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States grovel before Boeing in bid for 777X jobs

Governor Jay Inslee of Washington is hoping tax breaks will keep the contract for Boeing’s 777X in his state.
Governor Jay Inslee of Washington is hoping tax breaks will keep the contract for Boeing’s 777X in his state. Elaine ThompsoN/ASSOCIATED PRESS

JEFFERSON CITY, Mo. — With Boeing the king of US aircraft manufacturing, more than a dozen states are groveling before the throne for a share of the riches to be made from the next-generation 777 jetliner.

From coast to coast, states are rushing to impress Boeing with lavish incentive packages that offer property, labor deals, and billions of dollars in tax breaks. All this in the hopes that the aerospace giant will select them to assemble the new 777X — or at least give them a wing to construct.

The competition underscores Boeing’s commanding bargaining position in an economy in which manufacturing jobs remain scarce and elected officials feel obligated to pursue every growth opportunity, no matter how improbable.

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The contest unfolded in a mere matter of weeks after a machinists’ union in Washington state rejected Boeing’s proposed contract for the 777X because it would have replaced their pension with a defined-contribution savings plan.

The Chicago-based company said it would look elsewhere and gave states until Tuesday to submit proposals. Winners will be announced early next year.

The Boeing buzz has been loudest in Missouri, where Governor Jay Nixon convened a special legislative session to approve an incentive package valued at up to $1.7 billion over more than two decades.

Governor Gary Herbert of Utah said Boeing leaders reached out to him, too. Utah officials are emphasizing that they have the youngest workforce in the nation, as well as right-to-work rules. Kansas, North and South Carolina, and Texas are banking on right-to-work laws of their own.

But labor regulations may not be as important as having a workforce already trained in commercial airplane production and a seaport for shipping huge airplane components, said Richard Aboulafia, an aerospace analyst at Teal Group in Fairfax, Va. He predicts Boeing will use the offers as leverage to get Seattle-area machinists to make concessions.

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Last month, Washington lawmakers approved nearly $9 billion in tax breaks for the 777X. Just a few days later, union members rejected the contract. But Governor Jay Inslee now wants to sweeten the offer by getting lawmakers to sign off on a tax increase for infrastructure improvements.