Keep Those 787s Rolling

by Don C. Brunell
President, Association of
Washington Business

On 07-08-07, Boeing rolled out its new 787 Dreamliner in true Oscar-esque style, befitting the showmanship of the Academy Awards. The event was beamed around the world from Everetts Paine Field, signaling Boeings return to the forefront of commercial airplane innovation and production.
Boeings 787 order book is approaching 650 aircrafts, worth well over $100 billion. Later this year, the new composite bird will take to the air on its maiden flight. The first Dreamliner is scheduled for delivery next May.
The 787s success is pivotal to both Boeing and Washington. After scrapping the Sonic Cruiser in favor of the lighter, more fuel-efficient Dreamliner, Boeing made a comeback that has perked up our states economy. The company that jettisoned nearly 30,000 workers after Sept. 11, 2001, has not only stabilized its workforce but added to it.
Because of Boeing and other Washington-based companies like Microsoft, Starbucks, Costco and Schweitzer Engineering Laboratories, Washington is enjoying record tax revenues and is one of the few states with a positive foreign trade balance. In other words, Washington exports more than it imports and our economy is positioned very well for the future.
Washington is the second leading state in exports per capita, according to the 2007 WashACE Redbook, published by the Washington Alliance for a Competitive Economy. But our ranking is even more impressive when you consider that the number one state, Vermont, is very small. Vermont exports only $4.2 billion, equivalent to $6,805 for each of that states 625,000 citizens. Washington produces $40 billion in exports $6,035 for each of our states 6.3 million citizens.
So, roll out those 787s and keep them coming. Get ready for a cruise down Easy Street, right? Not so fast.
That same WashACE report also reveals our states glaring weaknesses, some of which caused Boeing to consider other locations to assemble the 787.
Unemployment costs, for example.
In 2002, then Boeing Commercial Airplane CEO Alan Mulally told lawmakers in Olympia that unemployment costs in Washington were the highest of any Boeing location. Mulally stressed that, despite the companys 100-year history in the state, Washington could not assume the company would stay a point that was made painfully clear in 2000 when Boeing moved its corporate headquarters to Chicago.
In 2003, Gov. Gary Locke and state lawmakers approved a series of competitiveness bills to convince Boeing to assemble the 787 in Everett. The package included major unemployment insurance reforms which were largely reversed in 2005. Last year, lawmakers approved another UI reform bill that took some of the sting out of the 2005 reversal, but that legislation may not survive a challenge by the U.S. Department of Labor.
Meanwhile, Washingtons unemployment taxes remain the nations highest. Employers, on average, pay $865 per worker each year, compared to the national average of $317.
Last year, union leaders pushed a bill that essentially leverages its organizers into non-union Boeing suppliers. It died midway through the session, but will be back in 2008. If that legislation is adopted, aerospace-related companies with fabrication plants in our state could lose tax credits and other incentives granted in the 2003 competitiveness package if they dont bow to union organizing pressure.
If unions are successful in tying the states incentives to union organizing, they wont stop with aerospace. They will go after other manufacturers, including those in the very high-tech sector that our state elected officials are hoping to entice.
So, while we all are encouraged by the Dreamliners debut, we should remember that it took a lot of heavy lifting to make sure Boeing put the Made in Washington label on the 787. Keeping that label should be our primary goal.
Boeings corporate headquarters were moved out of Washington. The rest can be moved, as well, if unions and elected officials arent careful.

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