Washington state takes steps to nail down Boeing 777X contract

Thu Nov 7, 2013 7:42pm EST
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By Jonathan Kaminsky and Alwyn Scott

OLYMPIA, Wash./ NEW YORK (Reuters) - The Washington state legislature met on Thursday in a special session to consider tax breaks aimed at ensuring Boeing Co (BA.N: Quote) builds its newest jet, the 777X, in the Seattle area.

Washington Governor Jay Inslee, a Democrat, called the session to seek roughly $8 billion in tax incentives along with a streamlined permitting process for Boeing and $10 billion in funding for transportation improvements.

But to win the coveted work for Washington, Boeing's machinists must ratify a long-term labor contract with concessions on pensions and healthcare.

The 777X program would secure thousands of jobs in the state, keep it at the forefront of aircraft technology and trigger construction of 1.5 million square feet (139,355 square meters) of new facilities in the Puget Sound area. It is viewed as crucial to the Seattle area, which is competing with nonunionized workers in southern U.S. states where wages are lower.

"Assembly of that airplane will be the lynchpin of economic growth for the state of Washington for decades to come," Inslee said, speaking before the Washington state House Finance Committee on Thursday.

It remained unclear exactly how much Boeing's decision about where to build the jet really hinges on the labor deal and the state incentives.

A union "letter of understanding" distributed to members says Boeing "agrees to locate" 777X production in Washington if workers approve a new, eight-year labor contract.

The document makes no mention of the deal depending on legislative action, raising the question of whether the airplane maker could be locked into production of its newest jet in Washington state with no new tax incentives or other inducements.   Continued...

An Airbus A380 plane takes off during a demonstration flight at the MAKS International Aviation and Space Salon in Zhukovsky, outside Moscow August 31, 2013. REUTERS/Maxim Shemetov