Twenty thousand jobs and $500 million in taxes — that’s what was at stake in securing 737 MAX assembly in Washington, state leaders said.
Also at risk was the state’s reputation in the aerospace industry.
Washington would have been in a “less advantageous position” for winning aerospace work down the line, said the writer of a competitiveness study for the state.
The Boeing Co. picked Renton as the final assembly site for the rejuvenated 737 after reaching a surprising deal with the International Association of Machinists and Aerospace Workers (IAM) late last year. The company’s decision to continue to build 737s in Washington also followed a year in which the state overhauled worker-compensation and unemployment insurance and took steps to revamp education and workforce training to benefit the aerospace industry.
Washington’s “win” comes at a time when Boeing is boosting jet production rates and adding employees. As of Feb. 23, the company employed 82,325 people in Washington.
But those familiar with the industry and Washington history worry about the future — whether the state will follow through on the aerospace initiatives, whether Boeing will go elsewhere for other jet programs.
“We can’t take anything for granted,” Gov. Chris Gregoire has said of the state’s need to continue efforts to stay competitive.
History
Washington and Boeing have had a long and often tumultuous relationship, sometimes as cyclical as the fortunes of the commercial jet industry. They haven’t always been in accord on how to support one another’s needs.
In the 1990s, the state drew Boeing’s ire for the high cost of doing business in Washington and a perceived unwillingness to support an expansion of the Everett factory to accommodate the then-new 777. Then-CEO Frank Shrontz threatened to never again expand Boeing’s footprint in the region.
By the time Boeing began work on the next all-new plane, the company had made it clear the state would need to compete to keep Boeing’s business, announcing a formal competition for the location of assembly of the 787. Washington lawmakers rallied behind the Dreamliner in 2003, approving $3.2 billion in tax breaks for Boeing and its suppliers to land the 787 line in Everett.
Only five years later, by late 2008, Boeing again was sounding the alarm, saying that it was looking elsewhere. Scott Carson, then president of Boeing Commercial Airplanes, told leaders in Seattle that the state had “significant room to improve” when it came to business climate.
“We want and need Washington state … to be increasingly competitive over the long haul,” Carson said.
A year later, Boeing picked North Charleston, S.C., as the site of a second 787 final-assembly line. Some blamed the Machinists union; others pointed to state government.
Project Pegasus
Last June, Gregoire vowed that Washington wouldn’t be caught unprepared for a new competition to keep Boeing work here.
“I want to do it right,” she said. “I want to be ahead of everybody.”
Gregoire launched Project Pegasus, an initiative to look to results of a competitiveness study to determine the way forward. By November, the governor revealed a nearly $10 million plan to address deficiencies identified in the report, which was prepared by consulting firm Accenture.
Confirming what Washington politicians and labor leaders have said for years, the study pointed to the state’s workforce as the greatest reason Boeing would have to continue 737 assembly here. That workforce, however, is aging. The state needed to strengthen plans to replenish the aerospace workforce — engineers and machinists alike — if it wanted to keep a competitive edge.
Gregoire called for money to improve short-term training programs for prospective machinists and for money to accommodate more engineering students at the state’s research universities. She also outlined strategies for improving aerospace-related skills and education in Washington’s secondary classrooms, starting in kindergarten.
A few weeks later, on Nov. 30, Boeing and the Machinists announced they had reached a deal that would keep 737 MAX work in Renton, extend the union’s contract and end a federal labor dispute over the company’s placement of the second 787 line in South Carolina.
2012 and beyond
For the most part, the governor and the Legislature are continuing their workforce-building efforts, even in light of Boeing’s quick selection of Renton. One of the governor’s first steps was to create an aerospace director position.
This week, Alex Pietsch, who has been the director of community and economic development for the city of Renton, will start his role as Washington’s first aerospace director.
“I think people have really coalesced around aerospace,” Pietsch said, pointing to a concerted effort by community and technical colleges to work together on delivering aerospace training.
It will be Pietsch’s responsibility to continue recent momentum behind the state’s aerospace industry. That will likely include more workforce training and education initiatives.
Education from kindergarten all the way through graduate school that focuses on science, technology, engineering and math (“STEM”), “will behoove aerospace but also the other industries in the state,” he said.
Commerce Director Rogers Weed, who has helped the governor promote the state’s aerospace industry, agrees that there is work still to be done in education and workforce training.
For Commerce’s part, though, “right now, our focus is on the MAX,” Weed said.
The state will work to recruit MAX suppliers that aren’t already in Washington. Weed also wants to ensure MAX suppliers here have what support they need to help Boeing be successful.
Even with the MAX secured at Boeing’s venerable factory in Renton, the state has plenty to do to stay in a good position for new opportunities, including work on the 777X, an upgraded model that the company could launch later this year.
Long-term, both Pietsch and Weed would like the aerospace industry in the state to be more diverse — with more defense and space work as well as possibly biofuels or next-generation air traffic control technology.
Although the commercial airplane business is booming, Linda Lanham, director of the Aerospace Futures Alliance, warned that the state needs begin preparing for what will happen when the industry goes through a downturn. The training programs that are in place today should be nimble enough to help workers transition to another industry.
“We need a system so that workers aren’t being laid off, they’re just being transferred to another industry,” she said.
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