Boeing’s 777X Project Offers Enticing Economic Perks
On November 17, Boeing (NYSE:BA) officially launched the 777X program at the 2013 Dubai Airshow, with a record number of customer orders and commitments made for the jet manufacturer’s latest twin-aisle aircraft. According to a company press release, it was the “largest product launch in commercial jetliner history by dollar value.” The 777X — which boasts the largest engines ever put on a plane and key costs-saving technologies that could change trends in modern aircraft design — is considered a pivotal to Boeing’s future profitability and a crucial component in the company’s fight against Airbus for dominance in the long-range, twin engine market.
But likely, the jet will not be built in Washington state, Boeing’s traditional manufacturing base. When a strong majority of Boeing machinists rejected an eight-year labor contract extension that would have ensured production of key components for the company’s new plane would have remained in Washington, other states were given an opportunity to make bids. After the contract proposal was rejected, Boeing decided “look very broadly” at where else the aircraft could be built.
Governors of a dozen or more states are crafting offers with incentives to convince the jet manufacturer to move the 777X production line out of Washington where the current model of the twin-aisle aircraft is manufactured. Losing the 777X program would cost the state a great deal of money. In the past year, 777 manufacturing generated $20 billion in economic activity and 56,000 jobs. To secure the 777X project, the state passed a bill authorizing $8.7 billion in tax breaks for the company, and the hope is that Boeing will still chose Washington even though members of the International Association of Machinists voted down the contract extension. Alex Pietsch, the state’s aerospace director, told Bloomberg that Washington Governor Jay Inslee and Boeing are working to “see if a deal can’t be resurrected.” But he admitted Boeing is “going out and testing the waters,” which in his opinion is reasonable. “I don’t blame them for that. Is it frustrating for me personally? Sure, because we’ve been working really hard on this deal for a long time.”