Washington readies to fight for Boeing work

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Lawmakers in Washington State are working to draft legislation aimed at giving the region the ability to better compete for Boeing's business - including future assembly of the 737 successor aircraft - as well as attract new companies to the region, ATI and Flight Global can exclusively reveal.

The legislative effort comes as Boeing considers establishing a 787 assembly line outside its historic Everett, Washington home, a move that has prompted the machinists union to study the wording of a 2003 piece of legislation that effectively provided a multi-billion dollar tax-break package to Boeing and other Washington companies after the airframer agreed to establish a final assembly plant for the 787 in Everett. That agreement is known as "Project Olympus".

Snohomish County Councilmember Brian Sullivan, a former state representative who now represents County Council District 2, which includes the city of Everett, says: "I'm proposing through State Senator Paull Shin and several legislators on behalf of Snohomish County a new bill that would allow the state to become a 'port district'.

"All the corporations are throwing in our face that they can go to South Carolina and rent property for $100 a year and Washington can't do that. But there is an exemption in the state law that allows port districts to do that. I'm proposing a state-wide port district or a county-wide port district to at least allow us to compete on the local level as South Carolina."

One of the major goals of the legislation is to keep Boeing in Washington, something that is no longer a foregone conclusion since Boeing moved its headquarters to Chicago and began employing a business model that involves outsourcing large "sections and tooling and everything else", says Sullivan.

He also says the state no longer has "the comfort zone" of knowing that Boeing leadership were born and raised in Washington and hold a specific sense of community and loyalty to the region.

"Scott Carson will be the outgoing Boeing Commercial Airplanes CEO here in less than a year and its up for grabs who ends up running Boeing Commercial. What we need to do is start competing with the same tools as other states and counties compete with and we have the added value that people want to live here because our quality of life is so good."

The bill that Sullivan is writing is still in draft form. "The Legislature meets once a year for a two- to four-month period. The bill won't be dropped and get a number until late December or early January," he says, adding that officials are trying to contact port districts that currently do business in Washington to "get their support and to let them know we're not trying to compete" with them.

A Boeing spokesman says the airframer is aware of efforts by lawmakers in Olympia, the state capital, to pass measures that would help the entire state and business community compete and thrive. "We think that is a good thing not only for Boeing but for all businesses," he says.

It is not yet known if the bill will move through the Legislature before Boeing decides on where to position its second 787 assembly line. Aimed at speeding construction of the 850 aircraft on order, the line may go to North Charleston, South Carolina, where Boeing's Vought division builds 787 subassemblies and where Boeing has already filed permit applications.

Such a move would no doubt raise the ire of the Boeing machinists union, IAM District 751, which is currently taking a close look at the Project Olympus agreement and the 2003 legislation that supported the agreement, known as House Bill 2294.

The bill defines a significant commercial airplane final assembly facility as "a location with the capacity to produce at least thirty-six superefficient airplanes a year", but does not appear to set a date for accomplishing this level of production.

"That is something we're looking into right now. The whole argument of where the second line goes, really they [Boeing] need to focus on that first line right now. That needs to be the priority and we believe we have every advantage to put it here," says a union spokeswoman.

"Realizing that that might not all come to light, we do have someone that's looking at Project Olympus and what did it mean and what was the intent of the Legislature at the time for the state."

Adds the spokeswoman: "Basically what we're doing is looking at what the actual law says and meeting with legislators to make sure that number one, the original obligation is met, because right now, we believe it is too early in the process to be considering anywhere else. Our focus and the company's focus really should be on getting the first line moving and getting that plane flying and certified."

Boeing believes there is nothing in the Project Olympus agreement to prevent it from adding 787 assembly capacity outside of Washington State. "We have long maintained that Project Olympus was an important step in Washington State's competitiveness journey and it was a key factor in our putting the programme base and commencing production here but it does not present a barrier for a potential decision on adding additional 787 assembly capacity either here in Washington sate or elsewhere," says the Boeing spokesman.

If Boeing opts to establish a 787 assembly line in South Carolina, that would certainly be a concern, says Sullivan, "but the point is Boeing is the gorilla in the room and nobody wants to look at it. If we threaten to sue them and make them pay back taxes, we may actually lose the whole ball of wax. That would be my concern".

Rather than litigate the issue, he says, Washington State needs to put measures in place to ensure it can compete for Boeing's business, such as the 'port district' proposal that will be tabled.

State representative Mike Sells is also focused on keeping Boeing work in-state. "I am asking some folks to compare the language we used in 2005 and 2007 to extend the tax credits, particularly to software used by aerospace companies. I am sure both the company and the state would be looking at agreements made in 2003, should some action be taken to move production out of the state. At this point, we're more focused on making sure it stays here, and that our relationships provide for success across the board."

For Sullivan, getting legislation passed to improve Washington's competitiveness is particularly important as Boeing mulls where to build the successor to its highly-successful 737 series. "The real battle may not be the second line for the 787. The real battle will be how to keep the [Renton-built] 737 in Washington State. "We know that the aging plant in Renton, on Lake Washington, is a billion dollar piece of property they can redevelop and make money on," says Sullivan, who refers to the successor to the 737 - which has not been detailed by Boeing - the "mini-Dreamliner".

Boeing says it is too early to say where future narrowbody assembly will take place. "I'm sure there would be people who would be looking into these issues because single-aisle is important to the business, but I think it's too early to talk about that," says the Boeing spokesman, noting that the airframer has said it doesn't believe technology readiness for such a project will occur until the latter part of the next decade.