“Thanks to this vote by our employees, the future of Boeing in the Puget Sound region has never looked brighter,” read a statement from Boeing Commercial Airplanes President and CEO Ray Conner on January 4th. Those employees are members of the International Association of Machinists & Aerospace Workers District 751, who had just narrowly approved an eight-year contract extension offer from Boeing – 51 percent for and 49 percent against. The union had rejected a similar offer in November, prompting the aerospace giant to launch a public site search for its 777X assembly facility that attracted proposals from more than 20 states. Two – Pennsylvania and North Carolina – were eliminated from consideration in late December, leaving the others to wait for a decision that Boeing said would come in the New Year. It did.
“We’re proud to say that together, we’ll build the world’s next great airplane – the 777X and its new wing right here,” Conner’s statement continued. “This will put our workforce on the cutting edge of composite technology, while sustaining thousands of local jobs for years to come.” Current generation 777 production in Everett has generated $20 billion in economic activity and supports 56,000 jobs.
Production of the 777X is slated for 2016; customer deliveries should begin in 2020.
As reported in the Alabama Spotlight from the January 2014 Site Selection magazine, reproduced in this issue of the Aerospace Report, some predicted a Washington location near the Everett plant that assembles the existing line of 777s all along, given the region’s built-in advantages. But the victory was no less sweet to Gov. Jay Inslee and his economic development team.
“Tonight, Washington State secured its future as the aerospace capital of the world,” said the governor on January 4th. “To make that happen, the International Association of Machinists District 751 took a hard vote that demands the respect of all Washingtonians who will benefit from having Boeing build the 777X here.” A key provision of the labor contract offer was a shift to the 401(k) model pension plan from its traditional model.
Legislative Package Delivers
“With the work the Legislature did in November and tonight’s vote, Washington state has shown it is the only place to build this next generation jetliner,” added Gov. Inslee. “That legislation has important protections for taxpayers and for machinists, and we will make sure the company keeps its commitment and that these jobs remain in Washington state for the life of the airplane.”
The legislation, passed in a special session in early November, (1) extends all commercial airplane tax incentives until 2040 and expands the current sales and use tax exemption on construction of buildings to manufacture “superefficient airplanes” to include all commercial airplanes and suppliers of wings and fuselages; (2) expands the state’s investment in education and workforce development to boost enrollment in aerospace fields at community and technical colleges, train workers for manufacturing of composite wings and complete the Central Sound Aerospace Training Facility in Renton; and (3) streamlines permitting actions that will speed up development and expansion of facilities at large manufacturing sites around the state.
The legislation includes strong contingency language to ensure that all of the 777X assembly and wing assembly remains in Washington, including a provision that says the company will lose its preferential B&O (business and occupation) tax rate for the 777X if any of that work is moved out of state. “We have a history of innovation in our state that has gotten us to this point today and will chart our future for decades to come,” said the governor in his January 4th statement. “Fabrication of the carbon fiber wing gives us a path to the forefront of the next generation of aerospace manufacturing and the start of a new industry for our state.”