Las Vegas Sun

March 28, 2024

Boeing sleeps on states’ bids for Dreamliner

SUN STAFF AND WIRE REPORTS

Washington and rival states pitched their wares to Boeing Co. last week, with roughly two dozen submitting bids to host an assembly plant for the company's proposed new 7E7 jetliner.

Competing states sent their proposals to the aerospace company and its site-selection consultant Friday, dangling fortunes in tax breaks, the promise of favorable zoning and government decisions and skilled workers hungry for jobs that would pay about $65,000 a year.

Nevada did not submit a proposal on the project. Bob Shriver, executive director of the Nevada Commission on Economic Development, said Boeing required access to airport land that the state could not offer.

"When we first looked at it, we hoped Ivanpah airport would work, but (Boeing) is looking to begin construction in 2004," Shriver said.

Construction of the Ivanpah airport about 30 miles south of Las Vegas is not expected to begin for about 10 years. In its request for proposals, Boeing said it would need about 300 acres with airport access and its suppliers would need another 300 adjacent acres, Shriver said.

"If Ivanpah had been under construction, we would have had one heck of a proposal," he said.

Still, Shriver also said the tax incentives being offered by competing states -- such as $3.2 billion offered by the manufacturer's home state of Washington -- would be difficult to compete with.

"It's a league we don't play in," he said.

Boeing declined to say how many states submitted proposals by Friday's deadline, or reveal details about what they offered, but company officials said they were heartened by the enthusiastic response.

"Now the hard work for us begins," said Mike Bair, senior vice president of the 7E7 Dreamliner program.

A Boeing team, working with McCallum Sweeney Consulting, will evaluate the proposals against a set of criteria the company published in May, he said. A decision is expected by the end of the year.

The 7E7 Dreamliner, a mid-sized, fuel-efficient jet, would be Boeing's first all-new jet since the 777, which entered service in June 1995. It will be months before Boeing decides whether to go ahead with the project.

Boeing will build "in a location that gives it the best opportunity to be successful," Bair said. "We remain absolutely committed to ensuring a fair and rigorous process that results in the right decision for the 7E7 program."

The deal, a developer's dream in the current economy, is worth thousands of direct and spinoff jobs and billions in long-term aerospace payrolls.

Washington Gov. Gary Locke and state trade Director Martha Choe were optimistic that Boeing, which got its start in a simple red barn in Seattle in 1916, would decide to build its newest generation jet close to home.

Over orange juice and coffee with top Boeing brass in nearby Renton, Locke and Choe turned over a thick multimedia packet extolling Washington's virtues -- and the rich array of incentives rushed through the state legislature to sweeten the bid.

These include the $3.2 billion, 20-year tax incentive package that would slice Boeing's cost of doing business if it builds the Dreamliner in Washington. Lawmakers also approved lower rates for unemployment and workers' compensation coverage and jacked up the state gas tax by a nickel a gallon to pay for a $4.2 billion transportation plan Boeing strongly pushed.

Locke noted the state's long history with Boeing, the 60,000 engineers and aerospace mechanics already here, and state and local governments' desire to be helpful. But he said it comes down to a pure business decision for Boeing.

"We think we have submitted a tremendous, winning proposal -- a competitive proposal that clearly, if Boeing analyzes it, will demonstrate that it will be cheaper for them to build the 7E7 here than in any other state," Locke told reporters after a rally at Seattle's Boeing Field.

Washington's proposed sites, as identified by Boeing, are Everett, north of Seattle, where the company assembles its widebody jets, and Moses Lake in central Washington, where it owns property at a former Air Force base.

Choe said Alan Mulally and Bob Watt, top executives at Boeing's commercial airplane division, lauded Washington's recent full-court press to win the bid, but didn't indicate whether the state had an advantage over the competition.

"It's not over yet," she said. "We do expect to make the final cut, and we expect to spend the next several months talking with Boeing to make sure we are the right partner."

Choe said Texas, California, Alabama and Georgia are potentially the state's toughest rivals, but added that it's anyone's guess, since all proposals are confidential.

Other states touted their own merits -- from sunny weather and well-educated work forces to tax incentives and outright grants and tax forgiveness.

Michigan is offering about $300 million in incentives over 20 years, including local tax abatements, tax credits, infrastructure assistance and worker training grants.

"We have the skilled work force and manufacturing prowess to insure that Boeing is successful in Michigan," said Gov. Jennifer Granholm, who recorded the introduction for her state's video presentation of three possible sites.

Arkansas has financial incentives for businesses to locate so-called "superprojects" in the state. An initiative on the November ballot would allow the state to issue bonds to raise up to $166 million for land purchases and infrastructure.

Oklahoma is making a strong bid, but didn't release details on Friday. Tulsa may vote on cash incentives worth hundreds of millions of dollars.

Jim Spaccamonti, promoting Pueblo, Colo., said, "It would be more profitable for them here. We can do it better, cheaper and quicker."

Other states reported to have submitted bids included Arizona, Florida, Indiana, Illinois, Mississippi, Missouri, New Jersey, New Mexico, North Carolina, Ohio, South Carolina and Minnesota.

The state that wins the 7E7 plant could end up with other next-generation Boeing lines, Washington's Gov. Locke said. Although the 7E7 plant only involves about 1,200 direct assembly jobs, it means thousands of indirect jobs. If future Boeing models go to the winner, it could bring 150,000 direct and supplier jobs and as much as $540 million in tax revenue each year, he said.

"I think we are highly competitive," Locke said. "We're looking, bottom line, at persuading Boeing that it's cheapest to do business here."

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