Skip! Boeing is the biggest abuser locally, but this is going on throughout the nation and world as multinational corporations--and those whose design/build territories are world-wide--pursue the only goal of capital: maximize profit, and avoid the "social costs" of exploiting land, labor, and materials. At some point, some communities are going to recognize the damage done, and some will turn their backs on appeasement. That's going to be really painful to do, particularly since there are still plenty of bottom-feeding states, communities, and politicians, but it's the only way to bring these one-way policy issues into focus. This is going to be a long journey, and Washington State, despite our chronic red/blue divide, is among those uniquely positioned to set clear limits and pursue a vision of more responsible (and "sustainable") private-public relations.

Seneca

Posted Sat, Jan 18, 9:30 p.m. Inappropriate

We can't win this sort of race to the bottom. The only way to win this game is to refuse to play it.

coolpapa

Posted Sun, Jan 19, 12:51 p.m. Inappropriate

"How will we know when we've crossed the line?"
We crossed it a long time ago.

beno

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