Want to worry about something more than the financial meltdown at WaMu and banks? Try Boeing. The company is locked in a strike with Machinists that some think will last well into 2009, since the stakes are so high, and is likely to start losing orders as the global economy slows down.
Boeing spokespersons started clanging the fire bell at the Governor's Annual Aerospace Summit. Fred Kiga, Boeing vice president for government and community relations, said that the state was becoming known as a "strike zone," and that could drive the company out of state for assembling its next airplane. Kiga pointedy recalled the way Boeing termed the area a potential "aerospace rust belt" in 1990, leading to $3 billion in tax breaks to keep assembly of the 787 in the state. Another speaker noted how 10,000 manufacturing jobs fled California for Georgia in 1990, when Lockheed Martin moved.
The stakes are high in the strike, with the International Association of Machinists insisting that Boeing reduce outsourcing and protect certain future jobs. No give from Boeing on this, which observers think is a signal that Boeing is preparing to shift more jobs overseas and to the lower labor costs of the American South. There are 87,000 aerospace jobs in Washington, with an average annual salary of $90,000, plus another 157,000 indirect jobs in the sector, according to state figures.
Mike Parks, editor of Marple's Pacific Northwest Letter, ($) expects the strike to last "well into 2009." He also warns that the bulging order books at Boeing will take a hit as the world economy sinks. "The four-year-plus hiring boom in Washington's aerospace sector may be over," notes Parks.
We forget, as the state diversified, how critical Boeing is to the local economy and state coffers. The strike, if it isn't settled in time for Christmas holidays, will be another drag on retail and tax revenues. The state may be facing both lower revenues and a coming power play by Boeing for more tax concessions. It's bad timing for the state (and for Gregoire's reelection hopes), but it may be good timing for Boeing, since the pressure to protect jobs will be intense as the economy sinks.