Company says union issues, not taxes, forced decision
The Boeing Co. is a huge part of Washington's history. Whether it will be a significant part of the state's future remains to be seen.
Wednesday's announcement that the company will open a second 787 production line in South Carolina upset local leaders, but they vowed to continue working with the aerospace giant to keep its tens of thousands of jobs in Washington - and to lure future work.
"I'm angry, I hurt for the workers, I think the company made the wrong decision," Gov. Chris Gregoire said at an Olympia news conference.
But Gregoire and congressional leaders said Boeing told them Wednesday's decision wasn't about tax breaks; the state approved $3 billion in concessions in 2003 to entice the company to build the 787 here. Rather, labor costs were simply too high, lawmakers said.
Local officials said the immediate impact on the Seattle area would be negligible. Initially, the South Carolina line is expected to employ about 3,000 workers, compared with Washington's nearly 75,000 workers. Boeing has more employees in Washington than any other company.
'A stone's throw apart'
"I am most disappointed, I really believed that the two sides could've come together and had a good deal for both Boeing and the Pacific Northwest, and unfortunately we can't reach that now," Sen. Patty Murray told KING5 News. Murray had asked the company to continue talks with union machinists; the company refused.
"Very clearly, they were a stone's throw apart in providing some real job stability, which Boeing has been telling us a long time that's what they wanted. I thought there was time ... to make that agreement and unfortunately Boeing saw it differently," Murray said.
The Chicago-based airplane maker said it chose North Charleston, S.C., over Everett because the location worked best for the company as it boosts production of the mid-size jet, designed to carry up to 250 passengers.
Boeing already operates a factory in North Charleston that makes 787 parts and owns a 50 percent stake in another plant there that makes sections of the plane. About 55 airlines have ordered some 840 of the planes since the program was launched in 2003 -- far more than any other Boeing plane at the same stage of development.
The airliner has yet to make its maiden flight. The company expects that to happen by the end of the year.
Boeing hasn't indicated how long it will take to get the second assembly line up and running, but the company says it hopes to produce 10 of the planes per month by 2013.
Gregoire said company leaders never raised the issue of further tax breaks from Washington state.
"Never, they've got over $3 billion sitting on the table and what's the incentive for every 787 -- they get more money in incentives. So the state, and the Legislature, I think, with (former Gov.) Gary (Locke), stood up to the question and the challenge," she said. "It has never been raised to me by (Boeing Vice President) Jim Albaugh, or by (Boeing Vice President) Scott Carson," she said.
Gregoire said the company made clear that "this is about negotiations with labor."
Rep. Jay Inslee, a Democrat whose district is also home to many Boeing workers, said he "point blank" asked a "high-level official" with the company last week whether there were any tax breaks or changes in worker's compensation benefits that would convince Boeing to build the line here.
"The answer was no," Inslee said.
Boeing employees in Everett were disappointed by the decision and insisted Everett is the right place for the second line.
"We have the skill and manpower here in Everett to produce the second line, but we haven't been given that chance," said Zen Jenne, a union member who has been with Boeing for three years.
Workers at the South Carolina plant recently voted to remove the union from the plant.
Boeing's engineering union blasted the decision, saying it "will hurt a program already stretched to its limit."
"We are astounded that Boeing has chosen to compound the problems of the 787 program by further fragmenting the supply chain," said Ray Goforth, executive director of the Society of Professional Engineering Employees in Aerospace (SPEEA), IFPTE Local 2001. "There is no credible business case for this decision."
South Carolina officials reacted with glee at the announcement.
Gov. Mark Sanford called it the largest infusion of jobs and capital investment in that state's history.
He said it "represents not only enormously good news for our state's economy, but also a telling dividend from our state's continued efforts to better our business climate. For us, that means lowering taxes, easing regulatory burdens in our state's tort and workers' compensation systems, and keeping South Carolina a right-to-work state."
There were no silver linings for the Puget Sound region in Boeing's decision, but Inslee offered a sliver of hope.
In the near term, Inslee said Boeing plans to open a "surge line" at its Paine Field plant in Everett to create additional capacity for assembly of the 787 during the next year or two while the South Carolina plant is brought on line. He cited as his source Timothy Keating, senior vice president for government relations for Boeing.
In Everett, Charlie Grieser, a 767 quality team leader and a member of the Aerospace Machinists union, said he felt betrayed by Boeing.
He noted the $3 billion in tax breaks in 2003 to build the initial 787s in Washington state.
"They were given that money to build the 787 here. Not half the 787 here," Grieser said, a 32-year company veteran. "I think this is going to poison all of the state on Boeing."
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