Hurdles remain in Williams Gateway's bid for Boeing plant - East Valley Tribune: News

Hurdles remain in Williams Gateway's bid for Boeing plant

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Posted: Saturday, May 17, 2003 11:45 pm | Updated: 1:44 pm, Thu Oct 6, 2011.

In more ways than one, the fuel-efficient 7E7 jetliner promises a new generation of economy.

To Boeing, the midsize commercial jet would be less expensive to build, require up to 20 percent less fuel than other jets and use standardized parts to make it cheaper and easier to maintain.

For Williams Gateway Airport, hosting the 7E7's final assembly plant would mean adding jobs in Mesa, positioning the airport as an aerospace manufacturing center and strengthening East Valley ties with the world's largest maker of commercial jets.

However, local and state officials have a long and turbulent ride ahead before landing a Boeing plant at the former U.S. Air Force base. Officials at the Chicago-based Boeing already have stated a preference for putting the 7E7 final assembly plant in Washington state, but some analysts say they are simply paying lip service to the company's unionized commercial aerospace hub and would rather assemble the jet in a right-to-work state such as Arizona.

The bad news is, there are more than two competitors in the race. Analysts have speculated that locations in Kansas, Texas and California also may be considered for the Boeing facility.

The good news is, there isn't just one prize in the box. Sites that do not win the bid for final assembly still could procure a lucrative plant to manufacture 7E7 parts. Kansas, for instance, is seen as a contender for subassembly rather than final assembly.

Whatever the outcome, officials from Williams Gateway, Mesa, the East Valley Partnership, Arizona Department of Commerce and the Greater Phoenix Economic Council say they are determined to make a strong play for the plane.

Boeing announced Friday that it will accept bids from locations within the United States to assemble the midsize passenger jet. It also issued a list of criteria company executives will be looking at when considering bids.

The list includes 27 specific site selection criteria, including tax incentives, construction costs, the likelihood of natural disasters, support of community and government leaders, and the proximity of port and rail operations. Other factors are site preparation and support services, environmental regulations and permits, and cargo and freight costs.

Boeing officials have predicted that their strict requirements would weed out some 7E7 contenders, but Mesa Mayor Keno Hawker and Arizona Department of Commerce deputy director Joe Yuhas said they saw nothing on the list that couldn't be accommodated if Arizona commits to the project.

Some factors jump out immediately as major advantages for Williams Gateway. Proximity to railways and interstate highways, support services such as fire and police, local flying weather, low likelihood of natural disasters, available land to expand or modify facilities, and quality of life are just some of the criteria that would seem to bode well for Arizona's chances.

In addition, access to the necessary supply chain and labor pool will be key factors in Boeing's decision, Yuhas said. He said the close proximity of Tucson's tool and die industry, and a trained work force coming from Prescott's Embry-Riddle Aeronautical University also put Williams Gateway at an advantage.

Other requirements, such as access to a deep-sea port, would appear to rule out Williams Gateway entirely. However, local economic development officials have proposed using a Union Pacific Railroad line that connects the airport to a port in Guaymas, Mesa's Mexican sister city about 400 miles to the south.

The port criterion, announced Friday, did not come as a surprise, said some officials close to Williams Gateway's bid effort, adding that they already had been apprised of the likely site selection requirements by engineering consulting firm Lockwood Greene, which has worked with Boeing in the past and is familiar with its typical needs.

Gilbert Mayor Steve Berman said it is the bottom line, not one specific criterion, that leads to the final decision on projects such as this.

"Los Angeles certainly has access to a port," Berman said, "but in terms of cost of labor, cost of unions, cost of construction, property and taxes, we beat the hell out of them."

Quality of life also is a key factor, Berman added.

"It often comes down to where the CEO wants to live," he said.

The Seattle area has been Boeing Commercial Airplanes' final assembly mecca for decades, having hosted plants for the company's 737, 747, 757, 767 and 777 jetliners.

However, Boeing Commercial Airplanes chief executive Alan Mulally has warned that Washington state needs to revamp its workers' compensation and unemployment tax rules as well as focus on other barriers that make it less competitive in order to win the 7E7.

Boeing already has loosened ties to Washington by moving its headquarters from Seattle to Chicago in 2001, and the aerospace manufacturer has long complained that the state is unfriendly to business because of its snarled traffic and tax structure.

The 7E7, envisioned as the jet to eventually replace the 757 and 767 in Boeing's lineup, is expected to receive board approval in late 2003 or early 2004. The jet then would be offered to airline customers, and would enter service in 2008.

Boeing has increasingly used technology to improve its design and manufacturing process, Mulally said. The company has adopted three-dimensional modeling in its design process and transformed its manufacturing by having the jet move through the plant in assembly-line fashion, instead of having crews bring parts to the jet from all over.

Mulally's call for improvements to the area's business climate followed the release of a study that compared Washington state with others in its ability to nurture technology companies. The study, by Paul Sommers, senior research fellow at the University of Washington's Daniel J. Evans School of Public Affairs, found that Washington is lagging behind in education, state funding for research and supporting an entrepreneurial climate.

Judging by graduation rates, enrollment in math and science courses and college entrance exam results, the study found that Washington state is not doing as good a job as other peer states with high-tech hubs in preparing students for a future in technology.

In addition, the state's monetary support for research is dropping, with Washington state ranking 46th out of 50 in terms of per capita dollars spent by the state for research at universities.

Boeing's announcement that it would accept bids for the 7E7 plant has infuriated labor officials in Washington state, who have accused the company of turning its back on loyal cities and states that have hosted its factories for 80 years.

Another sore point is that Boeing expects state officials to offer huge financial incentives, said Charles Bofferding, executive director for the Society of Professional Engineering Employees in Aerospace, the labor union that represents most of Boeing's technical workers in Washington state.

"The atmosphere they're creating is that everything is about dollars," Bofferding said. "What they're saying without saying is, 'We want the governments to subsidize us.' "

In Arizona, putting together a competitive package of financial incentives likely will be Arizona's biggest challenge, Yuhas said. To make matters worse, the Legislature's 2003-04 budget proposal threatens to eliminate state business development staff integral to creating such incentives. In addition, the Department of Commerce staff cuts could send the wrong message to Boeing, he said.

"It will raise questions about how serious we are about attracting businesses to the state," he said.

Still, Yuhas said until the new state budget is approved, his department will continue to work diligently with other stakeholders to develop the best possible proposal for the 7E7 plant.

There are some inherent financial advantages to locating an assembly plant at Williams Gateway, said East Valley Partnership president Roc Arnett, including military reuse tax credits and free trade zone tax credits.

Still, Yuhas said incentives at the state level undoubtedly will be a key element of the winning bid, and that Arizona is not known for offering such perks.

"We will have to appeal for those incentives if we're going to be successful," he said. "Our elected leadership will have to determine if the costs are worth the benefits."

Gov. Janet Napolitano's spokeswoman Kris Mayes said creating the stable, high-paying jobs the Boeing plant would bring is a high priority.

"We believe that if we were to get this project, it would bring terrific high-paying jobs to Arizona," Mayes said on Napolitano's behalf, "and it would benefit a number of different areas like Tucson and Prescott as well as Phoenix."

The Associated Press contributed to this report.

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