Boeing, Boeing, Gone?

"Boeing 787 Roll Out," courtesy of Seattlest Flickr Pool member Katkreig

Yesterday we thought only a huge idiot would really believe Boeing was going to leave its Northwest workforce behind and move to South Carolina. But then Matt the Engineer commented: "Bad news, or perhaps part of the bluff: I just received an e-mail from Boeing letting me know that an engineering job I had applied for has been cancelled. I went back to their site to see if other jobs are available (there used to be a handful), and found absolutely no engineering jobs posted for Washington."

So we were forced to confront the possibility that the huge idiots might reside at Boeing HQ. Which makes this a sticky situation because Boeing has no history of actually remaining satisfied with the state's billions in giveaways. Last time we were told that this would make Boeing competitive with heavily subsidized Airbus. Quick question: Does Airbus threaten to leave France every five years or so?

Danny Westneat sounds like a marriage counselor in the Seattle Times this morning ("Don't let Boeing slip away"). Danny's got a pretty good head on his shoulders, but look, how many times is Boeing going to play the "I'm outta here!" card to get stuff they didn't get the last time (when they said, "Wow, this is great, we got everything we wanted!")? If you have a few spare hours, enjoy reading the epic Google history of this post's headline.

We don't see anything wrong with Boeing's bottom line that shipping planes on time wouldn't fix. (The almost-two-year delay on the 787 is much longer than the eight weeks the union was on strike last year.) Bottom line, you can't stop a major corporation from making a huge mistake, and leaving because it thinks it deserves better. But if you're going to talk about no-strike guarantees after you've received billions in tax subsidies, you'd better come to the table with more than veiled threats and relocation rumors.

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By MvB in News on July 8, 2009 2:30 PM

Comments [rss]

23light

Boeing did come up with something more than veiled threats and relocation rumors -- they bought the Vought plant in South Carolina, as well as a bunch of adjacent property. This was hugely expensive and was done as more than a way to speed up the 787.

Boeing is serious about leaving, and the state of Washington has to be equally serious about keeping the company here. This isn't just about the union -- this is about our political, business and community leaders doing everything it takes. We can't afford to lose Boeing.

BigGreenFrank

"huge idiots"

Really? They're idiots for going with lower costs in a more business friendly environment?

We have to face up to what we are. We are not a local economy that is good for blue collar work. We over tax, we're too beholden to unions, our costs of living are too high.

The only kinds of businesses that can survive in that kind of climate are high margin companies that rely on strong intellectual capital.

Airplane manufacturing is NOT that kind of business.

Software is. Consulting is.

MvB

Really, BGF? For heaven's sake, no intellectual capital in airplane manufacture? Are you kidding? That's patently untrue. Also, "low-cost" and "business-friendly" are terms that can confuse the reality on the ground--which is that Boeing became Boeing right here in high-cost, business-unfriendly Washington. Off the top of my head, I can't think of a similar South Carolina enterprise. Again, I don't think there's anything wrong with Boeing's bottom line that *shipping planes* wouldn't fix. I haven't heard anyone saying they're taking a loss on planes they actually deliver. So uprooting from an established, proven workforce seems like a huge risk for an iffy cost-saving proposition.

jaisn

MvB,

I agree with most of your comment excluding costs.

Boeing became Boeing BEFORE Washington was high cost, business unfriendly. Your argument regarding costs ignores the issue of 'when.' Boeing becoming Boeing today would more likely happen in the deep south, the place where foreign car manufacturers are building all their new plants.

I wouldn't be surprised to learn many more of Boeing's domestic suppliers are also located in more inexpensive states, many of which are found in the deep south.

MvB

Business unfriendly? Forbes doesn't think so--"Washington is also the only state to finish in the top five in three main categories (labor, regulatory environment and growth)." Washington moved from 5th to 3rd over the last two years. And business costs are a primary factor in their rankings.

Absolutely Boeing is going to look/has been looking elsewhere for its supply chain. Any process they can de-skill and automate, they're going to move on that. My question is whether building a Toyota is the same as building a jet. I don't see that being the case, so far, and certainly not in the case of the 787. They're essentially building a series of prototypes and if one falls out of the sky during a test, there won't be a Boeing left to outsource.

Further unless we want the economy of South Carolina ($115B gross in 2001, compared to our $223B) to go along with their tax incentives, I don't see much incentive in competing with them in a race to the bottom. But that's another story.

BigGreenFrank

That Forbes number is misleading. Overall "business friendly"? maybe. I mean if you combine the high intellectual capital of labor the area, the strong growth provided by NON-manufacturing types like Amazon, Microsoft and numerous off-shoots of each, and the laws friendly to those tech types.

Business friendly for a manufacturing operation like Boeing? not so much.

Again, I'm fine with not giving Boeing the tax breaks, just understand that that will result in Boeing moving to an area where they can be more profitable. It wasn't a bluff when textile and steel manufacturers moved out of the US for cheaper production in Asia, it's not a bluff for Boeing to move to cheaper production in the South.

And you're right, they wouldn't be losing money if they could get their planes shipped on time. But even when they do get them shipped, they could more profitable doing the manufacturing in the South. I'd like to believe that the company would be a little more loyal to the State and the region that got them here, and not be beholden to a few points in their stock, but as the HQ move to Chicago showed... eh, not so much.

MvB

Well, and don't get me wrong--I have no problem with subsidizing Boeing to help make Washington more competitive. But let's be careful that we're not focusing solely on SC's competitive strength and forgetting what ours are. Plus, subsidies can only do so much--they can't prevent macroeconomic forces from pushing manufacturing around (or out of) the country.

Troy Morris

Agreed. Buying the company that's making them late on delivery? Last ditch effort? Why not fire them and find another company?

Excuse me. I'm bitter that losses are rewarded or worked on when capability is ignored.

P.S. - yes, it's personal