Boeing Layoffs Announced, Washington Considers Tying Tax Breaks To Jobs | KUOW News and Information

Boeing Layoffs Announced, Washington Considers Tying Tax Breaks To Jobs

Mar 30, 2016

The Boeing Company is expected to cut 4,000 jobs by June, with further cuts possible later in the year. The company announced plans to trim the workforce about six weeks ago and the scope of those job cuts is now becoming clear. 

Richard Aboulafia is an aerospace analyst with the Teal Group. He said there are some pressures on Boeing's bottom line and that could explain their desire to cut jobs and cut costs.

"There's about $29 billion in built up 787 deferred production cost losses, which need to be dealt with over the coming 10 years," he said. 

But, even with projections that the company could cut up to 10 percent of its workforce in Washington state by the end of the year, Aboulafia said this is not out of the ordinary for Boeing. 

"Hiring and firing is nothing new to Boeing, it's a cyclical business and at times unfortunately they do need to cut people. What is extremely baffling is their insistence that production rates are rising while they're making these cuts. I just don't see how those two views of the future can be reconciled."

Unions leaders are frustrated with the level of job cuts planned. Bill Dugovich is the spokesman for the Society of Professional Engineering Employees in Aerospace.

He said the job cuts are incredibly disappointing and it reinforces the need for state lawmakers to hold Boeing accountable by tying tax breaks to job levels. 

"Every other state who granted a tax break to aerospace, and specifically to the Boeing Company, tied that break to jobs. Washington did not." 

A bill proposed during this year's legislative session would have changed that, Dugovich said. The bill proposed linking job levels to tax break levels; if jobs fall below a certain level, the tax breaks are scaled back. The tax breaks wouldn't be eliminated.

The bill did not pass. But Dugovich said lawmakers need to revisit this issue. 

"It may not have prevented the latest round of layoffs right now but it would have created a disincentive for the company to ratchet down employment in our state," he said.

Senate Majority Leader Mark Schoesler does not want to see tax breaks tied to job levels. Schoesler said the state made a deal with Boeing and needs to honor that. 

"A deal is a deal. I make it, I keep it," he said. "If we get a reputation as a state of going backwards on tax policy, locating in Washington becomes a risky proposition. Staying in Washington becomes a risky proposition if we can't keep a deal."

Schoesler also said it's important for the state to realize what we've gained from Boeing's presence. It's had a large and positive ripple out effect, he said.