Nov. 13, 2017, © Leeham Co.: Washington State’s top aerospace official, John Thornquist, resigned early this month, complaining that the State Legislature cut the Department of Commerce’s budget 78% over the past three years—making it impossible for Commerce to promote Washington aerospace.
Commerce has been a target of Legislative critics for years, even going back before 2010 when I did some consulting work for Commerce. Some legislators wanted to cut Commerce’s budget each time the Legislature dealt with the budget. They were successful in some years and not in others.
Early in her first term, 2005-2008, then-Gov. Christine Gregoire skipped the Paris and Farnborough air shows. The state had pathetically small presence in the Halls at the shows and little in the way of entertainment to promote Washington’s aerospace sectors in the Seattle, Spokane, Moses Lake and Bingen. (Bingen is where Boeing’s UAV subsidiary is located; Moses Lake is a flight testing center.)
LNC roundly criticized Gregoire for skipping the shows, and she resumed going the next year. Washington stepped up its promotional efforts from 2010, increased the size of its presence in the air show Halls and upped its program of helping small companies attend the air shows.
Now, Commerce is back to square one and, perhaps, even worse.
I encountered Thornquist a few weeks earlier at a conference at which he bemoaned the budget cuts, but he didn’t give any hint he was thinking of resigning. But we joked Washington would barely have a closet presence at the 2018 Farnborough Air Show.
When PSBJ reported the resignation, I Tweeted, “WA Legislators are so myopic. Takes aerospace for granted here. US SE aggressively competing. Boeing 797 isn’t a lock in WA at all. North Charleston, maybe even Alabama, should be strong competitors. WA Out to Lunch again.”
Earlier this year, a long-time Boeing consultant, Tom Captain of Deloitte Touche, warned the state to “stop acting entitled” about aerospace, or the state will lose jobs.
The PSBJ wrote:
Captain, a long-time Puget Sound area resident, made the remarks during a presentation about the competitiveness of Washington state’s aerospace sector during the Aerospace Futures Alliance annual summit Sept. 7.
“Other states and countries are competing fiercely for what we take for granted here,” Captain said. “We can lose and we have lost.”
In September 2016, I presented to the Governor’s Council of Economic Advisors and pointed to a dip coming in Boeing employment by the end of the decade as the 777 Classic production wound down, before the 777X production ramped up and increasing automation. I also said the state needed to start thinking about how to win the assembly site for the NMA (797) because Boeing is sure to compete the location.
And now the State’s top aerospace official resigned because of draconian budget cuts.
The US Southeast is already looking ahead to the NMA competition. My Tweets about Washington’s myopia were only minutes old when Charleston officials replied they were ready to go. Alabama officials, the new Airbus plant in Mobile notwithstanding, are aggressively promoting the state as a place to do aerospace business. With Boeing Defense in Huntsville, in the northern part of the state, officials already know Boeing.
Mississippi aggressively pursues establishment of more aerospace suppliers in this state. The four states in the Deep Southeast, which includes these two plus Florida and Louisiana, join together to have a big presence at the Paris and Farnborough air shows. Washington, as noted, will be lucky to have the proverbial closet next year at Farnborough.
Mobile is the host of the first Southeast Aerospace and Defense Conference (SADC), organized by Airfinance Journal and Leeham Co. Washington cuts its budget.
While Boeing understandably gets the lion’s share of attention in Washington and some readers of The Seattle Times equated Commerce’s budget cut with incentives, this issue goes beyond Boeing and Commerce doesn’t offer tax incentives (this is the Legislature and county governments).
In my 2010 consulting project to Commerce, which remarkably until then didn’t have an aerospace strategy, I urged Commerce to look Beyond Boeing to expand its aerospace footprint. Airbus (that’s right), Bombardier, Embraer, COMAC and the broader supply chain all should be targets for Commerce’s efforts. Today, the supply chain and what OEMs it serves indeed go well beyond Boeing. (I had lunch recently with a company whose aerospace business is headquarter here and it sells more products to Airbus than to Boeing.)
The supply chain is Beyond Puget Sound (Seattle) as well. Spokane is the state’s second largest aerospace cluster. Bingen (those UAVs) is probably third and Moses Lake fourth.
This is what Commerce does. The electeds in the Legislature either don’t know or don’t care or are arrogant or complacent. Or all four.
Way back in 2001, Boeing shocked Washington State officials when it announced it was moving its headquarters to Chicago. Officials didn’t even know Boeing was thinking about this.
The politicians, of course, bemoaned the announcement and declared it to be a “wake-up” call. More attention to Boeing (and, more generally, aerospace) was needed, they said.
In 2009, Boeing announced it would establish the second assembly line for the 787 in Charleston (SC). This came as no surprise, since Boeing was threatening the unions it would do so unless concessions were made. Nevertheless, once again the electeds declared this decision a “wake-up” call.
In 2011, Boeing said labor and the state shouldn’t assume the 737 MAX would be assembled in Renton, the site of the 737 factory since the 1960s. The state offered incentives and labor gave concessions. The MAX stayed here.
In 2013, Boeing opened a national competition for siting the 777X wing production and assembly site. The state offered $8.7bn in tax breaks (it was for the entire aerospace sector, even though Boeing was the principal recipient). Labor gave more concessions. The 777X stayed here.
The trouble with these wake-up calls is that Washington repeated hits the snooze button. It has again, gutting Commerce’s budget.
You can bet the US Southeast heard the alarm going off.