States woo Boeing with incentives to win bid for building 777X jet

From California to South Carolina, states are racing to lure Boeing to assemble its new jet in their backyard

A model of the new Boeing 777X aircraft at the Dubai Airshow in November.
Duncan Chard/Bloomberg via Getty Images

Within weeks of union workers in Washington state rejecting a new labor contract from the aircraft giant Boeing, more than a dozen other states have begun preparing bids to lure the company to build its new 777X jetliner in their backyard — or at least to build the wings or other parts — and the competition is stiff.

From coast to coast, states are rushing to impress Boeing with lavish incentive packages that offer property, labor deals and billions of dollars in tax breaks. The winning state or states could gain thousands of jobs and billions in economic development.

The Chicago-based company has given states until Tuesday to submit a proposal for consideration, and will announce winners early next year.

The competition underscores Boeing's commanding bargaining position in an economy where top-notch manufacturing jobs remain scarce and elected officials feel obligated to pursue every growth opportunity.

"We have gotten a tremendous response, and it's obviously created a lot of interest and a lot of excitement," Boeing spokesman Doug Alder said.

So far the buzz has been loudest in Missouri, one of the states where the aircraft company already has a significant presence. Gov. Jay Nixon immediately convened a special legislative session to approve an incentive package valued at up to $1.7 billion over more than two decades, provided Boeing creates 8,000 jobs in the state.

The package, now before the Missouri House of Representatives, includes payroll tax credits and tax breaks for factory construction, job training and debt financing, according to the state.

Other states are keeping the details of their offers out of the public spotlight — and away from the inquisitive eyes of their rivals — by crafting them through administrative agencies shielded by nondisclosure laws.

Alabama government leaders are preparing to pitch the city of Huntsville, where Boeing has extensive operations. California said it is working on a plan to meet Boeing's requirement. Georgia said it may offer two potential sites.

There is also a strong effort to lure more of Boeing’s work into South Carolina, where the company does final assembly of its 787 Dreamliner jet.

"We want it as bad as anybody else. And we can deliver it," said Paul Campbell, director of airports for Charleston County Aviation Authority.

South Carolina will clinch a long-awaited $13.8 million land sale next week that should help Boeing expand aircraft production, and could work in the state’s favor to lure the company to build its new plane there.

Not to be outdone, Washington state lawmakers last month passed $8.7 billion in aerospace tax incentives in an effort to keep Boeing in the region where it already builds virtually all of its commercial aircraft.

Utah Gov. Gary Herbert said Boeing leaders reached out to him, too. Utah officials are emphasizing that they have the youngest workforce in the United States, as well as “right to work” rules that soften the power of labor unions. And it doesn't hurt that Boeing is already set to open an 850,000-square-foot factory in a Salt Lake City suburb to make tail parts for a different model of plane.

Other states in the hunt — including Alabama, Kansas, North and South Carolina and Texas — are banking on right-to-work laws of their own.

But labor regulations may not be as important as having a workforce already trained in commercial airplane production and a seaport for shipping large airplane components, said Richard Aboulafia, an aerospace analyst at the Fairfax, Va.-based Teal Group.

He predicts that Boeing will use the offers as leverage to get Seattle-area machinists to make concessions, unless the company gets "some kind of unbelievable, almost inconceivably good deal."

Boeing's history in the Pacific Northwest dates back more than a century, to when William Boeing purchased a Seattle shipyard that would become his first airplane factory. A decade ago, Washington enacted a broad package of tax breaks and other benefits in an effort to keep the company's 787 manufacturing in the state.

In the years that followed, however, wing production moved to Japan, and a new production line was established in South Carolina.

Washington state Rep. Reuven Carlyle, a Democrat who helped push through the incentives, remains confident.

"In an era where middle-class jobs are imploding, it's understandable that Missouri is going to take a shot at the plate," Carlyle said. But "there is simply no way that another state can replicate the DNA that has been built into the Washington-and-aerospace relationship."

The long-range, twin-aisle 777 is Boeing's second-largest plane and has been a best-seller since its first flight in 1994. The new 777X is expected to carry up to 400 passengers, about 35 more than the current model, and to be more fuel-efficient.

Boeing already has commitments from airlines worldwide to buy 259 planes valued at more than $95 billion.

Al Jazeera and wire services

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