Union leaders: As Boeing shrinks, what about Airbus?

EVERETT — Washington shouldn’t shy away from marketing its top-notch aerospace sector to a broader audience — including Boeing’s archrival Airbus, union leaders told lawmakers this week.

Given an opportunity to recruit the European jet maker, officials should do so, said Jon Holden, president of the International Association of Machinists and Aerospace Workers District 751, which represents thousands of Boeing workers in Washington. Holden and others addressed the state Senate Special Committee on Economic Recovery on Tuesday during an online meeting.

“COVID is placing extreme pressure on the commercial airline industry,” Holden said. “We’re seeing severe layoffs at Boeing and within the aerospace supply chain in the state.”

Despite the present circumstances, he added, “Washington is still well prepared to support the aerospace industry of today and the future.”

Weathering the devastating economic downturn requires fresh faces, Ray Goforth, executive director of the Society of Professional Engineering Employees in Aerospace, told the committee. His union represents about 15,000 aerospace workers in Washington.

“The focus of the Legislature should really be about how to attract additional work, whether it’s coming from the supply chain, or even from Airbus,” Goforth said.

As it happens, high-ranking state officials have sought out Airbus several times in the past decade, with Gov. Christine Gregoire attending the 2011 Paris Air Show and Gov. Jay Inslee meeting with an Airbus executive in 2013 at a Seattle aerospace gathering.

In 2015, Airbus made a statement when it opened an A320 assembly line in Mobile, Alabama, to serve North American buyers of that popular model, which competes with Boeing’s 737.

Today Airbus, like other aircraft manufacturers, is facing serious headwinds. It’s in the process of laying off 15,000 workers, 10% of its workforce, by the end of next year, although the company plans to build the A320neo family at a faster pace next year.

Airbus expansion in the U.S. doesn’t seem likely anytime soon.

Meanwhile, Boeing’s footprint in Washington has been shrinking. Goforth told committee members that Boeing “has been outsourcing engineering and technical work” to Russia and other locations for decades while laying off employees in the Northwest.

There’s no reason to believe that Boeing’s outsourcing efforts will stop because the company is currently shedding jobs, Goforth said. If anything, the pandemic is ”just accelerating decisions that were already in the mix.”

When lawmakers asked Goforth what they could do, he advised them to check allegiance at the door.

“We still think of Boeing as a Washington company. Boeing does not,” Goforth said. “If there’s an opportunity to bring other aircraft manufacturers here, we should do that.”

Loyalty to Boeing among state leaders runs deep. In 2003, lawmakers authorized billions of dollars in incentives — tax breaks intended to persuade Boeing to build the 787 here. In 2013, that tax break was extended to 2040, helping convince the company to build the 777X in Everett. In February, however, Boeing asked state lawmakers to suspend a preferential business-and-occupation tax rate, which the World Trade Organization targeted as an illegal trade subsidy. They complied.

Last year, Washington’s aerospace industry employed nearly 89,000 people and generated $73 billion in gross income, Seattle economic and trade consultant Spencer Cohen said.

Today the sector is reeling from layoffs and losses. The COVID-19 pandemic has crushed the airline and travel industries.

Some of the largest U.S. airlines are experiencing revenue losses of 80% or more, compared to 2019, said Scott Kennedy, Alaska Airlines’ state and local government affairs manager.

Passenger counts are down more than 60% this year. The airline industry isn’t expected to recover for at least three or four years, Kennedy said.

So far this year, Boeing has eliminated 13,000 jobs across Washington. The company said on Wednesday that over the next year it plans to eliminate another 7,000 positions. Boeing’s global headcount was 160,000 at the beginning of the year. Attrition and layoffs could thin the ranks to 130,000 by the end of 2021.

In 2018, Boeing was planning a new airplane program. State and union leaders set out to persuade Boeing to build the next airplane model here. Their efforts included commissioning multiple independent studies evaluating Washington’s aerospace sector.

Prominent aerospace analyst Richard Aboulafia’s firm, the Teal Group, was among the surveyors.

The final report was glowing. Washington is the most competitive U.S. location, it concluded.

But after the grounding of the 737 Max after two crashes, and with the economic devastation from the pandemic, Boeing has put an expected new airplane program on the back burner.

Aboulafia told the Senate panel: “If they do start a new program, Everett is very much the natural place to build it.”

Janice Podsada; jpodsada@heraldnet.com; 425-339-3097; Twitter: JanicePods