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The puzzling state of Washington's economy

There's energy and tension at the corporate level. For most of us, the tension may hold center stage.
Are the state's fortunes rising with Boeing's?

Are the state's fortunes rising with Boeing's? ThierryB/Flickr

There was a rerun of the 1998 romantic comedy “You’ve Got Mail” on TV the other night.  In it, the Tom Hanks character talks about his mega bookstore and its impact on the small bookstore around the corner owned by the Meg Ryan character.

“It’s not personal, it’s business,” he says. Like in “The Godfather,” and “going to the mattresses.”

That all comes to mind when I look at some of the issues in the region these days including Boeing, the Export-Import Bank, the general economy and how the state Legislature might react to more money in the pot.

The state Economic and Revenue Forecast Council reported recently that revenue collections for mid-July to mid-August were more than 5 percent higher than expected, up $62.4 million. So, the Legislature may have a bit more money to play with in January when it convenes to write a budget for the next biennium. 

Legislators, however will still face a daunting task of trying to match revenue and expenses with a multi-billion dollar legal case hanging over their heads. In the McCleary case, the Supreme Court ruled that the state is failing to meet its constitutional duty to fully fund education in Washington, and must do so by 2018.

David Schumacher, director of the state Office of Financial Management, said in July that the revenue growth “will not keep pace with the cost of maintaining current services and covering mandatory increases, let alone provide the additional $1 billion to $2 billion needed to meet the state’s constitutional basic education obligations.” The next revenue forecast is scheduled for release Sept. 16.

So, what is the state of the economy, and business, around here as we look ahead to the rest of the year?

Boeing

Boeing and the Puget Sound region seem like they are in crisis these days: Jobs going elsewhere. “Centers of Excellence” being created. Suggestions that the company is trying to destroy the Seattle Professional Engineers Association. The 787-10 to be built in South Carolina. Huge subsidies granted by the Legislature.

OK, let’s all take a deep breath and relax. I am not a Boeing apologist though, for full disclosure, I will note that I have family members who work, or worked, for Boeing.

But like in the movie, what is happening at Boeing these days in regard to the Puget Sound region is just business.

Boeing is obviously a global company with many functions; some people have compared it to the U.S. State Department. After all, it has operations around the world for various political and economic reasons — aircraft parts from Chengdu in China, engineers in Russia, and so forth. It made the business decision to diversify its manufacturing by opening a plant in South Carolina, though the headlines show that program still has some growing pains.

So, it is no surprise that Boeing also is tapping the aerospace engineer market in Southern California. You go where the talent is. There were few complaints in California when Google opened an office in Seattle to take advantage of the talent from software and gaming industries here. It made sense. So does Boeing’s decision to shift jobs to California and elsewhere.

Boeing jobs will come and go. The focus should be on what’s here and it’s significance. Our region remains a major manufacturing base for the company. Boeing will build the 777X here, including the high-technology wing because of the skill and experience of the work force. Boeing is here to stay and the jobs will keep coming — just not in all areas or all divisions.

Of course, there are issues remaining. Workers have accused the company of age discrimination in the recent reduction in engineering jobs.

And CEO Jim McNerney also made the situation worse recently with a mindlessly self-centered remark when he was talking to analysts about quarterly results and whether he might be near retiring. McNerney said he won't retire because "the heart will still be beating, the employees will still be cowering," according to Bloomberg. Workers rightly reacted strongly to that comment.


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Comments:

Posted Fri, Aug 15, 8:22 a.m. Inappropriate

Boeing builds global-warming machines. We should subject the company, and its products, to a broader environmental impact statement, ala coal trains and oil refineries. Global Governor Inslee should boot Boeing to the Carolinas. Let the unenlightened Carolinians have the filthy lucre, we can live on righteousness.

BlueLight

Posted Fri, Aug 15, 9:03 a.m. Inappropriate

It is always a pleasure to read Dunphy because he delves into the trends beneath the numbers. For us the long-term trends may be weaker and narrower than the high-profile current data suggests. It's a recovery, yes, but still a fragile one.

woofer

Posted Fri, Aug 15, 9:36 a.m. Inappropriate

Whoever at Boeing moved their wing supplier to Mitubishi should be caned... http://www.mrj-japan.com/ is the result. Nothing like teaching your competition how to do your job.

As for moving the engineers to Southern Cal.... dumb, dumb, dumb. Engineers need to be close enough to the assembly line to hear the cuss words from the workers building the aircraft. The 787 being years late and billions over budget is the result of that outsourcing. Twenty years ago maybe having engineering in So. Cal made sense. No longer... oh wait, it's not Boeing, it's McDonald Douglas in disguise.

Don't forget the economic driver of Amazon being in town. 40K local employees mostly highly paid. Sure they have a ton of warehouse jobs but the core of the company is here.

And the Port? got a shout out, or at the Port? Oh, not so rosy now that Prince Rupert is on line and shipping to the midwest. http://www.rupertport.com/ Soon the Panama Canal will be wider and even more freight won't stop here. Of course if Tacoma and Seattle ever worked together to get business they might stand a chance but all those years of bad blood hurts that chance.

Timber?.... long gone but not dead.

Fishing?.... still flopping around and not dead. If they pull the dams on the Snake River we may recover enough spawning ground to have a serious fishery on the Columbia again. The Elwah dams will help, but that's another 10 years in the spawning.

Of course the real reason the economy is flopping like dead fish is that the national banks are issuing unsecured loans creating money where there is no wealth and inflating away workers gains.... bought a loaf of bread lately? Ridiculious prices for sure.

GaryP

Posted Fri, Aug 15, 9:40 a.m. Inappropriate

Oh and don't forget our Pot Tax revenue. As the state gets its act in gear the cash will flow in until Oregon and California, Idaho, Montana et.al legalize it. Until then the visitor buys should float the school money for the next 10 years. After that, not so much.

GaryP

Posted Fri, Aug 15, 1:58 p.m. Inappropriate

Assuming the visitors don't get their weed via Craigslist. Anyone who would pay $25/gram (tax, tax, tax) versus $10/gram must be from out of state.

BlueLight

Posted Mon, Aug 18, 8:26 a.m. Inappropriate

Apparently the legal stuff is selling well.

http://seattletimes.com/html/localnews/2024328151_potseries4xml.html?cmpid=2628

... "sold out"

GaryP

Posted Fri, Aug 15, 11:27 a.m. Inappropriate

How I wish I could read an article about the economy without encountering the silly phrase "Great Recession." There's a word for a "great" recession: a depression. That's what we've got going on now, very similar to what we had in the 1930s, although thankfully not as severe. A recession is a minor depression. You can't be minor and great at the same time. That phrase mars an otherwise well-written article.

dbreneman

Posted Fri, Aug 15, 12:27 p.m. Inappropriate

In the last 12 months the Dow has gone from 15,112 to 16,655 and the NASDAQ is up 23.59%. Corporate profits are up, there's construction all over Seattle, and statewide unemployment is falling.

The only thing wrong with the economy is that not enough of the gains are trickling down to the state or the working class.

Yes, absolute state revenues are up - but on a per-capita level the state is collecting far less than it used to, we've got a growing population to educate, a clogged transportation system with infrastructure in dire need of both maintenance and expansion, and a mental health system that's a time-bomb waiting to explode.

Meanwhile, too many workers can't make ends-meet even in a state with the highest minimum wage in the nation, cannot save for their retirements, and have little or no real net worth.

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