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Boeing's 777X glides toward Seattle plant

Long Beach loses out as Washington state pledges tax breaks for jet maker's new plane.

November 06, 2013|By W.J. Hennigan
  • Boeing employees at a plant in Everett, Wash., work on the companys 777-300 before the aerospace giant made its first delivery of the airliner in 1998.
Boeing employees at a plant in Everett, Wash., work on the companys 777-300… (PRN )

A wide-ranging multibillion-dollar package of incentives comes before Washington state lawmakers Thursday as the state scrambles to ensure that aerospace giant Boeing Co. will build its next major jetliner in the Seattle area.

The company's Long Beach plant, which is now set for closure in 2015, had been rumored as a long-shot site for the work.

But Tuesday, Washington Gov. Jay Inslee called the Legislature into a special session that begins Thursday to pass a package of bills that includes more than $8 billion in tax savings for Boeing to build the next-generation version of the 777 wide-body jet in Puget Sound.

"If we can do this in the next seven days, we can be certain that Washington's aerospace future will be as bright as its past," Inslee said. "Everyone in Washington has a stake in what we're doing here."

The package came together after Boeing and the International Assn. of Machinists and Aerospace Workers union in Washington struck a tentative labor agreement.

Once again, Southern California — the former undisputed center of the aerospace industry — has been overlooked. The number of aerospace workers in Los Angeles County fell to 56,780 last year, according to the Los Angeles County Economic Development Corp, which tracks the industry. That was a nearly 70% drop from the 189,035 workers employed in 1990.

Over the last several weeks, rumors have swirled about where thousands of workers would build the plane, dubbed 777X, and its massive carbon fiber wing for the next several decades. Boeing had largely been silent on where the assembly line would go.

Loren Thompson, an aerospace analyst with the Lexington Institute think tank that counts Boeing as a contributor, published a column that speculated on Long Beach as an assembly site. It was a solid choice, he said, because of the workforce's decades-long experience building large aircraft.

The plant was built by Douglas Aircraft Co. during World War II. It thrived for decades, producing some of the world's most popular airliners, including the DC-3, DC-8 and MD-80. It still has a large "Fly DC Jets" sign nearby.

Over the years, Douglas became McDonnell Douglas, which later joined with Boeing. The site now houses construction on the C-17 Globemaster III, which ends in 2015. Boeing's current contract with the machinists' union in Puget Sound expires in 2016.

Boeing had already moved some jobs from the Seattle area to Long Beach. In July, it announced that work performed by 375 people would be moved to Long Beach over the next year.

Less than a month later, the company said an additional 300 engineering support jobs would come to the region, and that a new engineering design center for commercial aircraft would be established.

But Tuesday, the company and the Washington union announced that they had struck a tentative eight-year agreement. The union said members would lose pension plan and healthcare benefits, but the promise of the 777X could mean as many as 10,000 direct and an estimated 10,000 indirect jobs in the Puget Sound region.

The 777 is one of Boeing's best-selling models. Previous versions of the plane have been built in Washington since the early 1990s.

The union said the upcoming 777X program would provide "an unprecedented degree of labor stability in the volatile and competitive industry."

"Only a project as significant as the 777X and the jobs it will bring to this region warrants consideration of the terms contained in Boeing's proposal," said Tom Wroblewski, the union's directing business representative. "Not all will agree with the proposal's merits, but we believe this is a debate and a decision that ultimately belongs to the members themselves."

The union represents more than 35,000 Boeing workers, who still must approve the deal.

Scott Hamilton, an aviation industry consultant and managing director of Leeham Co. in Issaquah, Wash., said Long Beach was always a long shot. Although it has a assembly facility and a talented workforce, it still faces the same business challenges as Puget Sound: a union and taxes.

"The business climate in California stinks," he said. "If you wanted to leave high-cost Washington, why would you leave for high-cost California."

Boeing was said to have also considered manufacturing the jet in Charleston, S.C., where the Boeing builds the 787 Dreamliner. The site is the company's first non-union final-assembly plant, which was selected in 2009 — one year after a union strike stopped work in Washington for two months.

For the 777X, Washington has stepped up with an incentive package that contains several proposals, including transportation improvements, investments in education, streamlined permitting for large manufacturing sites and an extension of tax incentives to 2040.

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