Analyst: Boeing Announcement A Play For Tax Breaks

Oct 31, 2013

The Boeing 777.
The Boeing 777.
Credit Boeing handout

Boeing’s announcement that much of the detailed design work on the 777X jetliner will take place outside Washington state is a play for better tax incentives, according to a top aviation analyst.

“It’s certainly a strategic decision,” Scott Hamilton, a Boeing analyst at Issaquah-based Leeham Company, told The Record’s Steve Scher. “Boeing has been moving engineering jobs which of course are covered by SPEEA, the union, out of Washington state all year. Boeing Chicago, where the headquarters are, simply does not like dealing with unions.”

In an internal memo, Boeing told employees that Boeing engineering teams in Charleston, S.C., Huntsville, Ala., Long Beach, Calif., Philadelphia and St. Louis, Mo. would get much of the work on the 777X. The plane boasts folding wing tips, a stretched airplane to accommodate 40 more passengers and new engines for better fuel efficiency.  

Hamilton called the internal memo part of a larger strategy to have a bidding process between Gov. Jay Inslee and the governors of other states. He said it’s also part of the company’s efforts to weaken the union that represents the aeronautical giant’s white collar workers in the Puget Sound region.

He said that Boeing has been engaged in a long fight with the unions and may have picked on SPEEA because it’s the weaker of the two unions.

Ray Goforth, executive director of the union, SPEEA/IFPTE Local 2001, wrote in an email: "Puget Sound is Boeing's center of experience in commercial aircraft design. As engineering tasks are shared with other talented engineering groups, we fully expect Puget Sound to play the key integrating role needed to avoid a replication of the problems experienced by the 787 program."

Boeing said no final decisions have been made about whether or not all or part of the Triple 7-X will be designed or built in Washington.

Produced for the Web by Isolde Raftery.