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Tue December 17, 2013
Wash. State Courts Airbus Amid Boeing Tension
Even as they try desperately to hang on to Boeing Co., officials in Washington state have been courting the main competitor of the aerospace giant.
During the past several months, state officials have traveled to the U.S. headquarters of Airbus SAS in Virginia, moved to connect Airbus with Washington state suppliers, and signed a five-year confidentiality agreement with the company to allow further exploration of business opportunities, according to records obtained by The Associated Press under public disclosure laws.
In a confidential memo provided to Gov. Jay Inslee in July, state officials described dozens of potential ways to expand or recruit aerospace businesses in the state. At the top of the memo was Airbus, described as just one of a few major opportunities.
One expert said for years it was generally frowned upon for Washington state officials to jeopardize the relationship with Boeing by seeking ties with Airbus. However, the steps outlined in the memo came amid tension created when Boeing moved its headquarters from Seattle to Chicago and started an assembly line in South Carolina to build its 787 passenger plane.
Now, as it looks for a cheaper place to build its 777X passenger plane, Boeing has been exploring bids from 22 states that could send thousands of good-paying jobs elsewhere. Hoping to convince Boeing to stay in Washington, state lawmakers gathered in a special session and approved an estimated $9 billion in tax breaks.
Alex Pietsch, top aerospace adviser to the governor, said the talks with Airbus are not an attempt to replace Boeing. But a new relationship with another industry player would help diversify the state's aerospace economy and provide new opportunities for suppliers that are largely dependent on Boeing, he said.
"Just because we have had a near 100-year history with the Boeing Co. doesn't mean we can't work with others," Pietsch said.
Boeing's history in the Pacific Northwest dates back more than a century, when William Boeing purchased a Seattle shipyard that would become his first airplane factory. Since then, Boeing has been a cornerstone of the region's economy. Its shifting personnel influences traffic patterns and its green aircraft fuselages can be seen traveling by train along the Seattle waterfront.
State figures show the aerospace industry employs some 130,000 people at 1,250 companies around Washington, with suppliers making components such as aircraft lavatories, flight-deck security doors and molds to shape aircraft fuselages. The state estimates 777X production would support more than 56,000 jobs.
David Williams, vice president of procurement for Airbus Americas, said there are no near-term plans for Airbus to set up shop in Washington. However, he pointed out that Washington is already the company's No. 2 state for procurement, with around $200 million in purchases a year.
He expects that amount to grow as Airbus increases its U.S. spending and makes more connections with Washington state businesses.
This past summer, the state worked with the Pacific Northwest Aerospace Alliance to bring together aerospace suppliers and Airbus to talk about how they can expand partnerships. More than 110 suppliers attended the event — nearly triple what the alliance had anticipated.
Monica Tate, aerospace business development manager at the Washington state Department of Commerce, said a variety of suppliers already have relationships with Airbus but generally do the work on an as-needed basis.
"We were ready to take it to the next level," said Tate, who traveled to Airbus Americas headquarters in May. Pietsch also has visited the company's offices in Virginia.
Tate said it would be ideal for Airbus to establish a physical presence in Washington state, but she hopes there will be exponential growth in Airbus-related business in the state regardless.
Scott Hamilton, an aviation analyst based in Issaquah, said the past attitude discouraging dealings with Airbus was due to neglect and complacency on the part of political leaders who were satisfied with Boeing's presence.
That has changed. As Boeing began developing the 787 line in South Carolina, Hamilton said state leaders needed to diversify Washington's aerospace industry. The meeting this summer between Airbus and suppliers was a positive sign, he said, and there are indications that Boeing is fine with the relationship since it would maintain a robust base of suppliers.
Hamilton also said it would make sense for Airbus to scoop up some of the engineering talent that Boeing has laid off in the region and develop an engineering presence in the state.
Williams, the Airbus Americas vice president, said it's clear the state has a huge depth of expertise to supply the airline industry.
Airbus expects a certain level of "home team" allegiance between Washington state and Boeing, Williams said, but there's a realization on all sides that the airline industry is now global with two major players — Boeing and Airbus.
"To shut the door to either one of those, you're reducing your opportunities by half," Williams said.
Documents obtained by The Associated Press show that state officials have moved to connect Airbus with Washington suppliers and signed a five-year confidentiality agreement to allow further exploration of business opportunities with the company.
One expert said for years it was generally frowned upon for Washington state officials to jeopardize the relationship with Boeing by seeking ties with Airbus.
However, the recent steps by Washington state came amid tension created when Boeing moved its headquarters from Seattle to Chicago and started an assembly line in South Carolina to build its 787 passenger plane.
Airbus says it has no plans to establish a physical presence in the state but does plan on increasing ties with state suppliers.