Stateline Story

States Court Boeing for Airliner Project

  • July 08, 2003
  • By Mike Clements

State governments across the country are aggressively courting the Boeing Co. as the country's largest airplane builder shops around for an assembly site for its proposed new commercial airliner, the 7E7 Dreamliner. Amid a crippling budget crisis, the states are cobbling together incentive packages to win the jobs, tax revenue and prestige that a big Boeing project can bring.

The winning state stands to gain 800 to 1,200 well-paying jobs, said Mary Hanson, a Boeing spokeswoman. That figure does not include thousands of potential spin-off jobs, industry experts said.

"Projects that offer 1,200 well-paying jobs are plum projects. They can have a very beneficial impact on the economy of a state," said Patrick Shaughnessy, spokesman for the Texas Department of Economic Development.

The intense state interest in the Boeing plant is also tied to a state's business image, said Dick Conway, publisher of The Puget Sound Economic Forecaster, a quarterly newsletter in Seattle.

"If a state wins a heavy competition such as this, then the perception that the state is a good place for doing business improves," he said.

Boeing and state officials said they consider the bidding process sensitive, and in some cases declined to comment on it. In interviews, press releases and news reports, however, Stateline.org found 19 states where officials said their states had submitted bids for the Boeing 7E7 project.

The states are Arkansas, California, Colorado, Florida, Georgia, Illinois, Indiana, Louisiana, Michigan, Minnesota, Missouri, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, South Carolina, and Washington.

In Washington, Boeing's home until the company moved its headquarters to Chicago two years ago, Gov. Gary Locke (D) recently signed legislation that will give the aerospace industry an estimated $3 billion in tax incentives over the next 20 years. The entire proposal, however, is contingent upon whether Boeing decides to build the 7E7 in the state.

"It was a very good offer. I was surprised at how aggressive they were," said Robert Toomey, an equity research analyst who studies Boeing for RBC Dain Rauscher in Seattle.

Washington state economic officials estimated the new Boeing plant could generate as many as 17,000 spin-off jobs and $60 million to $70 million in annual tax dollars.

The aerospace industry in Washington employs 200,000 people directly and indirectly, or 7.5 percent of the state's workforce, said Dick Conway of The Puget Sound Economic Forecast. Boeing alone employs some 60,000 Washingtonians, he said.

Boeing, however, has plenty of other offers to consider, although the company declined to discuss specific state proposals. Even California, on the brink of fiscal insolvency with a $38 billion deficit, has put forth an offer to Boeing.

Gov. Gray Davis (D) said in a press statement that California is "working to prepare a generous incentive package composed (of) enterprise zone tax credits, a foreign trade zone, employee training grants and local incentive programs."

Davis' spokesman wouldn't comment further but the Associated Press reported that the package was worth an estimated $250 million over five years. Boeing contributes $8 billion annually to California's economy, with 40,000 local employees and 8,000 suppliers, Davis' statement said.

In Michigan, Gov. Jennifer M. Granholm (D) announced in June that the state has offered Boeing an incentive package valued at up to $300 million over the next 20 years. The company could receive local tax abatements, infrastructure assistance and worker training grants, according to the proposal.

"We think this plant would have a tremendous impact on the entire Michigan economy," said Jennifer Owens, assistant vice president of communications for the Michigan Economic Development Corporation. "We think we have a very good fit in terms of our work force, our incentive package and our strong aerospace industry that makes it logical for them to locate to Michigan."

Boeing spokeswoman Hanson said the company was looking for a location that gave the new airplane and the company the best chance of financial success.

"This is the first time we've done something like this in terms of shopping around. We want to build in a location that will ensure the success of the airplane," Hanson said.

To be considered for the plant, state proposals, which were due June 20, must meet each of the 26 criteria released by Boeing, Hanson said. Each of the criteria, which include proximity to a port facility and availability of the labor pool, will be evaluated with equal weight, Hanson said.

"The proposals will be weighted against the list of criteria," she said. "There's not one thing that's likely to be decisive."

Boeing, which develops a new plane every 10 to 12 years, is marketing the 7E7 as a fuel-efficient airplane that will use 15 to 20 percent less fuel than current airplanes while traveling at the same speed, according to the company's Web site. It will be able to hold 200 to 250 passengers.

Boeing is expected to make a decision about the the state bids by the end of the year.