Boeing Wooed by Unions, Washington State in Race for '797' Work

(Bloomberg) -- Boeing Co. hasn’t decided whether to build a new midrange jet, but Washington state is already teaming with aerospace workers to try to keep any new work in the planemaker’s industrial heartland.

The Puget Sound region around Seattle holds an advantage as a “dense supercluster of advanced aerospace manufacturing and skilled aerospace workers,” according to a Teal Group study released Wednesday. The analysis was commissioned by a coalition of Washington government, labor and business leaders.

“The point is to be purely data driven -- and the results are extremely favorable to Washington,” said Richard Aboulafia, a Teal Group vice president who led the study. “Boeing has done this exercise too with the 787, 777X and 737 Max,” before opting to assemble its newest commercial jets in the Seattle area.

The report is likely to serve as an opening shot in the coming battle among states and cities to land Boeing’s next jetliner. The Chicago-based company is refining plans for a two-plane family of jets dubbed the 797, which would enter the market in the middle of the next decade.

$70 Billion Industry

Washington, home to Boeing’s traditional manufacturing base, already has a booming $70 billion aerospace industry and large concentrations of engineers and mechanics. Every $1 paid to workers generates $11 in revenue, translating into the fourth-lowest unit labor costs nationwide, according to the Teal Group study.

The report was released by Washington Governor Jay Inslee; Jon Holden, president of District 751 of the International Association of Machinists and Aerospace Workers; and the Choose Washington NMA Council, using the initials for the new midmarket airplane.

Boeing builds 787 Dreamliners in South Carolina as well as Washington. In recent years, the company chose the Seattle area to make the 737 Max, an upgraded version of its narrow-body workhorse, and its 777X wide-body jet.

The competition was particularly fierce for the 777X in 2014, with South Carolina, Alabama, Texas and Missouri among the states that sought to land the largest-ever twin-engine aircraft. Washington prevailed after lawmakers approved more than $8 billion in incentives for aerospace companies, while Boeing Machinists agreed to freeze their pensions.

Teams of Boeing workers have been honing plans for a two-plane family of jets that would seat between 220 and 270 passengers and fly about 5,000 nautical miles. But the planemaker’s board hasn’t yet given sales team approval to begin marketing the aircraft, the first step in launching Boeing’s first all-new jet since the 787 Dreamliner.

The business case isn’t a slam dunk. Among the complications for the new midmarket airplane: a disagreement between U.S. and Asian carriers over its cargo capacity, along with pressure on Boeing to lower manufacturing costs. Boeing expects to decide over the next year whether to move forward, Chief Executive Officer Dennis Muilenburg said last week.

To contact the reporter on this story: Julie Johnsson in Chicago at jjohnsson@bloomberg.net

To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Tony Robinson

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