Puget Sound business and union leaders must redouble efforts to ensure Boeing keeps vital work here, writes Deborah Knutson, president of the Economic Development Council of Snohomish County.
AEROSPACE has had a bumpy ride recently. First, Boeing had to delay the maiden flight of the 787 Dreamliner. Now Boeing’s purchase of 787 subcontractor Vought Aircraft’s South Carolina operations fuels speculation that the company is headed South. It doesn’t have to be the case.
If Puget Sound wants to avoid becoming Detroit with pine trees, we must fight to keep aerospace.
Boeing’s fundamental concern is the cost of doing business here. We must build a stronger partnership, proactively addressing concerns, creatively using tax incentives and taking steps to control costs for transportation, housing and energy.
We can do it. The Boeing 737, built by workers here and in Kansas, is the most successful aircraft in commercial-aviation history. The higher wages of our workers is offset, in part, by being some of the most productive industrial workers in the world. We have too much at stake to not to compete for future aerospace jobs.
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Over the next 20 years, Boeing projects the global commercial-jetliner market will top $3.2 trillion.
Consider the company’s local impact today. Washington state has more than 600 aerospace companies, creating more than $36 billion in economic value and representing 66 percent of the state’s exports. We have more than 86,000 aerospace employees, with an annual payroll topping $5.4 billion. The Port of Everett handles shipment of all the oversized parts for the 747, 777, and 767, resulting in more than 5,800 hours a month of work by longshore crews.
And it doesn’t stop there. Snohomish County hotels earned close to $8 million last year just from lodging Boeing-related travelers. Much would be gone if Boeing shifted final 787 assembly to the South.
Boeing and the International Aero Mechanics have to get along. We’ve had three strikes here in 10 years. Deloitte Consulting estimated that the 2008 Machinists’ strike cost Boeing $1.3 billion in profits. Workers lost close to $250 million in wages during the dispute. Strike-driven delays rippled through customer airlines and Wall Street, prompting canceled orders and investor doubt. No one wins in a strike.
Like any business, Boeing must control costs and have some degree of economic certainty. Beyond union wages and benefits, it’s the cost and time for building a facility, local taxes and regulations, transportation, energy, housing and education. They all factor into the 787 Dreamliner’s costs.
Workers want living wages and some certainty that their jobs won’t abruptly disappear. And for their skill in making planes that safely take our loved ones around the world, they ask to be treated as a respected partner in Boeing’s success.
Aerospace isn’t dead in Washington state, but we do need to get out the economic defibrillator paddles and jolt ourselves into action. We must continue to improve transportation, K-12 and higher education, align our unemployment and workers-compensation programs with competitive states, and explore how we use our tax system to encourage capital investment, job creation and industry purchases from in-state suppliers.
For generations, Boeing has put Washington on the global map. The 747 is an icon of American industrial genius and skill. Even today, as you see gleaming new planes rolling off the Everett assembly line, one takes a special pride that Boeing commercial jets are built here.
This shouldn’t be Boeing vs. Machinists. There is too much at stake to let this degenerate into another management-labor standoff. In Michigan, the Big Three automakers and the United Auto Workers waited too long. Former Boeing Commercial chief Allen Mulally saved Ford from bankruptcy by quickly getting costs in line with competitors and working with the union to get there.
We should recognize that if we don’t make some changes in how we do business, the first flight of the 787 Dreamliner might become just a fond memory of what might have been our economic future.
Deborah Knutson is president of the Economic Development Council of Snohomish County and was involved in 2003 efforts to build the 787 in Everett.