Big win for the Carolinas - big loss for Seattle

[FranH]

Decades ago General Electric commenced scattering small operations throughout the Northeast. As a possible 'divide and conquer', my feelings basically were if having smaller operations scattered, labor unrest could be held to a minimum. We, in Vermont, had no real contact with the Lynn Massachuetts operation, or, with the Evendale Ohio operations. Yet 100% of our output went to those two facilities. If cost issues become excessive, the operation can be easily set up elsewhere.

Also on a larger thought (and probably more important) is the political scene. The scattering of operations meant that anything detrimental, the company could easily have political access to those in Washington DC. A couple dozen senators from a dozen states having local operations, the company collectively have a stronger voice to assist keeping/expanding that which is good for the company. People tend to vote their pocketbook and the politician that keeps jobs locally also keeps his job.

Right now while I'm listening to Seattle Radio, there was a hydrogen blast on Mars, and there is a 30 yard diameter cylinder landing in New Jersey....It has cooled off and a door has opened up....

tune in to King radio 98.1 fm... they keep inturrupyting the program...

[bryan_machine]

Labor (more to the point labor unrest) is surely a big issue, and the one the local media was dwelled on.

But there may be other fine issues. Political base is one and was well explained above.

Playing the states off is an obvious game. Maybe SC *had* to win this one, so at the next round, everybody in WA from Unions to L&I to taxing authorities will behave better? Likewise, next time around, the "well you know, we have a lot of stuff in WA" argument will be used to make SC behave.

But what about infrastructure and transportation? Seattle is choking in traffic, and when this recession ends, it will be worse. What's the traffic burden like for North Charleston?

Further, some parts of the plane are already being made there, apparently for all planes. Why ship these large pieces across the country? Especially into Seattle where the roads and even the railroads are clogged....

They certainly got everybody's attention, for the 2nd time now (the first being when they steadfastly insisted on moving headquarters out of Seattle...)

[bryan_machine]

Hmmmm... I tend to view the world as the areas around airports to which I can get a direct flight, and to be fair, to which I can remember there is a direct flight. By which I mean a direct flight from SeaTac at a practical time of time. Connections don't count. Direct flights from somewhere else don't count. If I don't happen to remember it, it may not count.

So to me, all of Georgia, NC, SC, etc. are all "Atlanta". The entire northern 1/2 of Florida is "Orlando". All of Illinois, Wisconsin, and Iowa are "O'Hare". All of WA and OR are "SeaTac" (because flying into Portland is pointless, might as well drive...)

All of Maine, NH, Vermont and of course all of MA are "Boston".

[thruthefence]

And we thought democrats were AGAINST deregulation!

Thanks, Jimmy!!

http://en.wikipedia.org/wiki/Airline_Deregulation_Act

[doug6949]

Originally Posted by motion guru

reading Milacron's post made me think of this cartoon . . .

Only a WA state resident would so quickly relate a situation to a Gary Larson cartoon.

[thruthefence]

I sure miss Gary Larson!

[Ox]

Hmmmm Sounds like Bryan flys more in a month than I have in my life.

I think I have been on a commercial air flight 5 times. 2 rounds and 1 one way.

Then there was a cpl of copter rides. One at a shindig and another a rescue mission. (Even after 3 days in the bush we still jist needed a 5 gal can of gas! )

I'll drive thank you very much.


------------

Think Snow Eh!
Ox

[bryan_machine]

ox - by business traveler standards I don't fly very much - there are people who commute (daily or weekly) by airplane.

I have probably averaged about 20 or 25 flights a year for the last decade. In the mid '90s it was more like 40.

And yes, after a while, flying to some real airport and then driving starts to make a great deal more sense than connections. Particularly in places like Ohio...

[Ries]

Different strokes-
I, too, probably do 20 or so one way flights a year.
My older son was on 40 airplane rides by the time he was 2.
No big deal- I just like to go places, for fun, and I have to go places, for money.

On the other hand, I think I have been a sledmobile once in my life, for about a minute...

My footsies get cold- I prefer taking a nice airplane, with a blanket, to a warm place.

[exkenna]

Any y'all northa Nashville are yankees anyway.

I made up my mind while droppin the kids in the pool this mornin.

[Unka' George]

Re: Big win for the Carolinas - big loss for Seattle

While this might be true in the short run and in one sense, more information is required. For example how much tax abatement was given and how much government [guaranteed] investment for plant, facilities, infrastructure, training, etc. is involved.

Another consideration is what types of contractual guarantees did Boeing make, and if Boeing goes belly-up can the state still collect?

American corporations have a long history of making promises they never intend to keep, and even more make promises they can’t keep. There is a reason “of course I’ll respect you in the morning” is a punch line to so many jokes…

[Ries]

Promises? from Boeing?
You gotta be kidding.

Washington State has given Boeing over $3 Billion (yes, with a B) worth of tax breaks, freebies, and outright gifts in the last ten years or so, besides changing all kinds of laws specifically for Boeing.

Which seemed worth it, as long as they kept jobs here- But they have, as I said above, shed 100,000 jobs in the Puget Sound area from their high in the late 60's.

South Carolina is paying $170 million for the privilege of hosting this plant- but some of the numbers are open ended- tax breaks that are ongoing.

I would say the SC state is getting a bargain. The latest discussions about keeping the 747 line in Everett, about a year ago, indicated that Boeing was looking for another BILLION from the state of Washington to keep it here.
Boeing drives some hard bargains.

[bryan_machine]

All true, but do keep in mind that some of those job loses didn't move, they were replaced by automation. I have a friend who was an engineer there, and he sites the examples of automatic wing riveting machines. Replaced a lot of people, from jobs that were not all that pleasent, but the net effect was a reduction in employment.

Some jobs too may have been "spun out" - meaning they are still in WA, but in suppliers to Boeing rather than in Boeing - would have to somehow count total aerospace employment to measure that.

Obviously, other jobs went to places where boeing felt they could get a better labor deal, no question about that.

[Ries]

You are right- a lot of jobs were lost due to more efficient work processes, designs, and automation.

I am just saying that paying Boeing does not guarantee jobs.
South Carolina, in this case, is probably getting pretty good bang for their buck- In one article I read, it said the BMW plant would cost more, in today's dollars, in terms of state giveaways, and in return, BMW has invested over $6 Billion in plants there, and employs 5000 workers.
I would bet the initial tax giveaways to BMW were long since paid off by other taxes BMW generated, and the net gain for SC is huge.

theoretically the $170 million they invest in Boeing should result in a minimum of $750 Million spent by Boeing on facilities, and approx 3800 jobs in the mid-term. Thats according to Boeing predictions.

If Boeing offered Washington a deal like that, we would be fools not to take it. But they tend to ask for more, up here.
Here is an article from 2007, detailing the returns on the last round of tax breaks.
The $3 billion figure mentioned does not include the freeways, the infrastructure, and the other legal changes Boeing has gotten in the last decade.
http://seattletimes.nwsource.com/htm...787jobs17.html

[motion guru]

Ries - you are spot on with the tax incentives and broken promises . . . but this should be kept in perspective - my hunch is that all of this silly tax stuff is diddly squat compared to the losses sustained by the company from a 90 day walk out from a strike. I believe this is the single biggest factor that has driven this decision. Losses associated with each day of a strike are staggering especially when delivery delay penalties kick in.

Any benefit that Boeing / South Carolina worked out between themselves related to taxes was just icing on the cake.