Gov. Inslee misses the point in his pique over Boeing 787 production decision

By Scott Hamilton

Analysis

Oct. 5, 2020, © Leeham News: The contrast in tones couldn’t be sharper.

With the announcement last Thursday by Boeing it will consolidate 787 production from Everett into Charleston, local political leaders were disappointed but understanding and even sympathetic.

Gov. Jay Inslee

Snohomish County Executive Dave Somers and Everett Mayor Cassie Franklin likened Boeing to a family member who was in crisis. Hard decisions by Boeing were made, but in a crisis, you must. Support your family. Understand the situation. Figure out how to make the best of it to move forward.

On the other hand, Gov. Jay Inslee vowed to review the state’s relationship with Boeing and tax breaks granted to the company. Inslee claimed understanding but his tone was hostile, defiant and angry.


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Moving 737, 777 production

With his vow to reassess the relationship and tax breaks, Inslee was asked about the risk of Boeing moving 737 and 777 production out of Washington. He dismissed the idea.

The governor said the tax breaks granted Boeing in 2013 to locate the 777 composite wing factory and final assembly here contains language prohibiting moving the 777 line out of state.

This statement is odd on two counts. The 777X tax breaks were an extension of the 787 tax breaks found to be illegal by the World Trade Organization. At Boeing’s request in February, the state canceled the 787 breaks, ostensibly to resolve the WTO findings.

One can’t help but wonder if Boeing’s request had less to do about the WTO than it did with knowing where it was going with 787 production consolidation. Why? If Boeing moved 787 production out of Washington, the breaks would go away. So, use the WTO as the reason to cancel the breaks without tipping your hand with what’s coming.

But maybe that’s just me.

The other reason Inslee’s reference to tax breaks is odd is if the 777X tax breaks tie Boeing to Washington, why in the world do you review the remaining tax breaks from which Boeing benefits?

He fell back on the refrain that because Boeing’s Washington workers are the finest in the world, it makes no sense to move 737 production.

This line of reasoning worked really well arguing for the retention of the 787 line….

Inslee also pointed to the highly efficient production of the 737. Disrupting it makes no sense to move out of state.

Jobs, Jobs, Jobs

This is a valid point. However, LNA analyzed the pros and cons of moving some or all the three lines from Renton to Everett to fill the vacuous space that will be left when the 787 and 747-8 FALs disappear. We agree that moving the lines out of state isn’t worth the trouble and cost, however. But that’s not to say it couldn’t be done.

There are lots of obstacles, challenges and considerations to moving 737 or 777 production. But myopically, Inslee overlooked several other possibilities Boeing has.

There is nothing stopping Boeing from moving engineering jobs out of state. It’s been doing that. It can continue to do so.

Boeing could relocate its facilities at Moses Lake out of state.

What’s to say Boeing doesn’t relocate Insitsu, its UAV company in Bingen (WA), across the Columbia River to Oregon or elsewhere?

More to the point, who says the headquarters for Boeing Commercial Airplanes must remain in Renton at its huge Longacres campus? Administration and sales don’t have to be in Puget Sound.

When the company created its Boeing Global Services business unit, employees from the former Commercial Aviation Services were relocated to Southern California. The new headquarters was sited, not where CAS was in Renton but in Plano (TX), of all places.

Missing the point

All of this shows that Inslee during his pique missed the point.

Boeing did what it had to do under the COVID crisis: decide to consolidate the production. Doing so in Charleston was the only logical conclusion.

Inslee understands this. He’s pissed that Boeing would not commit to restoring the 787 to Everett once the market recovers.

This shows a remarkable naivete on his part.

First, due to changing market dynamics, notably the ability of the A321XLR and the 737-8 MAX to fly 8-10 hour missions, this chips away at the market demand for the 787-8—Boeing’s long-thin market-maker. I doubt production will return to 14/mo or even 12. But if it goes beyond 7/mo, the current cap at Charleston, this plant will be ready to go higher. Increasing production capability at Charleston has been in the works for some time.

The single-aisle airplanes can’t fly as far as the 787-8. Nor do they carry the same number of people. But they can be market-makers in thin, new routes where range and capacity aren’t needed. These also may make some marginally profitable 787-8 routes profitable with their lower costs.

Mayor, Executive got it right

Mayor Franklin and Executive Somers got it right. The real point is preparing for the future, not whining about the past. Inslee needs to focus on how Washington State can win the Next Boeing Airplanes.

Boeing needs two new airplanes for the 2030 decade. The pressing need is a replacement for the 737-9 and 737-10. These two airplanes do what they do very well, but there are inferior to the A321neo family. The strength of the A321neo drives Airbus’ successful market share in the single-aisle sector to capture 55% or more.

Boeing needs a new airplane in the 190-250 seat sector, and it needs it badly.

The company also needs a new airplane in the 125-189 seat sector to replace the highly niche 737-7 and the anchor 737-8 MAX. Embraer was going to be charged with this responsibility (in the 100-160 seat sector). This joint venture is off, however. So, it falls to Boeing to design this airplane, too.

Governor, this is your mission, should you be reelected. You need to be thinking how to win this business for Washington. Franklin and Somers understand this. It’s not clear Inslee does.

Know your audience

Inslee went out of his way to praise BCA CEO Stan Deal and the relationship he has with Deal. But he complained that despite many requests, verbally and in writing, Deal never offered a “scintilla” of what it would take to keep the line in Everett.

I know Deal and he is every bit the good guy Inslee says he is. But when it came to making this decision, Deal wasn’t the guy Inslee needed to talk to. The governor needed to be talking to David Calhoun, CEO of The Boeing Co., and Greg Smith, EVP of Enterprise Operations and CFO. Inslee didn’t mention their names during is testy press conference, so it’s fair to conclude he didn’t talk to them.

Calhoun and Smith are based at Boeing’s Chicago headquarters. Chicago, as HQ is colloquially known, doesn’t have the best relationship with Washington.

When the 777X tax breaks were granted, for $8.2bn, a record anywhere in the US, Inslee crowed about it. Privately, he groused that he couldn’t tie jobs to taxes because Boeing threatened to put the wing center and FAL elsewhere if Inslee insisted.

During Inslee’s brief run for the Democratic nomination for president, he went public, denouncing his own deal. He felt mugged and extorted by Boeing. He was right on both counts. This alone may explain why Inslee is cranked at Boeing.

His pissy tone and threat to review the relationship and tax breaks won’t go unnoticed in Chicago.

But the poor relationship predates Inslee.

2008 Strike

Inslee’s public pique with Boeing isn’t the first time a Washington governor stepped on it.

In 2008, the IAM 751 went on strike for 57 days. Gov. Christine Gregoire was in a tough reelection fight with former State Sen. Dino Rossi. Rossi came within 133 votes of defeating her in Gregoire’s first run in 2004. Three recounts and a court challenge were necessary to declare Gregoire the winner.  A rematch was expected from the day she was sworn in.

While the strike was underway, union members held a rally outside the Seattle area hotel where negotiations were underway. Gregoire, needing all the union votes she could get, appeared at the rally in support of striking members.

Chicago took note.

The following year, then-CEO Jim McNerney stuck it to the union and to Gregoire by putting line 2 in Charleston. Gregoire, like Inslee, asked what the state could do to keep 787 production in Everett. Boeing then said nothing—the fight was with the union.

Gregoire took Boeing at its word. No incentives were offered. South Carolina governments, on the other hand, ponied up more than $900m in incentives. Gregoire, and other politicians, felt flimflammed. With good reason.

Inslee complained he felt mugged and extorted by Boeing in 2013 when $8.2bn in tax breaks were extended for the 777X. Workers were insulted and taxpayers betrayed with the decision last week to consolidate production in Charleston.

Long-running unhappiness

Boeing’s complaints about Washington are deep-seated.

In 2001, Boeing didn’t even tell Gov. Gary Locke and other electeds it was shopping around to move its headquarters. Chicago won—with tax breaks, and other reasons.

Talk about insulting Washington.

For years, Boeing executives complained Washington failed to support aerospace education and took Boeing for granted. Boeing was correct on both counts.

In Gregoire’s first term, she didn’t even bother to go to the Farnborough or Paris air shows to promote Boeing or Washington aerospace. Only after a cacophony of criticism (started by yours truly in every media that would listen) did Gregoire make the trek.

Did Inslee lose the 787?

Democrat Inslee is running for a third term as governor. The same day Boeing announced its Charleston decision, some Republicans criticized him, charging he “lost” the 787.

This criticism is completely unfair. As LNA noted last week, nobody should have been surprised. This decision was made Oct. 28, 2009, when McNerney put Line 2 in Charleston. Anyone with any vision understood then that one day all 787s would be assembled there. COVID only accelerated this move.

Inslee’s posture may be a combination of being mugged and extorted in 2013 and his need for union support in his reelection (though his Republic opponent stands no chance of winning).

But the criticism that should be leveled at Inslee, which is entirely fair, is the myopic view that (1) yes, Boeing can move more jobs out of Washington, as noted above, and (2) Boeing has need for two new airplane programs.

Kicking Boeing when it’s down—and there is no mistake, it’s down—is not the way a savvy governor treats one of the state’s largest employers.

Just ask the California politicians beginning in the 1970s and 1980s. How’s that state’s aerospace market today?

56 Comments on “Gov. Inslee misses the point in his pique over Boeing 787 production decision

  1. The real question is, what is Boeing goal?

    McNerney was allowed to vent his spleen on Boeing workers because he hated unions and equally was a member of an organization that wants to eliminate Social Security.

    Members wages vs return pale in comparison to the 30 billion that Boeing management has pissed away though they screw ups.

    Should Washington State just pay Boeing 5 million per aircraft and get it done and over with?

    As I recall the Foxcon factory would cost Wisconsin 500,000 for every job created. Just dole that out and they would created far more jobs than the factory (that never happened)

    Is one of the most beautiful places in the county (Pacific N.W.) worth a lot more to attract good people than living down in a swamp?

    Yes Boeing is on the rocks, but it was not Washington State that put them there.

    Tens of billions on stock buy backs, not investing in the future.

    When I acted up as a kid, I did not get a poor misunderstood baby treatment.

    So, Inslee may be tired of all the pandering to Boeing management that acts like two year olds. Agree he is supposed to say all the right tisk tisk, poor baby stuff but he may also have information that its all wasted and the future is elsewhere with Boeing leaving anyway.

    • Fifty years ago, free market economy Milton Friedman espoused “shareholder capitalism ” where the only social responsibility was for profits to the shareholders (this is often totally misstated as part of a Corporations Legal Obligations) .

      Amazingly, the Business Roundtable (of which McNenearney was a prominent member and espoused eliminating Social Security) came out with a statement in repudiation good old Milton.

      “Declaring that a companies needs to balance their obligation to serve shareholders with obligations to other stakeholders including customers, employees and suppliers as well as the communities in which they operate”

      Clean out Boeing management with the old dead wood and get back on track would be on the right side of history. They will get run over by history, its just of they lead they can do a lot of good for all.

      • You miss that individual freedom supported by defense and justice systems feeds you, collectivism does not.

        That type of social system rewards competence and honesty, not cronyism – which WA state’s giveaways to Boeing are and the IAM’s behaviour is.

        Look at Honda, Microsoft, and many other well-known companies that started small, some in the face of government discouragement.

        Look at Sears, which could have done what McKenzie Scott and Jeff Bezos did – put its renowned catalogue on the Internet.

    • You must not have ever visited Charleston to call it a “swamp”. I believe if you look at how Airbus has a few FALs spread out, with covid and other risks becoming apparent, having such a high concentration of your manufacturing base in 1 location is not a wise strategy. Boeing probably recognizes this and diversification is inevitable. It would be costly to simply abandon WA but it would not be unreasonable to see them shrink their footprint and spread it geographically. How much will remain in WA is what these discussions will decide. When you look at the products in Renton and Everett it is within the realm of possibility it could all go elsewhere when the follow on programs are created, albeit at great expense to Boeing. And as far as attracting people, I think the majority would prefer an oceanfront city with reasonable costs of living. I would however agree that the union did not cause Boeing’s current crisis

      • Actually I did go through Charleston once.

        Yes it is a swamp, yes there is a reason they call it the Low Country.

        Yes there is a reason downtown floods with regulatory .

        Sea Levels are rising and it will only get worse.

        • And the summers are long, hot, and muggy. I lived there for 7 years and flooding was common. They also have palmetto bugs or otherwise known as roaches. Finally the crop of bugs is very large.

        • Sea levels are only rising very slowly.

          Manufacturing has moved south, to places like Tennessee and Texas, because there’s a better work ethic. Sony and Toyota are on public record as saying the quality from their US plants is better than from their Japan plants. Why is that? Leadership I say.

          As Scott notes “Just ask the California politicians beginning in the 1970s and 1980s. How’s that state’s aerospace market today?” Ask where movies are made today – answer is on sound stages in southwest US states and in BC. Besides costs is the social problems that motivate people to vote with their feet – I’ve met two families who did that.

      • Good point about spreading facilities out.

        Seattle is vulnerable to earthquake, other locations to convective weather phenomenon, others to flooding though mitigation is possible.

        (Going on about Boeing’s old plants along the Duwamish, as I like to, I ask how stable that ground is. Recall Boeing Field’s runway cracked badly in one modest earthquake, as it is a filled area.
        Earthquake risk is complex, depends in part on where the faults are, and what building construction is (masonry is fragile).
        Of the two recent ones I remember, one was centered east of Duvall but took down a brick building in Auburn, the other centered in lower Puget Sound, it almost took down the state capital building, I forget which one damaged BFI.)

  2. There is nothing odd about the governors point. He is a politician and just like every other politician uses tax money to create jobs and buy votes. Boeing like all companies wont refuse free or cheap money from government. But now Boeing is caught with WTO ruling and inefficient flow line. They have to refuse free/cheap money from government to abide by wto. Finally Boeing is thinking without government money to run efficient FAL.

    • There were major incentives and tax breaks for the Charleston Operation.

      Same that they floated putting the 777 wing plant somewhere else, despite the inanity of getting those wings to Everett.

      • The current 777 wings travel by looooong road trailer from Frederickson south of Tacoma now . The even bigger 777X wing is made next door to the Fal .
        The A380 wings had to travel like a middle ages Pope, by road, ship , barge and the road again. ( That should have been a hint the cost structure was ridiculous, the final assembly should have been Hamburg at the current Airbus plant on the old Focke Wolf airfield next to the Elbe river port.)

        • Are you sure????
          “road ship barge and road again” are for fuselage components from Saint Nazaire to Toulouse but NOT for the A380 wings
          the wings are flown directly from the UK Broughton plant to the assembly plant in the Beluga plane

          • Sorry, i was wrong!
            The 380 wings are too large for the Beluga, and are shipped from the welsh Broughton plant to Pauillac, downstream from Bordeaux.
            Then a barge takes them upstream to Landon, where they are put on special trailers, driven South to Toulouse on a recalibrated local road.
            It is wise to mention that most european components of A320/321 manufactured in Mobile (Al) are shipped across the pond from Saint Nazaire.
            Bottom line is that 787/10 fuselage could certainly have been shipped from Charleston to Everett, via Panama.
            when there is a will, …..

          • sorry, Dukeofurl, you were right!
            The wings are too large for the Beluga, and are shipped from Wales to Pauillac (downstream from Bordeaux)
            then a barge tales them upstream to Langon, and a special trailer drives them to Toulouse…
            It is Wise to remember that most european components of 320/321 assembled in Mobile Alabama are shipped across the pond from Saint Nazaire
            Bottom line is that ,if the Dreamlifter is too small for the 787/10 fuselage, it could have been shipped to Everett via Panama, in a couple of weeks.
            When there is a will….

  3. There’s another important logistical piece to the B787 consolidation issue. Recall when the program launched it was supposed to be with several risk sharing partners building major components / subassemblies to be delivered in Everett using Dreamlifters. Two of those suppliers were Vought and Global Aeronautica who setup facilities in Charleston to build center fuselage sections. The “plan” was to be able to assemble a B787 in just 3 days, remember that ? Of course, the “plan” went by the way side when several suppliers failed to meet schedule and quality requirements causing Boeing to pause the program and convert to a more traditional subcontractor situation. As such the Charleston facilities came directly under Boeing control. Fast forward a few years and customers expressed a lot of interest in the 787-10 to replace B777-200’s, A330’s and A340’s. This airplane I understand has such a large center fuselage section that it cannot fit in a Dreamlifter for shipment to Everett. Hence, all B787-10’s are built in Charleston. Future market for the plane is very much focused on the 787-9 and 787-10 so Boeing must keep building both models and that cannot be done if consolidating in Everett.

    • Too large or too long for the Dreamlifter?

      Why not transport the 787-10 fuselage in two pieces, then join them in Everett?

      • Or put the piece in question on a seaship.
        Airbus moves its parts to Mobile on a ship, and certain A380 parts were also moved by ship.

      • We can add in, Charleston assembly plant did not have to be built.

        It was not part of the original plan.

        By doing so they guaranteed the whole FAL would be moved there.

        Self fulfilling prophecy. Build it and we will move!

        And yes you can assemble the 787 -10 in pieces in Everett.

          • The 787 is nothing more than a plug and play erector set (or Logo’s if you will)

            There is nothign magical about attaching the non pressurized tail area to the fuselage (well there should not be, Charleston can’t do it right)

            Front is made in Japan and the nose in Kansas and shipped to Everett and Charleston.

            All the bits and pieces are made around the world and flown to Charleston (other than one fuselage section)

            All you have to do is ship the non pressurized tail section to Everett and attach it to the rear fuselage (and get quality control back for that area). Everett has been the one to point out all the flaws coming out of Charleston.

            Its nothing more than a floor jig setup to do so (they connect the fuselage to the front section and nose in Everett)

            They already make 2 fuselage joins in Everett and those are the much trickery pressurized sections.

            You can just read the Boeing can’t (or it would be hard) to don’t want to.

  4. I actually feel like Inslee knows the situation that Boeing’s time in WA is counted. The problem at Puget Sound is that it is fill with high tech companies like Amazon/Google/Microsoft/Apple who pay 6 figure salary for their entry position. Inflation goes up like crazy in the area especially for housing and I just don’t think Boeing can keep up their engineer pay. What’s worse is covid just accelerate the problem. While Boeing workers are facing furlough, Amazon employees down the street are getting paid bonus. I just don’t see how Boeing can stay in the area for long ….

    • They could have put the 787 factory and other stuff on the other side of the mountains .

      You have Wenatchee, Spokane, Tri Cities , Yakima and even Mosses Lake (where they is LOTS) of land to a factory.

      Its a speculator beautiful area.

      • Or if Boeing needs a deepwater port, consider Aberdeen, Port Angeles, Shelton, …

        • @Cascadian: All garden spots of WA State….if recruiting for Moses Lake is a challenge, try those places.

          • Scott:

            You are clear on your feelings of Moses Lake.

            There are some lovely places all around it even if you don’t like the desert.

            I grew up in places that make Moses Lake look like a Metropolis.

            Loved it, getting away from all that congestion would be a delight for many and lower cost of living.

            There is a reason those Easter Side of the range town/cities are growing like wildfire.

            Alaska has lured many a city slicker who went on to stay in what they decided was paradise.

            I have spent a good amount of time in that area and its a wonder geologically and scenery.

            I sure would rather raise kids there than Seattle and the environs. Granted up BHam way there are some really nice towns.

          • I’m less sure there’s an advantage over Moses Lake (although I would think there is because of the climate difference east of the Cascades), but there would be an advantage in retaining skilled employees compared with trying to convince the workers to move to Charleston or whatever other state wins the next clean-sheet FAL auction.

          • Those places on the coast are attractive for their proximity to ocean recreation and wilderness.

            Whether or not they physically suitable for very large plants I don’t know, I doubt they have much for runways.

            Some people want to live in smaller cities, many young people don’t as they can’t meet lovers I boozing places.

            And once there, you are too dependent on one employer, that has been a problem with Collins in Cedar Rapids.

            But people looking ahead to retirement may prefer the cities mentioned, depending in part on what they want to do for recreation in retirement.

  5. Boeing probably doesn’t belong in Puget Sound anymore. It’s no longer what drives the local economy, which is now dominated by tech. The cost of living locally is, consequently, pretty outrageous.

    The state ought to see whether Boeing can be relocated somewhere in the state that’s lower cost – maybe north of Portland, so that operations can benefit from PDX airport. Absent that, Boeing should be making plans to leave completely.

    Doing that while not suffering a catastrophic loss of skill will be quite a challenge, however.

    • Boeing found out to its cost just opening shop in another state and using state funds ‘to train up a workforce’ produces an inferior product.
      Even the offloading of risk by Boeing to major suppliers for the 787 was a financial catastrophe.
      And No they wont be making plans to leave with 70,000 employees in state.
      Moving the 737 line from Renton to Everett is high risk and has many downsides and only upside is ‘Everett has free space now ‘ and Renton could be sold for development- Yes it will raise cash but does it add long term value to the Company-

  6. Scott — “[Wondering if Boeing’s request to cancel tax breaks had more to do with knowing where it was going with 787 production consolidation] maybe that’s just me…” Or just maybe you are a very wise reader of human nature.
    As in: “…Anyone with any vision understood [in 2009] that one day all 787s would be assembled [in North Charleston].”
    And regular commenters here who perceive Toulouse-affilia in this column should note: “In Gregoire’s first term, she didn’t even bother to go to the Farnborough or Paris air shows to promote Boeing or Washington aerospace. Only after a cacophony of criticism (started by yours truly in every media that would listen) did Gregoire make the trek…”

  7. Bruce’s points above are correct. If a second line was needed, and it would involve the -10, then there was logic in having the line at the -10 assembly location. That doesn’t mean there were no other solutions possible, or that it couldn’t be at Everett. But it was the choice that was made, for a variety of reasons, and for better or worse. That die was cast and there was no going backwards now, to reverse that decision.

    Also once that choice was made, then it was also likely that as 787 production eventually fell below the need for two lines, it would finish up at Charleston where the -10 is assembled. It just wasn’t foreseen that this would happen as soon as this year. Inslee and others are upset about that, but the acceleration was clearly due to COVID, which was outside Boeing’s control. That doesn’t lessen the sting at all.

    If it had gone the other way, you’d have Charleston being equally upset, and with equal justification. It wasn’t the best situation for Boeing, either way. Still best to have enough production to support two lines, as we would now if not for COVID,

    • Realistically the 787 should have been down to 8 previously.

      The only reason it was so high was to try to burn down the huge losses due to mis-management of the program (nothign to do with labor at all) .

      Anything 10 or under at least supposedly Charleston has the capacity. That is not an accident, they built it large enough to take over the 787 regardless of Covd.

      Its a nice sounding excuse. Its been headed there all along.

      Wings, front fuselage and wing box all have to go all the way to Charleston from Japan now.

      As long as you don’t care if its done right then Charleston is the logical choice.

  8. So, what we need is a sliding scale

    1 million a copy to build a single aisle in Washington State (that was the discount for SW if they did not have to train up on the MAX).

    5-8 million a copy for a 787

    8 million a copy for a 777X.

    That is really what is being said.

    Would any amount of sucking up change Boeing’s mind? Hat in hand, wait in the Chicago lobby for 6 months. Calhoun does not even know or even care that Inslee exists (heck he did not know Boeing was failing so badly either)

    Could the Politico’s do a better job? Sure.

    • TW, tax incentives for businesses are common throughout the US and cannot be reduced to simple graft or payola, as you suggest.

      Those agreements are consensual and do not have binding clauses of the kind you suggest. They are vulnerable to conditions of the market. The goal is to attract business & employment which builds up the community. You just have to look at any town in America that has lost its industry, to understand why that investment would be valuable and worthwhile.

      If you want to argue the merits of that system, that’s fine. It’s far from perfect and has some flaws. There are instances where it doesn’t work out as expected, and instances where it does. But it’s the reality of a competitive market for business locations.

      • Rob:

        It can be as simple as payola because that is exactly what it is.

        And yes you can tie any terms you want to ensure that they don’t take the money and run. Vulnerable to the market is business speak for twisting state and local arms and then leaving when the next place offers lower terms. In the legal world its called a protection racket.

        https://www.seattletimes.com/business/boeings-787-decision-shows-tax-breaks-dont-buy-happiness/

        Fluffing it with terms like conditions of market does not change that.

        20 years ago this was not occurring generally and no, its not healthy and it has no upside.

        Its corporate Welfare at its worst playing one state off against another.

        Everett was not build on tax breaks nor was River Rougue.

        I got to travel the world a fair amount when I was younger. One stop was Puerto Rico. There were all sorts of huge companies there. Huh?

        Why? Tax Breaks. Ford, Drug Companies etc.

        I was out in Vieques and there was this big building on the Island. What’s that all about, this place doesn’t have any water?

        Oh, they got a big tax break, they tanker in the water they need.

        Its a 5 year deal, they hire a few locals and make them VPs, bring in the rest of the labor and then when the tax break is up, they leave.

        Keeping in mind that there was virtually nothing on Vieques. Well part of it was a bombing range for the US Navy (gone now). Tiny town, lots of sail boats tied up in the bay (we made money cleaning the bottoms for the local guy hired to take care of them). Of course its the place to put a big surgical tubing manufacturer.

        So, lets be honest. If Boeing can offer terms to SW at a million a pop for a MAX if it does not need to have trianing, then WS can offer a million a pop for a MAX to be built.

        No plane, no pay. Sure simplifies it and easy to track compliance. Its acualy honest.

        There is a serious Constitutional question if the corporate shakedown are l, but it should be put a halt to.

        As often happens with dubious IRS write offs, it will require legislation to correct (the courts are severely biased to business so there is no remedy there)

        And of course before that is challenged, the courts decided Microsoft was not a monopoly for their operating systems (and you had to have Windows Explorer to run it). We get shook down every 10 years.

        Clearly laughable, it is a monop0oly and the EU told them to remove IE and they did. You can add any browser and a browser has nothign to do with an operating system but the US judges sucked it up hook line and sinker.

        I like honest payoff much better and you then get what your pay for with no smoke and mirrors.

        • TW, this is the typical simplification of the problem to the level which supports your criticism, then insist your simplification is the reality.

          In your world maybe, but not in the real world where complexities matter. In addition to your services as adjunct board member and CEO of Boeing, you could be on the Supreme Court to resolve Constitutional issues as well. There is an opening at present.

          With Microsoft, the competition complained that bundling a free browser was unfair competition. Microsoft countered that any other browser could also be offered for free, and that is what has happened. Windows is bundled with IE and Edge, but users can install any other browsers they please. So the Microsoft model won out.

          The EU forced Microsoft to remove IE, which meant they stopped the integration plans to use the web browser as a main interface. But today they are working on that again with Edge, and in fact ironically, the Chrome operating system is heavily browser-based for the user interface.

          The real issue was whether people should have to pay for a web browser. The same issue occurred with network stacks. Once the TCP/IP stack was integrated free with Windows, that became the new normal, and it now powers the Internet.

          Things are not always as simple as you wish them to be. There are definitely problems with the tax incentive model, but when it works, it’s a boon for the local economy. The people who are employed because of it, that have good schools and public services because of it, would disagree with you.

          This is the same problem with constantly ripping Boeing apart. You predict & advocate for failure and when it happens, you blame Boeing while being pleased with yourself. But take a good look at your own ethics, and the impact of the reality you wish upon others.

          • Rob:

            We agree things are not simple.

            But the reason is total lack of honesty. At least the Payola types are honest, give us 10% or we break your arm or your business has a sudden crisis.

            Boeing twisting arms is no different, they just hide behind verbiage. Its the same thing. Money for product.

            That does not mean we can’t call it what it is.

            What you don’t get is I love Boeing. I grew up with them and the bright future they offered, what they had done, fantastic products.

            No question they failed to understand aspect of jets and there were issues. Manual trim being one (few if any known impacts) as well as pilots no being able to keep up with the speed.

            I don’t wish for Boeing to fail, they have failed terribly.

            I would be a happy camper if Boeing reformed and took up the new Rountable Business model of being part of a community.

            Unlike the jet age in the 50s and 60s, the future is how a business is run, not just product . We can hope they join back into the reality.

            As for MS, I did not pay for my browser. I know you are too young to remember, but I cut my computer teeth on CPM. You can smoke some people but you sure cant smoke a computer expert (yep, I am one of those as well – I did the Kaypro Newsletter for 3 years in Anchorage as well as some unique code writing in Word Star.

            The browser adds nothign to an operating system, in fact it interferes with it. There is a reason Lenux works better.

            Its amazing how often MS product conflict with themselves.

            PS: Yes I am accepting nomination to the Supreme Court. Hopefully I stand a chance. I will be a vote for the Spirit of the Constitution which reads, We The People, not We the Corporations.
            Think of me as a knarly Thomas but for the people.

          • TW, if you love Boeing, you are the Houdini of commenters, as you have concealed it perfectly. That would be the absolute last impression anyone could gather from your words. Once again the facts (your own statements this time) are not on your side.

          • And amusingly – and stupidly IMJ – Microsloppy’s Udge browser may actually be Gurgle Chrome. There’s more than one version of Udge but without a name change.

  9. Words to live by:

    “We must never allow a question of profit to jeopardize this position.”

    Refers to a company stellar reputation.

  10. Civil Aerospace has become truly international. I don’t see that reflected in policy or actions. It All seems 100% national driven. Contrary to the competition, beating them at all front except the national military.

    Times have changed, ignore & get by-passed.

  11. Did not GE do something similar, closing most Commercial Engine production in Evendale IAM Lodge 912, Cincinnati and moved it to Durham N.C. The big test facility is in Peebles Ohio somewhere in between. Boeing kind of copies GEAE business old methods but usually not as skillfully. Boeing can more easily shuffle Engines from GE N.C. to Boeing S.C. instead of trucking trans Continental.

    • GE is in a financial spiral now as well.

      Funny how all that Milton Friedman thinking has taken down RR, Boeing and GE.

      Make you think the old model was better.

      • Ignorance alert.

        You haven’t a clue what Milton Friedman said. He certainty did not support support using government for your business whether tax breaks, subsidies, loans, infrastructure, training facilities, …

        Most gummints have a free-lunch mentality though at someone else’s expense – they think manipulation works when history shows it does not. North of Boeing’s main plants there was an example – the BC governments attempt to save pulp mills in NW BC. Boeing learned the hard way about game playing when it complained to the WTO about the governments of Quebec and Canada helping Bombardier, Airbus now sells the airplane Boeing did not want to have.

        I cover attempts control in http://www.moralindividualism.com/monopol3.htm.

  12. I agree with Scott’s point on the Mayor and Executive having the right of it. The different Washington-based stakeholders have at times focused too much on the short term and maintaining the status quo with regards to the employment landscape and what the relationship looks like and not looking three steps ahead to “how do I keep myself valuable and indispensable”. I am pointing at the unions, specifically IAM 751 and the different political stakeholders in Washington. IAM is emblematic of putting too much investment of maintaining the status quo and not evolving to work for its members in a changing market. And while Boeing can certainly espouse half-truths they are right on the education and talent front. Walking through UW and noticing the Aerospace and Mechanical Engineering dept. buildings seem dated compared to other engineering departments or the seemingly token efforts of having workforce training that will be inadequate when the gray wave hits the machinists in the next 10 years are the real sign of not prioritizing the right things. Sure, for UW they have wealthy benefactors donating to other departments and Washington does have a comparatively robust aviation sector, but that will not be true tomorrow if they don’t think about tomorrow.

    • Brian:

      The real question is would any of it make any difference to Boeing? Personally I don’t think so.

      I think both are at fault. Having been in 3 unions, I have seen the good and bad.

      Unions tend to be stuck in the past, the last one I was part of was like a throw back to the 50s, talk about heebie jeebies.

      Boeing could have done a huge amount to bridging the gap and good faith efforts which in turn would have supported rational union management.

      • While I cannot see alternate realities, it is obvious the recent strategy has not been forward facing and long term. In effect, it is similar to Boeing’s own strategy with investment and not dumping more into R&D and instead doing stock buy-backs.

        It is always more difficult to have people see the long term since it is more difficult to quantify the benefits for people’s own self interests. But this is always easier when both sides make a good faith effort.

    • UW is not training IAM members, nor even all SPEAA members.

      There are community colleges including in Everett, and probably still extensive in-house training by Boeing.

      When the Everett plant was built, a college in California opened a branch in Everett to support Boeing employees. A few years ago it closed because CCs and such had finally caught up with demand. (Government funded institutions are very slow to change.)

  13. Why would any company choose unionized employees over non-union? With a union they have to contend with an organization which continuously tries to drive a wedge between management and their employees, drives up costs, and disrupts operations with strikes every few years. Without unions, there is none of that. Unions are great for employees, right up to the point when everyone loses their jobs.

    • There is a middle ground but that stands no chance if you attack the union.

      The union can be your best friend in pointing out where you are going wrong. But if you want to crush them and don’t want criticism, then its nothign but hostility.

      I have benefit greatly under the unions I was with. Yes they had issues but financially I was alwyas much better off.

      As it stands, everyone looses. The employees, Washington State, the Country and Boeing.

    • Qualifier: US style unions are dysfunctional.
      They complement dysfunctional management structures.:-)

      Why is it that foreign companies can build perfect products in US “right to work” states while native companies apparently can’t?

      • Ayup, even a left-leaning person I worked with was scathing about Pittsburg and PA for migration of steel companies away and obstructionism by gummints there.

        Unions are inherently protectionist. Look at the US airline pilots convincing gummint that individuals who test flew hastily built airplanes and ferried them across the stormy North Atlantic without good weather reporting were not temperamentally suited to fly pax in a controlled and supported domestic US environment.

  14. Yah, well, eat at the trough and the filler-in-charge will be unhappy when you change your mind.

    Serious problem with gummint interference, perhaps including enticing Boeing to the Carolinas.

    A second plant was a reasonable strategic choice given sales of the 787, KC-46 production, and a troubled machinist’s union (check the statue outside its office building south of the Boeing Everett plant).

    Times have changed, in large part because people like Inslee panicked and pandered to just another strong corona virus, applying shotgun policies while not protecting the truly vulnerable.

  15. BTW, regarding the claim that some executives bean-counting or such caused the 787’s development delays:

    My knowledge is that irresponsibly incompetent project management was the cause. Executives ignored warnings from Boeing’s military division about how easy it was to fool oneself about progress.

    Failure of the military division’s PM was publicized by the lead customer on Wedgetail publicly criticizing Boeing in the city where its largest customer is headquartered – Washington DC. That was a ‘two by alongside’ that woke that Boeing division up.

    For years after the 787 program was put back on a proper course, executives continued to spin, blaming outsourcing of engineering work. While there were very troubled suppliers like Smiths Yakima playing games, Boeing was in charge of the program.

    Along the way McNerney did try to improve the culture of Boeing’s lower level management, making it clear that rating of a manager would include how s/he treated employees.

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