As a preface to the campaign to win local work on the next Boeing jet, a new report commissioned by advocates for the aerospace industry estimates the jet-maker directly and indirectly injected $70 billion into the local economy last year.
Ten years after the state Legislature passed a massive package of tax reductions and other incentives to persuade Boeing to put its 787 Dreamliner assembly line in Everett, the report is designed to lay out what’s at stake this time around.
Boeing is considering where to locate final assembly and wing fabrication of the 777X — a pending new version of the 777, which is currently built in Everett.
The analysis, prepared by Seattle-based consulting firm Community Attributes Inc. (CAI), estimates that just shy of 20,000 Boeing employees now work directly or indirectly on the 777 program.
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Adding in jobs created by businesses that either supply the program or sell services to the employees — everything from Starbucks to health services — the total for local jobs generated by the 777 is pegged at 56,600, generating $3.2 billion in wages.
Bob Drewel, president of the Washington Aerospace Partnership, a coalition of local government, business and labor interests that commissioned the report, sees the data as confirmation that the state needs to pull out all the stops for Boeing.
“It’s news that will reaffirm that we need to be bold and aggressive in our approach to this competition for the 777,” Drewel said.
Boeing is expected to formally launch the 777X program next month at the Dubai Air Show. A decision on where it will be built, including where the giant composite plastic wing will be fabricated, is expected a few months later.
At the opening of the Governor’s Aerospace Summit in Everett on Tuesday, Boeing Senior Vice President Pat Shanahan offered few guidelines for state officials.
He said Boeing is concerned about state funding for education and for transportation, and also about “unachievable environmental regulations” related to water quality and reduction of toxins in fish.
“I worry we’ll set a standard that’s harmful to business and we’ll spend more money on a requirement that may not be necessary,” Shanahan said of possible fish regulations.
Beyond that, however, he said it’s too early to discuss how or where the 777X will be built, offering only what some might interpret as a ray of hope for this region:
“We’ll be very thoughtful to not repeat some of our experiences on the 787,” he said, perhaps a reference to the overseas outsourcing that went so bad on the 787.
Though state legislators aren’t thinking of new tax breaks for 777X, instead focusing on Boeing’s known issues — infrastructure improvements, workforce training and easing of regulations — the report tries to pin down exactly what the state got for the tax breaks it granted Boeing in 2003.
The study estimates how much Boeing has reaped from the state’s incentive package over the decade since it passed: the lion’s share of a $1.4 billion total benefit to local aerospace companies.
In those 10 years Boeing’s jet-making has contributed an estimated $3 billion to state tax revenues, including both direct taxes paid by Boeing and also taxes paid by other companies, aerospace and otherwise, that are buoyed by its business.
Halfway through the projected 20-year extent of the original tax-break legislation, the report presents the first data on how Boeing and the state have each benefited.
sees the economic calculus — $1.4 billion in revenue forgone, $3 billion taken in — as a bargain.
“We’ve doubled our money on that,” said Drewel. “I’d put money on that proposition anytime.”
Taking into account other aerospace companies doing work unrelated to Boeing, the total state tax revenue from aerospace in the past decade is about $4 billion, the study says.
The $70 billion estimate of Boeing’s impact to the state economy in 2012 consists of all money spent by Boeing, its suppliers, its employees and also by companies, aerospace or otherwise, providing services to Boeing or its workforce.
Since Boeing doesn’t disclose how many people work on specific jet programs, CAI had to estimate the 777-specific data.
Chris Mefford, president of CAI, said his firm’s breakdown of jobs and economic impact by individual jet programs was arrived at after consulting with Boeing’s engineering and Machinist unions to find out where their members work within the company.
For every dollar in sales made by Boeing’s Commercial Airplanes unit, an additional $0.45 is generated in sales among other businesses across the state, according to the report. And for every job created by Boeing, an additional 1.8 jobs are created in other businesses.
Mefford said the full report won’t be ready until month-end, but a summary will be presented Wednesday at the Governor’s Aerospace Summit in Everett.
Among the striking data points in the summary:
• Last year, the aerospace industry in the state paid out $11.5 billion in wages to employees at Boeing and companies that either supply the jet-maker or provide goods and services to its workforce.
• The aerospace industry supports 132,500 total jobs statewide, including both direct aerospace jobs and jobs providing services and support.
• Although CAI does not have access to company-specific tax data, it estimates that after factoring in its tax breaks, Boeing paid $131 million in business & occupation tax in 2012.
• Overall state tax revenue from Boeing and from other companies supported directly or indirectly by its jet-making totaled $476 million in 2012.
Dominic Gates: (206) 464-2963 or email@example.com