(The Center Square) – After enjoying 16 years of tax breaks in Washington, Boeing is moving production of its two-aisle 787 jetliners to South Carolina.
The news comes after state lawmakers repealed those past tax breaks on the last day of this year’s legislative session this spring.
Gov. Jay Inslee signed Senate Bill 6690 into law to settle a trade dispute between the U.S. and the European Union. It was intended to prevent billions of dollars in retaliatory tariffs on Boeing planes and other Washington exports like wine and seafood.
The bill was introduced at the behest of Boeing executives who sought to eliminate the aerospace company’s business-and-occupation tax rate, which the World Trade Organization recognized as an illegal subsidy.
“Consolidating to a single 787 production location in South Carolina will make us more competitive and efficient, better positioning Boeing to weather these challenging times and win new business,” Boeing CEO Stan Deal said in a statement.
Washington State House Minority Leader Rep. J.T. Wilcox, R-Yelm, said in a Facebook post that the development could cost the state as many as 900 jobs based on his communications with Boeing.
Boeing boasted a statewide workforce of more than 70,000 people in April and has taken in about $100 million more a year since 2003 under past tax breaks.
Inslee described Boeing’s decision as “an insult” to Washington workers.
“I understand the serious market forces Boeing faces today,” Inslee said in a statement. “What I don't understand is why the company can't commit to restoring production here when the market for this plane improves.”
During a Thursday press conference, Inslee said the move came after regular discussions he held with Boeing executives, who gave zero suggestions of what the state could do to keep 787 production in Washington.
“If you hear voices blaming regulations, taxes, transportation, training, I can tell you that’s bunk. Because the Boeing company never suggested any improvements we could make,” Inslee said. “We can’t be in a position where the companies just dictate to us and we just say, ‘yes sir,’ and when they ask us to jump, we say ‘how high.’ We can’t do that. It’s just not fair to our state.”
While Inslee said the state intends to support Boeing in the long term, he added that the company’s decision may entice the state to review its partnership with the aerospace giant.
Lawmakers and union officials in Washington state said Boeing was wrong to abandon the skilled aerospace employees who worked on the 787 in the state.
Paul Shearon, president of the International Federation of Professional and Technical Engineers, called the move “bad news for organized labor.”
He argued that South Carolina workers will be “taken advantage of” under the new deal while Boeing drives wages and benefits down for Everett’s work force.
U.S. Rep. Rick Larsen, D-Everett, promised he would keep fighting to return 787 production to Washington.
Production of 787 jetliners first began in Everett, Washington, in 2007. Each plane was equipped with fuel-efficient, carbon composite fuselages built and shipped from North Charleston, South Carolina.
Boeing was forced to ground eight of its 787s after structural problems were found this summer in its fuselage panels at a South Carolina facility.
More 787 production has migrated eastward since 2011 with the opening of a 787 final assembly line in South Carolina that boasts one of the lowest percentages of union workers in the country.
A Bureau of Labor Statistics report said 2.7% of South Carolina workers were unionized in 2019 compared to Washington’s 19.8% that year.
Boeing announced it will keep assembling its 737, 747, 767 and 777 jets in Washington’s Puget Sound region.
Everett workers will be building the smaller 787-8 and 787-9 models until the company cuts its production of 787s to six per month in 2021, the company announced.