POLICY HIGHLIGHTER

Volume 14, Number 11
May 11, 2004

Boeing 7E7 = Washington jobs?

To justify the state's largest incentive package ever offered to a private employer, state officials frame the Boeing agreement as a jobs package. Knowing that Boeing did not plan to manufacture the majority of its 7E7 plane in Washington (primarily three-day final assembly), supporters of the nearly $4 billion in tax and other incentives granted to Boeing instead justified their support on the basis that they were "safeguarding" nearly 200,000 jobs. While this position requires one to assume that the economy is static and no new employers or industries could appear (i.e., Microsoft), it fails to acknowledge that Boeing plans to shut down production on its 757, with the 737 and 767 (pending outcome of Pentagon tanker deal) likely close behind.

Boeing has indicated that the 7E7 will only require between 800-1,200 individuals to perform the three-day final assembly duties at its Everett plant. Despite the billions in tax incentives and other considerations bestowed to Boeing without the requirement of a single net new job being created, we may have hastened the elimination of the jobs for those currently employed on manufacturing Boeing's 737, 757, and 767.

It is becoming clear that the 7E7 is not the Washington job engine it was advertised to be. Consider the following time line:

Source: Boeing

As the above numbers show, Boeing continues to reduce its employment numbers:

• Since legislators passed the $3.2 billion tax incentives last June, Boeing has reduced its Washington workforce by a total of 4,217.

• Since the Governor signed the Boeing agreement granting the additional incentives last December, Boeing has reduced 1,313 positions.

• Since March when the legislature appropriated $614,000 to implement the Boeing agreement and $6 million in Reed Act funds for the Boeing Employment Resource Center (ERC), Boeing has reduced 444 positions.

This means that even if Boeing were to continue manufacturing at current staffing levels on its 737, 757, and 767, Washington will still suffer a net loss of over 3,000 Boeing jobs (since June 2003) even with the 7E7 three-day final assembly.

As for the actual manufacturing of the 7E7, here is the breakdown of who will be doing what:

Source: Seattle PI

In a move that appears to signal a desire by Boeing to ease out of manufacturing commercial airplanes, the coveted wing technology and manufacturing now will be handled outside Boeing. The unprecedented decision to transfer the highly prized and safeguarded wing technology to Japan resulted in the following comments from Bill Barrett, manufacturing sequence planner at Boeing's Auburn plant, "If we give away our technology, what are we leaving for our kids? We are the leaders, so why would we want to give it away just for a few bucks?" (Seattle PI 11/14/2003)

Legislators were told Boeing jobs warranted billions of dollars in tax incentives and corporate welfare. However, no matter how one breaks down the state's agreement with Boeing, coming to the conclusion that it will result in a net increase of new jobs is difficult, if not impossible, to substantiate – especially in the context of Washington state Boeing jobs. Adding 1,200 jobs after first reducing 4,217 is not an increase in employment.

Prepared by: Bob Williams | Senior Analyst | 360-956-3482

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org