No, I am not making this up. It is the conclusion of a report released today by PricewaterhouseCoopers (PwC), the influential global accounting and professional services firm. In the 2016 Aerospace Manufacturing Attractiveness Rankings, Washington comes in No.10.
The report says, “The 2016 index is based on a weighted average of variables. For the global rankings, the three categories of variables are costs, industry size, and infrastructure/stability/workforce.” (The United States is No. 1 globally).
The nine states ahead of us are Arizona, Florida, Utah, Georgia, Missouri, Indiana, Texas, Michigan and Ohio. Poor South Carolina ranks only 24th, despite Boeing’s decision to place a second Dreamliner assembly there. California, with 74,000 aerospace manufacturing employees, is only 16th. Alabama, which is pretty attractive to Airbus and NASA, comes in No. 13.
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Washington was 29th in tax attractiveness, 24th in operating expenses, 13th in industry size and 11th in education. About the Evergreen State, PwC was brief: “Washington placed tenth in the state rankings. While Boeing has had a large presence in the state since the company was founded in Seattle, in the past year, it invested more than $1 billion in infrastructure to prepare for the manufacture of the next generation of airplanes.”
Huh? Washington boasts one of the planet’s two largest aerospace clusters (along with “Aerospace Valley” in Toulouse, France). In addition to Boeing, more than 1,300 aerospace-related companies are located here. In May, 91,700 employees worked in aerospace product and parts manufacturing. This is the backbone that makes Washington the nation’s third largest state for merchandise exports. Aerospace education is ubiquitous. Oh, as for taxes, don’t forget the nearly $9 billion in aerospace tax breaks associated with the 777X.
At this week’s gathering of the aerospace elite at theFarnborough Air Show outside London, Washington, Florida, Alabama and the Carolinas had booths. Connecticut had a booth. Mississippi had a booth. Maryland had a booth.
I don’t mean to beat up on my home state, but Arizona is pitiful by comparison. Although it is nearly as populous as Washington, it had only 25,000 employees in aerospace manufacturing in May. The state leads the nation in cuts to university funding, has terrible K-12 funding and a reputation for intolerance that doesn’t act as a magnet for talent or high-end investments. “Right to work” labor is cheap but Arizona has no capacity to hand out the
corporate welfare incentives that Washington does. Much of its aerospace roster, such as Boeing’s helicopter plant in Mesa, is a remnant of the state’s legacy economy seeded by Cold War federal spending. Real estate is king in Arizona’s underperforming economy. I take no pleasure in pointing this out.
(If you want to read more of my commentary, analysis and history on Arizona, go here).
As I file this, PwC has not returned my request for clarification. I will add it when that happens. Meanwhile, it appears the rankings are a combination of statistical fluke and reliance on local (potentially boosterish) reports. But perhaps I’m wrong and Washington needs to be even more paranoid. Download the report yourself and see. You can bet site selectors and aerospace executives will.
Today’s Econ Haiku:
“Grandma, what were stores?”
“No time now, little Susie
I’m on Amazon.”