In a ribald display of corporate-welfare envy, Boeing and rival Airbus publicly hauled out each other's aerospace tax breaks last week at the biennial Farnborough, England, air show and bickered over whose was bigger. Airbus' billions in European subsidies were rapped as unfair by Alan Mulally, Boeing's commercial airplanes boss, who referred to Airbus as his "subsidized competitor." Airbus Chief Executive Noel Forgeard said the subsidies are in fact loans that must be repaid; meanwhile, Boeing gets billions in unreimbursed U.S. subsidies—especially Pentagon research funding—and billions more in assorted state aid. That includes the $3.2 billion tax "incentive" given to Boeing by Gov. Gary Locke and legislators last year in return for Boeing's agreement to assemble its new commercial 7E7 Dreamliner in Everett. As Forgeard told the Seattle Post-Intelligencer, Locke's tax break is almost equal to the European loans Airbus is getting to develop its new commercial jet, the A380 superjumbo.
The aerospace giants' whizzing match is destined to get more intense as Airbus awaits word from Defense Secretary Donald Rumsfeld on whether the U.S. will reopen bidding for the military aerial- refueling tanker project. Airbus says it would love to get a chance to openly compete against Boeing without the bid being rigged, as it originally was, and would build the planes in the U.S. Boeing thought it had clinched the Pentagon pact to supply 100 Everett-built 767s to the Air Force, but the deal blew up in an ethics scandal, leading to the criminal conviction of a Boeing executive who had steered the project to Boeing, and away from Airbus, while she was a Pentagon official (see "Plane Pain," April 21, 2004). The concussion also spun CEO Phil Condit permanently from his Boeing chair and weakened the company's efforts to fight off the Airbus military and commercial challenge.
All of which raises the question: If Airbus is covetous of Boeing's state welfare and would put a "Made in America" label on its version of the tanker, why not build them—or any other Airbus planes—in Washington state? It could mean lots of jobs and perhaps billions of dollars for the state economy. In return, Airbus gets the same sweetheart deal as Boeing. You see, it would have been illegal for a single corporation to be the beneficiary of the state tax break, so the law that Locke proposed and legislators approved last June generically allows any "aircraft manufacturer" to take advantage of the multibillion-dollar tax credits.
Surely, Gov. Locke and the economic development team that spent millions and worked overtime to land the 7E7, extolling the paybacks of helping the "industry" and expanding state employment, must be aggressively pursuing the prospect that Airbus could provide similar benefits by locating a production facility here. It would seem automatic that Locke's Department of Community, Trade, and Economic Development would recruit the world's largest commercial airplane maker, a title Airbus took from Boeing last year, to join Boeing in its home state and make Washington the undisputed capital of airline production. Such an effort could also offset the bad news, as The Seattle Times reported from Farnborough last week, that one of Boeing's 7E7 partners is likely to locate its 500-job assembly facility in another state, a setback to the governor's predicted 7E7 economic benefits.
Sorry, says Locke's office. Not interested.
"No," says Robin Pollard, director of Locke's economic development office, the state is not trying to woo Airbus. Period. Asked if this was being done in deference to the governor's allegiance to homegrown Boeing, Pollard said, simply, she "did not have anything to say in response." To some, that's a position as questionable as giving away those billions for the 7E7—an assembly-line (rather than manufacturing) project whose workforce will number less than 1,000. "I'm 'shocked' the state isn't actively wooing Airbus," says Jason Mercier of the Evergreen Freedom Foundation, feigning real surprise. The government-watchdog group in Olympia has battled Locke over the tax giveaway and thinks the governor's office sold out taxpayers. "Airbus has promised to build the plane in the U.S., as opposed to taking U.S. tax dollars to facilitate plans to send manufacturing jobs out of state and country—like Boeing," says Mercier. "Sounds like the state could market to Airbus the properties Boeing is selling so that Washington manufacturing jobs could be created in building [the] tankers."
Airbus, which is not saying where it would produce its tankers in the U.S., does about 40 percent of its business with U.S. companies, although not necessarily in the U.S. It has not inquired about locating in Washington, says the governor's office, but such an inquiry could be premature with Rumsfeld's tanker decision still pending. Still, some aerospace suppliers, including Boeing subcontractors, would like to see Airbus land in the Evergreen State and have been doing their own wooing. "We've had some preliminary talks with Airbus," says Tom Peterson, vice president of Farwest Aircraft, an electrical equipment supplier and toolmaker in Edgewood, near Puyallup, and a longtime Boeing supplier. "But it's difficult to get a licensing agreement with Airbus. We'd like to supply repair-station tooling to the airlines that use their planes, but most of them are European-based companies without outlets in the U.S. There's no question Airbus itself is trying to get a bigger presence in the U.S. We'd like to see that in the state, too."
Mercier, of the Olympia watchdog group, points out that Locke "said that an individual trained at the taxpayer-funded Boeing Employment Resource Center [another perk of the 7E7 deal] didn't have to work for Boeing after receiving training at that facility; they could actually go to work for Airbus." The claim perpetuated the charade that Locke's law wasn't intended to benefit only Boeing. But, as Mercier notes, "Just because the state pays for an individual's 7E7 training doesn't mean the individual can't then go and indeed work for Airbus, right?" The irony of that, however, comes with the same catch: If Airbus locates here, taxpayers will end up subsidizing another corporate welfare queen. The wonder is, can the state's economy endure another Boeing?