Pa. plans to court Boeing for new factory


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Pennsylvania plans to join a high-stakes competition for the chance to assemble the Boeing Co.'s new 777X jet, a competition that likely will require the players to pony up tax breaks and other economic incentives in hopes of winning.

The commonwealth intends to submit a proposal to Boeing by the deadline today in a bid to land the jetliner's production and lure thousands of well-paying jobs from Everett, Wash.

"Any time there's an opportunity to attract jobs and investment to the commonwealth, we're certainly going to do that," said Steven Kratz, spokesman for the state Department of Community and Economic Development.

But Pennsylvania hardly is alone. The competition for the assembly plant -- and the 8,500 jobs it could create at its peak -- is likely to be fierce. As many as 12 to 15 states received invitations from the Chicago-based jet manufacturer to bid for the plant, with the goal to start production of the 777X in 2017.

"We are very excited about looking over these proposals once we get them in," said Doug Alder, a Boeing spokesman.

Boeing solicited the proposals last month after union machinists rejected an eight-year contract extension that would have kept the work in Everett, where production of the 777 model takes place. In the pact, Boeing sought to replace the machinists' traditional pension with a defined-contribution savings plan.

Some states haven't been shy about making offers. Missouri lawmakers have approved a tax credit package valued at up to $1.7 billion over more than two decades. Washington state lawmakers offered $8.7 billion in tax breaks. States like Alabama and Utah are touting their "right-to-work" laws, which prohibit "closed shops" where workers are required to join a union or pay the equivalent of union dues as a condition of employment.

At the same time, Boeing hasn't been bashful about asking for incentives. According to the St. Louis Post-Dispatch, which obtained a copy of the request for proposals, the company is asking for a site at no or very low cost, facilities at no or significantly reduced cost, infrastructure improvements provided by the location and full support in worker training.

It also is seeking a "significantly reduced" applicable tax structure, including corporate income tax, franchise tax, property tax, sales/use tax, business license/gross receipts tax and excise tax.

The ideal site, according to Boeing, would be immediately adjacent to a major international airport with a 9,000-foot runway. The company also is seeking enough land to build a 4.2 million-square-foot plant, easy access to a major highway and a direct rail line to the site.

"It's a fishing expedition using a harpoon," Richard Aboulafia, an aerospace analyst for the Teal Group in Fairfax, Va., said of the Boeing demands. "It's an astonishing request for people to build a facility for them. Some might even term that hubristic."

What will be in Pennsylvania's final proposal has "yet to be determined," Mr. Kratz said.

"Obviously, it's a comprehensive request that requires a comprehensive proposal," he said.

Mr. Kratz said Boeing already has a presence in the state. It builds military helicopters in Ridley Park in Delaware County and has a subsidiary in Smithfield, Fayette County.

Pennsylvania is no stranger to competition over big plants. It beat out West Virginia and Ohio last year for the Shell Oil Co. ethane cracker plant, to be built in Beaver County, in part by offering a tax credit worth up to $66 million annually over 25 years.

While Mr. Kratz would not detail the Pennsylvania sites that the governor's action team has under consideration for the Boeing plant, Pittsburgh International Airport likely figures prominently among them.

The airport has thousands of acres of land at its disposal as well as an 11,500-foot runway. There's also easy access to Interstate 376 and Interstate 79 and a trained workforce dating to the airport's days as a US Airways hub, Allegheny County Executive Rich Fitzgerald said.

"I think we have a very strong case to make why it would make sense for them to be here," he said.

Mr. Fitzgerald said the county has been working with the state in putting together a package.

"Without getting into details, we're going to be as cooperative as we need to be to get those kind of jobs into Western Pennsylvania," he said, adding that he believes the state will provide a "very competitive and lucrative package."

But Mr. Aboulafia believes all the work being done by the states bidding for Boeing may be for naught.

He suspects that the company will end up staying in Everett, where the current workforce is trained to build the jet and where the logistics and facilities "are better than anywhere else in the world."

"Eventually calmer heads will prevail," he said.

About the only other state that may have a chance, Mr. Aboulafia said, is South Carolina, where Boeing already builds its 787 Dreamliner. It also is a right-to-work state and has the ocean port that is part of Boeing's wish list.

"If I were them, I would be making every effort," he said.

As for Pennsylvania? "Forget it," Mr. Aboulafia said, noting two strikes against it are the lack of an ocean port and the fact it is considered a union state.

"I'm not sure what the advantage would be and I can think of many negatives," he said.


Mark Belko: mbelko@post-gazette.com or 412-263-1262.

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