States Compete To Woo Boeing | St. Louis Public Radio

States Compete To Woo Boeing

Dec 9, 2013
Originally published on December 17, 2013 9:56 am

Tomorrow is the deadline for states to get their proposals to the Boeing corporation about what kind of incentives they’ll offer to get the aircraft giant to build its next generation jetliner, the 777X, in their backyard.

The state of Missouri has been up front in its desire to woo the manufacturer. Governor Jay Nixon convened a special legislative session to get a proposal off to Boeing.

From the Here & Now Contributors Network, Marshall Griffin of St. Louis Public Radio explains what’s inside.

Washington state is home to the majority of Boeing’s commercial aircraft production; Boeing is the state’s largest private employer.

Last month, Washington state lawmakers approved almost $9 billion in tax breaks to keep production of the 777X in the state. It was the biggest corporate tax subsidy in U.S. history. Then the machinists union overwhelmingly rejected the contract, and Boeing started asking other states for bids.

Here & Now’s Robin Young turns to Austin Jenkins at Northwest News Network for details.

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JEREMY HOBSON, HOST:

Well, staying with the airline industry, tomorrow is the deadline for states to get their proposals to the Boeing Corporation if they want all or parts of Boeing's next generation jetliner, the 777X, to be built in their states. The state of Missouri has been out front in its desire to woo Boeing. Governor Jay Nixon convened a special legislative session just to get a proposal off to the company.

From the HERE AND NOW Contributors Network, St. Louis Public Radio's Marshall Griffin explains.

MARSHALL GRIFFIN, BYLINE: Governor Nixon and state lawmakers are offering tax breaks to Boeing that add up to around $1.7 billion over a 23-year period. Other selling points include Boeing's existing presence in the St. Louis area. The aerospace giant already makes FA-18 fighter jets at its plant next door to Lambert International Airport. Also, Governor Nixon reached a deal with leaders of three St. Louis area labor unions that would build the new 777X factory. They've committed to a 24-hour work schedule with no overtime pay.

GOVERNOR JAY NIXON: I think providing us the option to put our best foot forward to compete for this transformational job is important. And I think we have put forward a plan using existing Missouri programs that will do that in a way that is very taxpayer-friendly, and allow us to continue to move forward.

GRIFFIN: Navigating the Boeing bid through the legislature though was no guarantee. Governor Nixon is a Democrat while the Missouri General Assembly is controlled by Republicans, and there's a lot of bad blood between the two. Earlier this year, GOP lawmakers rebuffed Nixon's efforts to expand Medicaid while the governor vetoed a major tax cut that lawmakers touted as an economic development package.

There's also a group of fiscal hawks within the Republican ranks that viewed the Boeing bid as bad business. One of their more outspoken is Rob Schaaf who spoke against the proposal on the floor of the Missouri Senate.

STATE SENATOR ROB SCHAAF: We're wanting to help this one company. Basically, really we're just giving hundreds of millions of dollars to this one company and, you know, it just seems so hypocritical or so inconsistent.

GRIFFIN: Schaaf and several other fiscal hawks were hinting at a filibuster. But in the end, GOP leaders allowed them to amend the bill requiring that the 777X project show a profit after 10 years. Democrats also added language that would require Boeing to issue an annual report on its efforts to hire women and minorities. The bill finally passed the Senate after those additions. The Missouri House, which historically has been more tax break friendly than the Senate, had no problem with the additions.

This is Republican House member Kevin Engler.

STATE REPRESENTATIVE KEVIN ENGLER: I'm going to support these fine amendments because they're completely redundant and do nothing. And so, they don't kill the bill so I'm sure they made the offerers feel very good. And as long as they feel good, I think we should all just hop on board this happy train.

GRIFFIN: The Boeing bill easily passed the Missouri House on Friday, garnering nearly 79 percent of the vote. Republican House speaker Tim Jones, who expressed skepticism about the governor's proposal early on, enthusiastically cheered its passage afterwards.

STATE REPRESENTATIVE TIM JONES: Politics were truly put aside this week for the sake of passing good policy. Major manufacturing has not only largely been disappearing from Missouri but from the entire United States of America over the last few decades. We are competing with this type of product with the world. This is an international competition.

GRIFFIN: Still, with all the accolades on a job well done, there remains the concern that Boeing could be using Missouri and other states to leverage a better deal back in Washington State where the 777X was originally slated to be built. Tom Dempsey, the top Republican in the Missouri Senate, says he's taking his Democratic governor at his word.

STATE REPRESENTATIVE TOM DEMPSEY: In his discussions, he believed that we were not getting played for a better deal or for agreement to a deal with Seattle. This would be a great opportunity for our state for decades into the future.

GRIFFIN: Missouri lawmakers and Governor Nixon are hoping to land the entire 777X contract. But both say they would also be happy if Boeing only chooses to build the wing or fuselage sections in the St. Louis area. Boeing officials, meanwhile, have withheld details of the request for a proposal, or RFP, that they've sent out to interested states. However, last week, the St. Louis Post Dispatch obtained a copy of the RFP from a third party.

According to the Post Dispatch, Boeing says its new site needs to be near an airport with a 9,000 foot runway, which Lambert Airport in St. Louis has. It also lists something that's desired but not a requirement: A seaport that can handle container ships - something that Missouri cannot offer. Boeing says its decisions for which state or states will receive its contracts will be announced early next year.

For HERE AND NOW, I'm Marshall Griffin in Jefferson City, Missouri.

ROBIN YOUNG, HOST:

So now we set the table. Let's go to Washington state, home to Boeing. It's the largest private employer in the state, twice the employees as Microsoft. Much of its commercial aircraft production is based there and, as we heard, other states want to change that. Austin Jenkins is with the Northwest News Network, a HERE AND NOW contributor. And Austin, last month, Washington lawmakers approved almost $9 billion in tax breaks. That's the biggest corporate tax subsidy in U.S. history, all to keep production of the triple-X and Boeing there in Washington state. But then we understand the machinists union rejected that contract. Where are we on Washington's offer?

AUSTIN JENKINS, BYLINE: And it was a two-to-one rejection...

YOUNG: Yeah.

JENKINS: ...so a very significant no vote. So what's happening now is the state of Washington is completing one of those requests for proposal bids. They're going to submit the application. It's a bit pro forma. I mean, it's not like the state of Washington is telling Boeing anything it doesn't already know about its operations here. And meanwhile, the governor of our state, Jay Inslee, a Democrat, is working behind the scenes to get Boeing and the machinists back to the bargaining table. That's not easy. And, as of today, they're continuing to negotiate - the governor and lawmakers - on about a $10 billion dollar transportation funding package to work on reducing congestion, which Boeing has said is very important to its business here in Washington state, especially the Puget Sound region.

YOUNG: Well - yeah. Well, some analysts are telling Reuters, for instance, that they don't think Washington is out of the running, but, as we just heard, Boeing is being wooed by Missouri, where unions are making compromises. It's also being wooed by a number of right-to-work states: Alabama, Utah, Texas - other states in which unions can't require membership. Is that at the heart of this story?

JENKINS: You know, it's often said here that Boeing's greatest heartburn with Washington state is not the business climate, but the labor climate. We've got strong unions, a history of strikes, threats of strikes, protracted contract negotiations. The unions here do drive a hard bargain. This is not a right-to-work state. There's no evidence it will be anytime in the future, if ever. So, yes. It would seem that that is what this is about, ushering in a new era of labor contract, labor relations, labor costs. Certainly, what Boeing wants to do, if nothing else, is phase out the pensions, which cost the company a lot of money.

YOUNG: Well, but the company is huge. It makes a lot of money. So what's your sense, here? You've got Reuven Carlyle, who's a Democrat, a representative there in Washington state. He helped push through the incentives. He says there's simply no way that another state can replicate the DNA that's been built into the Washington and aerospace relationship. But you've got other states like South Carolina, said to be a frontrunner. It's making huge offers of land deals. You've got California offering R and D. What's the sense that, you know, the machinists might not blink, thinking, as Reuven Carlyle said, there's just too much DNA here in Washington state?

JENKINS: Well, he's right. You know, Bill Boeing started building planes here in the Puget Sound region in 1960. And you've got Boeing Commercial based here in the Puget Sound, with tens of thousands of jobs. Even Boeing says because of the size and magnitude of its Everett plant - the largest building in the world, by volume - the Everett plant represents Boeing to the world, but the company has also shown a willingness to go elsewhere.

It's gone to South Carolina for its second 787 Dreamliner assembly line. And while it's not easy and there are growing pains, the company has shown a willingness to look elsewhere, even though its roots, and certainly its - the bulk of its commercial airline production is here in the Puget Sound region.

YOUNG: And Austin, just very briefly, we know that if it did move totally, the state could lose 23 billion over 15 years. What's public opinion, briefly?

JENKINS: Well, certainly, people don't want to see this company go elsewhere. We lost the headquarters in 2001. We lost the second 787 Dreamliner assembly line, and there's a huge amount of concern that if the 777x goes elsewhere, that that is a huge, huge beginning to the end, perhaps.

YOUNG: Austin Jenkins of the Northwest News Network. Thanks so much.

JENKINS: You're welcome.

YOUNG: It's HERE AND NOW. Transcript provided by NPR, Copyright NPR.

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