Boeing’s Confidential Site Location Wish List

From the Seattle Times:

Boeing says factories for its planned 777X will require total investment of up to $10 billion, but states competing for the work are asked to shrink that tab by providing the site and facilities at “no cost, or very low cost.”

In confidential documents sent to the 15 states vying for the project, Boeing estimates it will produce 8,500 direct jobs. […]

Must-have requirements for any site that hopes to win the work:

  • An airport with a 9,000-foot runway capable of handling both the 777X and 747-400 jumbo freighters that could deliver parts.
  • Easy highway and road access to the site for delivering parts.
  • Direct access to the site by rail, including a dedicated rail spur right into the site. This is described as “a critical requirement to support delivery and shipping of parts.”

In addition to these three essentials, the documents list one other “desired” infrastructure feature: a seaport that can handle regular and oversized containers. […]

Boeing estimates its investment will include up to $6 billion in property improvements and up to $4 billion in machinery and equipment. However, Boeing wants the states vying for the work to pay a portion of that.

The “company preference is toward a location that will share in the cost of capital expenditures including acquiring site, constructing facility, building infrastructure and procuring equipment/tooling,” the documents state.

Among the “desired incentives” sought by Boeing, the biggest items are these:

  • “Site at no cost, or very low cost, to project.”
  • “Facilities at no cost, or significantly reduced cost.”
  • “Infrastructure improvements provided by the location.”

Additional incentives it lists include:

  • Assistance in recruiting, evaluating and training employees.
  • A low tax structure, with “corporate income tax, franchise tax, property tax, sales/use tax, business license/gross receipts tax, and excise taxes to be significantly reduced.”
  • “Accelerated permitting for site development, facility construction, and environmental permitting.”

Other factors that will be “significant” when Boeing makes its choice early next year include:

  • Low overall cost of doing business, “including local wages, utility rates, logistics costs, real estate occupancy costs, construction costs, applicable tax structure obligations.”
  • The quality, cost and productivity of the available workforce.
  • Predictability of utilities pricing and government regulation.

Washington is among the states that will submit responses to Boeing’s request.

Among the sites known to be under consideration are Everett; Long Beach, Calif.; Salt Lake City; and Huntsville, Ala.

Also likely on Boeing’s list are North Charleston, S.C.; San Antonio, Texas; and St. Louis.

Last month, Gov. Jay Inslee called a special legislative session in which lawmakers hurriedly approved $8.7 billion in tax breaks over 16 years to woo the 777X.

But after the Machinists union on Nov. 13 rejected a Boeing proposal that would have frozen pensions and dramatically slowed wage growth for new hires, management threw the competition open to other states.

In Missouri, Gov. Jay Nixon also convened a special legislative session to approve an incentive package valued at up to $1.7 billion over more than two decades. That plan is expected to win final approval Friday.

Other states are keeping the details of their offers out of the public spotlight — and away from the inquisitive eyes of their rivals — by crafting them through administrative agencies shielded by nondisclosure laws.

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About ozidar

I'm an Assistant Professor of Economics at the University of Chicago Booth School of Business and a Faculty Research Fellow at National Bureau of Economic Research. You can follow me on twitter @omzidar. http://faculty.chicagobooth.edu/owen.zidar/index.html
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