Published May 2003

Region steps up campaign for Boeing 7E7

By Bryan Corliss
Herald Business Writer

Government, business and labor leaders from Puget Sound’s three largest counties said in April that they will work together to convince the Boeing Co. to build its new airliner in the region.

In addition, U.S. Sen. Maria Cantwell is preparing a bill that would provide federal money for a new aerospace research and training center that would deal with the materials Boeing plans to use on the new 7E7, her staff said.

“I’m absolutely gleeful about this,” said Snohomish County Executive Bob Drewel. “Everything that we can possibly do, will be done.”

The moves come as Boeing prepares a list of steps it wants taken by the state if the company is to build the plane at its Puget Sound facilities.

In the meantime, the public- and private-sector alliance calling itself the Regional Partnership will lobby legislators to push for legislation important to Boeing and other businesses, Drewel said.

The group has a four-part agenda that seeks to improve transportation, emphasize work-force training and higher education, enact policies to aid port and airport development, and develop “a comprehensive plan to keep Boeing building planes in Washington.”

The issues are similar to those being pushed by different groups already, said Deborah Knutson, president of the Snohomish County Economic Development Council. “The different part is that we’ll all be saying it together,” she said.

It is unusual for business and labor to lobby side-by-side, added Mike Sells, secretary of the Snohomish County Labor Council. But in this case, “The goals are very similar to what we’ve been trying to work on ourselves,” he said. “They needed to be done yesterday, quite frankly.”

Boeing in recent weeks has set the stage for a competition for sites that could manufacture the 7E7, the superefficient new airliner program it plans to launch next year.

Boeing has approached the Kansas Legislature in its search for incentives. Boeing suppliers in Europe and Asia also are interested in assembling significant parts of the plane, company officials have said, and they haven’t ruled out building the 7E7 overseas.

“There will be extreme competition for the 7E7,” Knutson said.

Drewel added, “The only way we’re going to be able to compete on anything like an equal basis to build the 7E7 is if we’re going to compete as a region.”

The Kansas Legislature is considering a $500 million bond issue that would provide Boeing with cash for new tooling and for research and development connected to the new airplane.

That’s not allowed in Washington. The state constitution bans direct aid to companies, so “ours is not going to look like that,” Knutson said.

Instead, the partnership is looking for existing state programs that could be modified or expanded to help Boeing and other aerospace companies, she said. An example would be the materials science program at Edmonds Community College, which teaches students about the types of composites that Boeing plans to use in the new plane.

The partnership will lobby the Legislature to increase funding for those programs in this session, and to “help set the agenda for next year’s legislative session as well,” Knutson said.

Composite materials also figure into Cantwell’s proposed new program.

In April, the senator announced that she will sponsor legislation to create the nation’s fifth “center of excellence” in aerospace research. The $500,000 federal grant would go to a University of Washington-led academic partnership that would lead research into the composite materials and aluminum alloys that Boeing will use in its next passenger airplane — and that other manufacturers will use in everything from tractor-trailer rigs to kayaks.

“We should build on our region’s most important asset: our skilled work force,” Cantwell said. “I want the Northwest to be a leader in these markets.”

The new center would work in conjunction with a materials science program at Edmonds Community College, said Jerrilee Mosier, the vice president of work-force development and training.

Boeing’s recent pronouncements on 7E7 site selection have “raised the sense of urgency, which isn’t bad at all,” Knutson said.

The message now is “get off your duff and do something,” she said. “If we don’t do something, we’ll be in a world of hurt.”

Also
n The Port of Everett is studying whether to build a $10 million, 600-foot pier to handle shipments of airplane parts bound for the Boeing Co.

The pier could be “a critical piece of infrastructure for the Boeing Everett plant” Port Executive Director John Mohr said in April.

And while the proposal is not directly tied to Boeing’s new 7E7 airplane program, it could “basically make Everett more than ever the place to beat” as Boeing assesses sites for assembling the new plane, he added.

Boeing has not decided whether it wants the port to proceed with the project, said company spokeswoman Vicki Ray. But if it does, construction could begin as early as next year, she said.

A new pier would allow Boeing to move by rail components far larger than the ones that come through the Everett port now, while also reducing backups on the main rail line through the city.

n Boeing reported a $478 million loss for the first quarter in April, with earnings pulled down by accounting charges and the continuing decline in its commercial jet business. However, the loss was less than the $1.2 billion Boeing lost in the same quarter of 2002, and the adjusted operating earnings of 42 cents a share beat analysts’ projections by 11 cents.

Boeing’s Commercial Airplane division lost $112 million during the quarter, but if its share of the accounting charges were set aside, it would have had a $341 million profit, the company said. That compares with a $639 million profit in the first quarter of 2002 after charges were set aside.

n Boeing recently announced that it delivered 71 aircraft during the first quarter, down about 35 percent from the same period in 2002. Boeing delivered 22 aircraft from its Everett factory during the first three months of this year, down almost 40 percent from the 36 it delivered during the same period in 2002.

Deliveries of 777s fell the most, dropping from 16 last year to seven. Boeing delivered nine 767s, down from 12 last year. It delivered six 747s, down from eight last year.

n All Nippon Airways said in April that it plans to buy 45 737 passenger jets from Boeing. At list prices, the deal will be worth about $2.1 billion. However, it’s almost certain that Boeing will grant the airline a discount.

Boeing and All Nippon still must negotiate terms of the deal, including the specific types of 737s that the airline will order, said Boeing spokeswoman May Kulthol. There will be a mix, but most will be 737-700s, which typically carry 125 to 150 passengers and have a range of about 3,800 miles.

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