“Will the last person leaving SEATTLE — turn out the lights.” So read the famous billboard rented by real-estate agents Bob McDonald and Jim Youngren near Seattle-Tacoma International Airport for 15 days in 1971.
It was meant as a humorous response to pessimism from the Boeing bust. High development costs and slowing sales for the 747, along with the cancellation of federal aid for the supersonic transport program, sent employment at the company from 100,800 in 1967 to 38,690 in April 1971.
While Seattle never reached a “turn out the lights moment,” trouble at the region’s largest employer worsened our battle against that decade’s national slump (two recessions, high inflation and slow growth). The billboard was meant as parody, making the point that the city “wasn’t a ghost town with weeds growing in the streets.” Yet the sign remains a potent legend — and times were hard enough that Seattle lost population in the 1970s.
Just how far Seattle and the Puget Sound region’s economy have come in nearly 50 years is about to be tested.
Earlier this month, my colleague Dominic Gates wrote about the likelihood that Boeing could consolidate 787 Dreamliner production in South Carolina:
“If Boeing were to consolidate in North Charleston, it would leave the largest building by volume in the world — housing Everett’s widebody jet final assembly lines — almost an empty shell.” Some 30,000 people work there.
Meanwhile, the company’s 737 MAX, assembled in Renton, is struggling to win approval to resume service after being grounded by two deadly crashes.
With the aviation industry in crisis because of the pandemic, a revival in air travel looks bleak for several years.
It’s tempting to shrug the danger off. Compared with the 1970s, Seattle has an amazingly diverse economy — the most varied of any of the five large cities (and two smaller ones) in which I’ve been a business journalist.
The Seattle area is home to the headquarters of two of the five Big Tech giants, Amazon and Microsoft.
The startup scene is vibrant, especially in technology.
By providing city amenities and natural beauty coveted by top tech talent — but at a lower cost than San Francisco and Silicon Valley — the region has drawn high-end operations with thousands of good jobs from Google, Facebook, Apple, Salesforce and others.
More good jobs and capital come from such major headquarters as Starbucks, Nordstrom, F5 Networks, Alaska Air Group, Costco, Expedia, Expeditors International, Paccar, REI, T-Mobile and Zillow.
Then comes the power of biomedical and biotech headlined by the University of Washington, the Fred Hutchinson Cancer Research Center, Seattle Cancer Care Alliance and Allen Institute. The Bill & Melinda Gates Foundation is an economic cluster all its own.
Tourism, including conventions and cruises, is another major sector and huge employer.
A number of legacy entities also power the economy. Among them are Weyerhaeuser’s headquarters and such sectors as maritime and shipping, with two natural deep-water ports.
Finally, the region boasts the second-largest concentration of military bases on the West Coast, including Naval Base Kitsap and the Puget Sound Naval Shipyard, along with Joint Base Lewis-McChord and other installations. Military spending here totaled $15.2 billion in 2017, sixth among the states.
And yet … It’s not 1971, but aerospace still leaves a huge footprint.
According to a deep-dive 2019 report, the aerospace industry generated an estimated $71 billion in revenue in Washington the previous year and employed 83,400 at 199 establishments, anchored of course by Boeing. The average annual wage paid per worker was $116,770 (vs. an estimated $63,000 across all industries and all workers in the state).
The report was prepared by the research firm Community Attributes for Aerospace Works for Washington, a project of the Seattle Metropolitan Chamber.
Thus, Boeing moving substantial assembly outside the region would add in a big way to the pandemic drag hitting across all sectors. Except in the case of lost 787 assembly, that high-paying work wouldn’t be coming back and the consequences would also affect Boeing suppliers.
Not only that, but these are among the best high-skilled, blue-collar jobs left in America. The Puget Sound region has been rich in them. Replacing them would be hard.
Another casualty would be Washington’s standing as a major export state. This past year, Washington booked $60.4 billion in merchandise exports. Nearly 45% came in the “transportation equipment” sector — read airliners and components for airliners.
Gates wrote: “ … with the pandemic triggering a collapse of demand for airplanes and Boeing’s finances already drained by the 737 MAX crisis, there is no new airplane launch on the horizon to compensate if 787 production is lost.”
“In 2003, this state’s political and union leaders mobilized to win the original 787 competition. In 2011, they did it all over again for the 737 MAX. In 2013, Boeing forced what became a bitter fight with labor to secure the 777X.
“Now another momentous Boeing decision looms that may add substantially to the heavy job losses already announced and could lay waste to this state’s world-renowned aircraft manufacturing sector.”
Shifting 787 assembly exclusively to North Charleston is a reckless move. The plant wouldn’t even exist except for an attempt at union intimidation here by then- Boeing CEO James McNerney.
It’s difficult to see how South Carolina could assemble the ecosystem of a world-class aerospace cluster. The world has only two: Puget Sound and Toulouse, France.
The Palmetto State had success in creating “the autobahn” around a BMW assembly and suppliers along Interstate 85. But it lacks the talent, infrastructure or experience to scale up for aerospace. (As business editor for The Charlotte Observer, I supervised coverage of the economy in North and South Carolina in the 1990s).
Indeed, a 2019 Aerospace Competitive Economics Study by the Teal Group found Washington No. 1 in the business environment for the manufacture of aerospace equipment. South Carolina ranked No. 27, falling five spots from the previous year.
It’s an old saw that McDonnell Douglas used Boeing’s money to take it over, take its name, and replace its engineering culture with bean counters overseen by acolytes of Jack Welch — and they hate the Puget Sound region. The former Seattle headquarters is in Chicago, loyal to nowhere.
Maybe that’s an oversimplification, but it speaks some truth.
And if that antipathy is so strong that Boeing is starting an exit, however foolish, our lights will stay on, but dimmer.