A 51-49 percent vote is a house divided, but Boeing workers did what it takes to keep production of the new 777X jetliner in the Puget Sound area by approving a new eight-year contract extension that included significant givebacks to keep the company from taking its production work elsewhere.
For San Antonio and 14 other cities and regions invited to submit bids for the Boeing 777X production work, the long shot opportunity to significantly grow the aerospace sector is now kaput. You can read more about this city’s bid in our Dec. 9 story, “All I Want for Christmas is the Boeing 777x.”
The $377 million, 400-passenger 777-9X – the largest of two available models – is the next-generation airliner that follows the 777 and 778 Dreamliner models. The Wall Street Journal recently reported that Boeing booked 295 orders valued at $95 billion at the Dubai Airshow in November, its largest product launch in company history.
San Antonio officials assembled their bid knowing the city was not a frontrunner in the event the work did leave Washington state, even though Boeing has a substantial presence at Port San Antonio, where the company’s Global Services & Support (GS&S) business unit operates one of the largest military aircraft maintenance, repair, and overhaul facilities in the world. Boeing is based at the Port’s Building 375, the largest free-standing hangar in the world. It can accommodate 15 wide-body aircraft at a time and can be expanded to accommodate 22 wide-body and 33 narrow-body positions.
When it established operations at Port San Antonio in 1998, Boeing did so to perform maintenance on military aircraft. It added commercial work in 2011, including the 787 Dreamliner and the company’s 747-8 Freighter. As military contracts dwindle, Port San Antonio officials consider commercial airliner work critical to its future vitality and growth, where more than 13,000 people now work in high-paying aerospace jobs.
Several months ago Mayor Julián Castro formed a special working group of civic, business and economic development leaders to explore new approaches to redeveloping the former Kelly Air Force Base. Port San Antonio currently finances its operations largely on rents and fees, a model that has proven inadequate to help tenants weather downturns in the aerospace economy. Current tenants are seeking and winning rent concessions, but Port managers will have to replace that income through other means to keep port operations viable. The task force reportedly submitted its recommendations to the Mayor last month, but the report has not been released to the public.
Even if San Antonio has now endured two failed bids to win major aerospace contracts, the work that goes into each bid could prove fruitful in the future. Boeing, to cite one example, has shown a growing willingness to move jobs out of Washington if it will make the company and its aircraft more competitive globally. In the end, Boeing’s invitation to 15 cities to submit bids spurred 22 states to submit offers for 54 different sites. Missouri’s governor even called a special session of the legislature to fashion a billion-dollar-plus incentives package. Inevitably, more manufacturers facing high union labor costs will test the waters in states that offer more competitive labor costs and are willing to offer attractive incentive packages that include tax abatements, free or low-cost land, and workforce development assistance.
This time, however, the 777X work is staying in Washington. The International Association of Machinists and Aerospace Workers opposed the company’s proposed terms, but about 23,900 of the 31,000 qualified Boeing union members cast votes and narrowly approved the deal by about 600 votes. You can read more about Friday’s vote in this Wall Street Journal article or in this New York Times article.