Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.
March 27, 2013 at 10:06 AM
Memo to the governor: A post-Boeing state
Yesterday, I asked, “Chicago, do we have a problem?” after the recent string of Boeing cutback news. My conclusion: We’re a branch-office town for a short-term-focused, self-destructive company that sees itself as inconveniently tethered to the Puget Sound, no matter the skills and advantages we bring. One reader was concise: “Between robots + other countries, these gigs be toast.” Another: “It is all over but the shouting.”
From yet another reader wrote: “Your reference of to the influence of Neutron Jack Welch on Boeing via Jim McNerney today was on target… There is no question that the moves you mentioned today along with all of the previous South Carolina activity are anti-union. They can’t possibly be cost effective. The strategy of building ‘auxiliary’ factories in right-to-work states and slowly transferring work to them until the unionized site is not cost effective is the one Neutron Jack used again & again @ GE. In that vein I came across an article on the poor conditions at Wal-Mart and buried in the article was a reference to how Bob Nardelli fouled up Home Depot. Of course Nardelli once learned at the knee of Neutron Jack.”
Still another email came from Scott Hamilton, the aviation consultant and analyst with Leeham Co. It deserves to be quoted in full:
I read your column with interest, not just for its content, but for your closing line: “It’s time for Washington to plan for a post-Boeing world.”
In April 2009 I gave a speech to the Economic Development Commission of Snohomish County, at a time when the location for the second assembly line for the 787 was theoretically an open issue. I predicted then Boeing would locate Line 2 in Charleston. New airplane designs to succeed the 737 and the 777 would also likely be located out of state, I said.
The following October I gave a speech at the Governor’s Aerospace Summit in Spokane. I said then Washington needed to start reaching out “Beyond Boeing” to other airframe and engine manufacturers and aerospace industries other than commercial. Within weeks, Gov. Gregoire outlined a strategy to the Puget Sound Business Journal planning to do just that.
Since those two speeches, Boeing (1) selected Charleston for 787 Line 2; (2) decided to re-engine the 737 rather than design a new airplane (at least for now) and assemble it here; (3) decided to do an extreme makeover of the 777 in the form of the 777X — but rest assured, Boeing will look at all options for assembly sites; and (4) contracted to purchase a lot more land at Charleston.
I have no doubt whatsoever that future new airplane programs have a very, very real chance of going to Charleston and not Washington State. This could well take 10-15 years, but mark my words: Charleston will become the real rival to Puget Sound.
Gov. Gregoire was slow to wake up to realities. She took office in January 2005 and didn’t kick into gear until November 2009. I hope Gov. Inslee won’t make the same mistake. He needs to look now “Beyond Boeing.” Big time.
Today’s Econ Haiku:
Contained in Cyprus
Or so the eurocrats thought
Now Italy sneezed