Can California land Boeing again?

Can California land Boeing again?

777Xgallery_banner_650Boeing, the world’s largest aerospace company, announced last week it would be restructuring its primary research and development unit. The company will be opening new research centers in Alabama, Southern California, Missouri, South Carolina and Washington state.

“We are reorganizing and realigning our research-and-technology operations to better meet the needs of our Commercial Airplanes and Defense, Space & Security business units, as well as our government R&D customers,” Greg Hyslop, general manager of Boeing Research & Technology, said in a press release. “With these changes, we are enhancing our ability to provide effective, efficient and innovative technology solutions.”

This will also be a relatively permanent change. According to the press release, “The new research centers will consolidate technology development of strategic importance to Boeing over the long-term — up to 30 years into the future.”

While it may appear to be good news that California will have a new research and development site for decades to come, the true impact of the restructuring is less heartening.

Missouri, Alabama and South Carolina are expected to gain between 300 and 400 jobs from the realignment. Washington state will lose between 800 and 1,200, and California will see somewhere between 200 and 300 research and development jobs leave. This follows news from September that Boeing planned to shutter a manufacturing plant in Long Beach and lay off some 2,000 workers.

The trend is clear: Boeing is moving jobs away from the old epicenters of manufacturing and design in Washington and California. Now, more and more jobs are moving toward states throughout the South. The closure of the manufacturing plant, and the more recent loss of hundreds of white collar jobs, display California’s vulnerabilities with retaining talent in both high- and low-paying fields.

Positive sign

However, in a positive sign for Californians who would like to see more manufacturing jobs brought back to the state, Gov. Jerry Brown and local politicians in Long Beach are currently lobbying Boeing to build a manufacturing plant for its 777x jetliner in Southern California. Bringing the new manufacturing plant to Southern California would be huge for the local economy. Boeing will need to create more than 4 million square feet of manufacturing space, and thousands of workers will be needed.

However, it is unclear whether or not California will end up being chosen as the site (or if the Golden State even has a chance). California hasn’t disclosed what it is offering Boeing, but at least two states have disclosed their incentives.

Washington state originally offered a $9 billion tax incentive package to Boeing, but a machinist union shot down the proposal and Boeing moved on to evaluate other offers. The Missouri state legislature offered its own $1.7 billion tax incentive package.

Given California’s pro-union climate and its less-than-friendly business climate, it’s unlikely that the state could win the contract when competing against the likes of Missouri, Alabama, Utah, Texas and other states with laws not as friendly to labor unions.

However, California’s major advantage is its workforce. People have been making airplanes for decades in Southern California, and the institutional knowledge is considered valuable. Whether or not California can lean on some of its natural advantages, in the face of impediments to business development, remains to be seen. But if it succeeds, it could be a turning point for a state that has shed thousands of manufacturing jobs in recent years.

7 comments

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  1. Billybs
    Billybs 17 December, 2013, 17:29

    Hard to believe that Cal’s role in the negotiations isn’t to drive the “cost of landing” up among the states that Boeing has on the preferred lists. Cal asks them to hire 20 percent illegals, and pay for them to move their entire extended families here.

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  2. MadMax3
    MadMax3 18 December, 2013, 07:53

    Ha! I don’t see SoCal as a viable choice. Between the AQMD, the City of Long Beach, airport noise restrictions, UAW local 148, tax rates, and the elderly age of all these “tenured” experts, there’s not a chance.

    The only reason most of the fab work was done here was because the older local machine shops were “grandfathered” exempt from ordinances. Since the industry folded and left, all these grandfathered shops have shut down, never to return.

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  3. MadMax3
    MadMax3 18 December, 2013, 08:04

    To see how this will play out, examine how the City and constituency welcomed BNSF – when they announced the intermodal yard. This project solves infinitely more problems that it created – yet the city and people declared total war.

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  4. Rex the Wonderdog!
    Rex the Wonderdog! 19 December, 2013, 14:51

    Well Boeing moved their corporate HQ’s from WA to Chicago a few years back, to get tax breaks, and Chicago is going to be filing BK in the next year or two- I bet Boeing are regretting that (tax saving??Not!) move right now…..

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  5. Hondo
    Hondo 20 December, 2013, 09:53

    Kalifornia will land Boeing when the earth explodes into outer space.
    Hondo……

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  6. eck
    eck 20 December, 2013, 19:31

    Hopefully, those in charge at Boeing will have enough business sense to steer clear of any additional presence in CA. If not, I may dump my Boeing stock.

    Reply this comment
  7. Frankhs
    Frankhs 25 December, 2013, 21:23

    No, Boeing left and will not even consider California.

    Same reasons as before but multiplied many times

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