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Jon Talton

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

April 9, 2013 at 10:29 AM

Boeing’s going

Boeing says it will invest another $1 billion in its North Charleston, S.C., plant over the next eight years, promising to create 2,000 jobs. A company spokeswoman said this is on top of the $1 billion already spent to get a second 787 assembly line going and acquire land. She dropped into creepy corporate-Orwellian language to note “today we have more than 6,000 teammates working at the Boeing sites in the state.” This is a long way from the 86,000 employees in Washington state. But we’re on notice.

It’s not news that big corporations have no loyalty, or that they will play states and localities off against each other in a blood sport made more desperate by a slow-growing economy. The $3 billion in tax incentives Washington gave to Boeing to win the Dreamliner? That’s so yesterday, pal, what have you done for me lately? And it’s not just wage levels that are arbitraged, but presence or lack thereof of those pesky unions, which give workers some leverage and a voice. Non-unionized teammates are much more malleable, just grateful to have a job that’s not humping it at the Mount Pleasant Wal-Mart.

Our conceit is that the Puget Sound region has the talent, skills and sunk costs in facilities that offset its relatively higher costs. The unions have accepted contracts without strikes. It makes no logical sense to start all over again elsewhere, particularly since this quality workforce is a major driver behind record profits at Boeing. But that’s not the way Jack Welch’s acolytes think.

We will know when Boeing enters a down cycle and the big layoffs come here, not in North Charleston. And the bean counters can bring out their PowerPoints to show that the Puget Sound region is just not economical. Somehow those studies never look at outrageous executive compensation or management overhead. They don’t show the costs of failing to take maximum advantage of the engineering expertise in the Seattle area. Anyway, the United States has only one builder of commercial airplanes. This is what 30 years of lax antitrust enforcement has brought us. So Boeing, the coddled star of American manufactured exports, is too big to fail. It can do what it chooses. This is among the reasons earlier generations of Americans mistrusted and sought to outlaw monopolies, duopolies and cartels.

So we have a decade or so to prepare for the transition. But it’s coming. And we couldn’t prevent it even if the Boeing employees here decertified their unions and we racked back our wage levels to those of the South. It doesn’t matter that Ray Conner, chief of commercial airplanes, is “a good guy” who joined the old Boeing as a mechanic. His bosses came from General Electric, sat at the feet of Neutron Jack and carry the McDonnell Douglas toxic culture — and American employees that are not expendable teammates are simply liabilities. At the moment, the executive suite needs our world-class engineers, machinists and technicians to fix the dog’s breakfast their outsourcing made of the Dreamliner. Don’t expect any such dedication in return. By the way, neither should South Carolina. That’s the Chicago way.

Hitting a bump: Seattle-based PayScale released its report on first-quarter salaries. The PayScale Index shows the first decreases since 2011. From the report: “ Tech hotspots cooled off. Cities with a strong tech presence that were previous wage winners were wage losers this quarter. Wages in Boston, Minneapolis, and Seattle fell this quarter (0.7 percent, 0.4 percent and 0.2 percent respectively). Wages in San Francisco softened with a quarterly growth of 0.7 percent compared to previous quarters of more than 1 percent.

And Don’t Miss: China export-data skepticism deepens | Bloomberg

Today’s Econ Haiku:

Penney’s lost billions

Ron’s severance won’t make cents

At least the buck stopped




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