The aerospace industry is a cornerstone of our state’s economy. It supports more than 200,000 good-paying jobs and is a critical part of the economy and community in the cities we lead as mayors.
Boeing is the largest piece of that industry. As our state’s largest private employer, with more than 71,000 employees in Washington, Boeing drives thousands upon thousands of jobs in our cities and throughout the state. It also provides tens of millions of dollars every year in community and charitable giving.
But Boeing is not alone. Several hundred aerospace suppliers that also receive the tax break employ tens of thousands of additional people building airplane parts and supplying other necessary items for Boeing commercial airplanes.
The World Trade Organization has recently ruled that one of the tax provisions that the Washington state Legislature offered the aerospace industry 16 years ago is out of compliance with WTO rules. Boeing has proposed, with the support of its industry partners, legislation to end that tax preference. The legislation also provides that, if an agreement is ever reached that specifically allows the current lower Business & Occupation (B&O) tax rate to return, it would return, but only to the extent allowed by the agreement.
This all comes at a particularly challenging time for the aerospace industry. International trade tensions and the ongoing grounding of the 737 MAX airplane have resulted in significant difficulties for Boeing and aerospace companies across Washington. Despite this, for nearly a year Boeing kept production running at the 737 factory in Renton. They kept buying parts and components. They kept building airplanes.
In January, Boeing began a temporary pause of 737 production in Renton. But when they did, they announced they would not engage in layoffs, as many had assumed and expected. Instead, the company temporarily reassigned Renton workers to factories in Everett, Auburn and other places — keeping these people employed and their paychecks coming.
While this is a wonderful effort on Boeing’s part, its suppliers are now feeling the strain Boeing has felt for almost a year. We are starting to hear of layoffs in the supply chain as suppliers adapt to the production pause.
Unfortunately, some voices in Olympia are beginning to suggest that we should not include the provision allowing possible reinstatement of the current tax rate if an agreement is ever reached specifically allowing its return. They believe that, despite the challenges this industry is navigating, now is an opportune time to extract higher taxes and additional requirements on Boeing and its suppliers.
We fundamentally disagree. Now is the time to ensure our laws are compliant with WTO rules. But now is absolutely not the time to extract additional and unnecessary costs from this industry upon which so many of our citizens rely.
It is too important to the future of our cities, our region, our state and our people to play politics with this industry at this difficult time.