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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

July 1, 2009 at 3:16 PM

Boeing: The blame game

The Wall Street Journal has weighed in with a report that Boeing is in talks to buy the Vought factory in South Carolina that makes sections of the 787 fuselage. In the Seattle area, the big question is whether this is only a prelude to starting a second Dreamliner production line in the Palmetto state?

If so, it would be a blow to the aerospace jobs that pay enough to support as many as three additional jobs in the local economy. You don’t get that from positions at Wal-Mart, which is the dominant employer in many states.

There’s no question that Boeing needs to gain more control of its troubled and badly managed supply chain for the much-delayed Dreamliner. It may also need a second line working just to catch up on its order backlog. But there’s also the huge argument — based on the comments to this morning’s post — about who will be to blame if South Carolina gets aerospace jobs that might have gone here.

It’s almost impossible to separate the discussion from ideology. Some people are convinced that unions are to blame for the death of American manufacturing. They inexplicably give a pass to such factors as executive blunders, Wall Street’s unsustainable drive for profits and, especially globalization.

The Southern states are hungry in the economic game. In many cases they can offer companies an option besides straight off-shoring of jobs. Their wage structures are much lower and the workforce is more malleable. They have a tradition of hostility to organized labor. Ironically, these states have also been decimated by globalization, in the textile, apparel and furniture sectors, which have lost hundreds of thousands of jobs. South Carolina has one of the highest unemployment rates in the country.

The other reality about the South is that despite some individual coups, often purchased with huge tax subsidies, the overall results are middling. Southern states tend to rank low on virtually any scale of social, educational or economic well-being. South Carolina’s median household income is $43,508; Washington’s $55,628. Still, the region is not to be underestimated in going after specific economic assets — and its low cost is a huge advantage.

If the worst comes to pass, I am unwilling to blame collective bargaining or Puget Sound workers. I don’t know about you, but I always feel better flying in an airplane made in Everett — and I only worry if the airline has outsourced its maintenance to cheap, non-union labor. I do think all the stakeholders in the region need to polish their economic-development game. The world is coming after what we have.

One reader knocked me for saying Boeing’s headquarters relocation had nothing to do with the company’s feeling’s toward our region, and all about wanting a central location. I know those were the talking points, and perhaps had some truth. But what is a “central location” in a globalized economy? I continue to worry about executive disconnection from Boeing’s birthplace. It matters where the CEO lives. For one thing, he or she might be more likely to encounter not just bean counters but average employees — and see them as assets, not liabilities.

We’ve watched the Midwest be hollowed out — and this was a place that as late as the 1990s had some of the most productive labor in the world and for decades was a center of innovation. If that starts here, it won’t be the fault of the workers. It will be the continuation of a disturbing shift that won’t bode well for America — even for the South. Somehow the discussion needs to address that, too.

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