January 10, 2017 / 5:09 PM / 7 months ago

Boeing, lobby group team up to defend $8.7 billion in state tax breaks

The Boeing Company logo is projected on a wall at the "What's Next?" conference in Chicago, Illinois, U.S., October 4, 2016.Jim Young

SEATTLE (Reuters) - A dispute over $8.7 billion in Washington state tax breaks is heating up after Boeing Co (BA.N) joined a new lobbying group set up to preserve the industry incentives, the biggest in U.S. history.

The group, launched on Tuesday, opposes efforts to make the aerospace tax breaks, passed in 2013, dependent on Boeing maintaining minimum employment levels in the state.

Such "claw-back" bills had failed the past two years, but union leaders and a lawmaker said in interviews on Tuesday they planned to try again in the legislative session that started this week.

The new group, Aerospace Works for Washington, will be a "megaphone" to warn that jobs are at risk, said Maud Daudon, chief executive of the Seattle Metropolitan Chamber of Commerce, which is leading the effort.

"We are in a competition to keep them here," she said. "Any state in the country would die to get these jobs."

The group also may oppose European Union efforts to eliminate the incentives under World Trade Organization rules, and may try to extend them to Washington's growing space industry, Daudon said.

Chicago-based Boeing, the world's biggest commercial aircraft maker, has its largest factories in Washington, and is the state's largest private employer, with 72,000 workers.

As with previous proposals, "Boeing is opposed to any effort to alter the Washington aerospace tax incentives," the company said in a statement on Tuesday.

"Changing the parameters of the incentives now would simply increase the cost of building airplanes in this state, and unnecessarily put excellent, family-wage jobs in Washington at risk."

SEEKING JOB GUARANTEES

Aerospace Works for Washington has more than 30 members, including elected leaders, economic development organizations and chambers of commerce from state regions where aerospace manufacturers have factories. It includes trade groups of retailers, restaurants, hotels and other industries.

Alaska Airlines, owned by Alaska Air Group Inc (ALK.N), is also a member. No labor groups are involved.

Daudon said the broad membership signals growing opposition to changing the incentives.

Union leaders said their members still support the tax breaks "as long as Boeing doesn't ship jobs out of state," said Larry Brown, legislative director for the International Association of Machinists, District 751.

The 2013 tax cuts were designed to "maintain and grow" aerospace employment in the state and are available to any local aerospace manufacturer.

Since the law passed, Boeing has eliminated 11,414 jobs in Washington, about 15 percent of its state workforce, the company's employment data showed.

In the year through November 2016, the state lost 5,500 manufacturing jobs, largely in aerospace, according to state employment security department data.

Boeing said in December that job cuts and movements were necessary to respond to competition from European rival Airbus Group SE (AIR.PA) and years of constricted U.S. defense spending.

Boeing said it fulfilled its commitment in the 2013 law to locate the assembly line and wing factory for its new 777X jetliner in the state.

Reporting by Alwyn Scott; Editing by Matthew Lewis and Richard Chang

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