Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
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Odds and Ends: Tax breaks and job guarantees; New airline analysis blog
Feb. 17, 2015: Tax breaks and job guarantees: Boeing’s two largest unions in Washington State appear to be making headway this legislative session to get a bill on the floor for a vote that would retroactively tie 2013 tax breaks to a guarantee of jobs.
It’s less likely that the legislation will include a minimum wage component.
The tax breaks, hastily approved by the Legislature in November 2013, provided for $8.7bn in tax breaks to 2040 in return for Boeing locating the 777X assembly line and wing production in Everett (WA). The tax breaks are not only for Boeing, but available across the supply chain.
But there were no job guarantees, SPEEA and the IAM 751 warned legislators, and without them in the bill, they predicted Boeing would move jobs out of state.
That’s exactly what happened.
Click on photo to enlarge into a crisp view. Photo by Scott Hamilton.
On Monday, the two unions, in a press conference overlooking Renton Airportwhere the 737s are assembled, pointed out other states include job guarantees but twice Washington failed to do so.
There were no job guarantees with the 2003 $3.2bn in tax breaks approved to win the 787 assembly line. Additionally, there was nothing in the legislation to prevent Boeing from either moving the 787 line to another state, or locating a second 787 assembly line elsewhere. In 2009, Boeing announced it would located 787 Line 2 in Charleston (SC). The company has used the threat of locating the 737 MAX and 777X lines elsewhere to gain more tax breaks and other concessions from Washington State, and the IAM 751.
Since the 2013 tax breaks were approved, Boeing has moved around 7,000 jobs out of state to other Boeing facilities. Other states included a jobs-for-breaks guarantee, and the unions charged Boeing is getting breaks from Washington then taking these jobs to another state to get tax breaks there.
They also said some of the other states include a minimum wage component in their tax breaks for high-paying jobs.
The job guarantee proposal has bi-partisan support in the Washington Legislature, say union officials. The wage component is opposed by Republicans, who control the State Senate.
The Inland Northwest Aerospace Consortium (INWAC), which represents the state’s second largest aerospace cluster in Spokane, opposes the legislation. INWAC says approval will prompt new and existing businesses to look to another state.
New airline analysis blog: There is a new blog devoted to airline analysis called SkyWriter Aviation. Unlike other blogs that are written by journalists or analysts, this one comes from someone who worked for the airlines (Continental) and the industry (Boeing).
Whether this passes or not, Boeing will still do as it pleases. It cares far more about bootstomping it’s unionized workforce than some tax breaks.
The Unions were right, but they failed to learn a lesson from their own prescience.
At least Boeing does not receive any subsidies like Airbus. Just exclusively applicable tax breaks, a totally different thing.
I am not sure of what you mean …. I guess it is a joke .. otherwise please explain
I am not very familiar with English lanquage nor US culture
WTO determined otherwise, Schorsch
Sarcasm.
Then there is Nasa funding of research on carbon fibre manufacturing.
A Dornier 328 had a complete new fuselage from behind the cockpit including tail built out of carbon fibre, thanks to the US taxpayer, to understand the process for out of autoclave manufacturing
The German gliders were built for decades before the Do 328 out of plastics.
“INWAC says approval will prompt new and existing businesses to look to another state.”
They expect just unencumbered gifts, money for nothin’? Quid pro quo is a foreign phrase to INWAC, it seems …
Golly the legislative Mensas proved the Gruber theory in the ‘ great giveaway ‘
But have no fear- they will make up the cost of the free lunches by fees and resource improvements (AKA taxes ).
While Boeing has moved some jobs to Calif. and Mo., the number of employees in the Seattle area has increased and that doesn’t consider the 737 production increase or the 777X yet to come. So am I missing something?
Source of your jobs data for Boeing ?
perhaps your data is for the total state employment of all companies ??
BA EMPLOYMENT check WA state
http://www.boeing.com/boeing/aboutus/employment/employment_table_2013.page?
http://www.boeing.com/boeing/aboutus/employment/employment_table_2012.page?
http://www.boeing.com/boeing/aboutus/employment/employment_table_2014.page?
http://www.boeing.com/boeing/aboutus/employment/employment_table.page ( see jan 2015 numbers ) 80,199
Thank you Don for the links. I was unaware of that being available. To answer your question, I believe it was on CNBC the comment was made that the Seattle area employment for Boeing had remained stable and gone up a little since the Jan 2014 union vote. Your link shows that to be incorrect, but 1700 reduction to 80k – 81k employment would be considered stable.
And as I said there is the 737 production increase and 777X yet to come. FYI I am not a fan of state, local or federal subsidies but they are a fact of life and the genie is difficult to get back in the bottle.
Unfortunately the national network news outlets, cable or local have morphed into rip and read, a certain amount of built in bias, and rarely enough time to check for facts or data. Add to that a certain amount of cherry picking by the major networks of data and its like a lawyer once told me re legal cases described in the ‘ news ‘- rarely correct or in context.
The same goes for unions and overall employment figures. Private Union membership numbers are based on the last day of their accounting year (often different than year end ) and posted on a government website ( DOL )
http://kcerds.dol-esa.gov/query/getOrgQry.do
However for tax purposes, the IRS 990 membership data is usually year end ( dec 31).
Now add in ( or subtract depending ) a normal total company turnover-replacement- retirement rate of around 6 to 8 percent, and it is difficult to come up with accurate numbers for any region.
Of course the annual reports count the beans- employees much different also.
IMHO – any number – employee/ employment change thats less than about 5 percent of the company total for a given group ( such as state or division ) is within a roundoff or margin of error.
I don’t differentiate tax breaks from launch aid, it all comes at the publics expense. I do think Europe does it better in that they insist that the employees benefit not just the company.
In so far as that goes Europe’s approach is vastly better vs a few at the top getting it all.
Its better a national policy and the companies can’t play the states off against each other.
In the past this was not true, Boeings benefits paled by comparison to Airbus (per the WTO ruling).
We need an updated comparisons that covers all the states Boeing manages compared to EU as well as the individual nations that add their own local adders to the overall package like US states do now.
to Don
I totally agree with your comment about accuracy of news media … all over the world
This is an excellent reason to follw Scott’web and check there EVERYTIME
Very good about job guarantees new airline analysis blog.