Boeing's cutback of 777 production will affect the region's economy, even if it is far more diverse than in previous decades. We're about to examine its strength and depth.
Ups and downs with Boeing are nothing new for the Puget Sound region. The “will the last person leaving Seattle — turn out the lights” recession of the 1970s is legend. From 1990, total aerospace manufacturing employment in Washington went from 114,600 in September 1991 to 58,000 in November 1995, back up to more than 113,000 in the summer of 1998, below 61,000 in 2004 and lately 88,900. This includes all aerospace jobs but the prime driver is Boeing. It’s not our first rodeo.
The new go round was reported by my colleague Dominic Gates: Lacking orders to sustain building seven 777s per month, the company will cut back to five. “The worst-case scenario.” At least worst-case as outlined by Chairman and CEO Dennis Muilenburg in October. In fact, starting in 2018 deliveries will fall to 3.5 airplanes per month. This year started with a rate of 8.3.
Boeing has received no new 777 orders since October. The deal with Iran would face scrutiny from an incoming administration that has been hostile to rapprochement with Tehran. (No wonder Boeing is pledging $1 million for Trump inauguration events).
Job losses will be inevitable, rippling out into the wider aerospace cluster. And things may get worse — world economic growth is slow or negative, trade is in a rut and Trump ran on a platform of economic nationalism that should make companies dependent on international sales (that help sustain American jobs) nervous. Stalling on getting the Ex-Im Bank running again will start to hurt in a slowdown.
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Seattle has changed dramatically from the 1970s or even 1990s. As I discussed yesterday, it boasts numerous advanced industries, headquarters and world-class economic assets. But aerospace remains one of the most important. And don’t assume the job losses would be confined to Snohomish County — aerospace workers live all over the region. Then there are vendors, already being squeezed to cut costs.
So buckle your seat belts, make sure your seat-backs and tray tables are in their full, upright and stowed position. We’re heading into some turbulence.
Today’s Econ Haiku:
Vladimir’s man Rex
To make America great
An oily concept