Boeing hasn’t yet declared whether it will build a new breed of midsize passenger jet — variously known as the New Mid-Market Airplane, NMA or 797 — but Washington state officials are already arguing they have the best place to build it.
And now they have a statistics-filled report to back up that claim.
The report, known as the Aerospace Competitive Economics Study or ACES, was researched and written up by aerospace consultants at the Teal Group and Olympic Analytics for labor unions at Boeing, on behalf of the Choose Washington New Mid-Market Airplane Council.
Those groups have an obvious interest in keeping Boeing airplane production in the Evergreen State, but today Washington Gov. Jay Inslee insisted the report is legit.
“If you dig down and look at this research, this is not a puff piece,” Inslee told journalists and VIPs who gathered at South Seattle College’s aviation maintenance technology hangar. “It is a scientifically rigorous evaluation that shows what we know: Washington is the place to build this airplane.”
The study ranks 50 states and the District of Columbia on 41 metrics, measuring factors ranging from education and training levels, to industrial and infrastructure development, to taxes and incentives.
Washington came out significantly ahead on the Teal Group’s weighted scoring system, followed by Ohio, North Carolina, Kansas and Colorado. South Carolina, where Boeing has a secondary assembly and delivery facility for its 787 Dreamliner jet, was No. 22 on the list. (For what it’s worth, D.C. is last.)
To some extent, the report’s conclusions were preordained due to Washington’s existing virtuous circle: It’s a good place to build airplanes because it already has the requisite infrastructure, plus a large labor pool with the skills to build airplanes.
Richard Aboulafia, the Virginia-based Teal Group’s vice president of analysis, acknowledged that such circular logic dictated how the airplane industry expanded in past decades. “It was an article of faith that you build an airplane at a legacy facility,” he said.
However, that logic hasn’t always been ironclad in recent years. Boeing set up state-vs.-state competitions for its 787 and 777X assembly facilities, and Washington state provided billions of dollars in tax incentives to win out. (Those incentives are now the subject of a U.S.-Europe trade dispute.)
“This is obviously becoming a feature of the landscape,” Aboulafia said.
That’s why state officials, as well as labor and industry leaders, have become more proactive about stating their case. During today’s unveiling of the report, Inslee said the figures showed that the state already has an “extremely attractive tax climate” — and implied that no further financial incentives should be needed.
“We have an incentive, which is, we are providing the best place to build an airplane in the world today,” Inslee said in response to a question. “And that’s a pretty good incentive.”
The report thus provides the foundation for Washington state’s opening position in the negotiations over assembly sites — assuming that Boeing issues a request for proposals modeled after Amazon’s HQ2 selection process. Inslee said he had no inside information about what Boeing had in mind.
The New Mid-Market Airplane has been the subject of speculation for years: The plane informally known as the 797 would fill a niche between the single-aisle 737 and the twin-aisle 767, roughly equivalent to the discontinued 757. It’s envisioned as a twin-aisle plane that could carry 220 to 270 passengers.
Boeing executives say they’re talking with airlines about what they’d like to see in a midsize passenger jet but haven’t yet committed to going ahead with a new line.
Could South Carolina officials find statistics showing that their state was the best place to build the 797? Aboulafia insisted that the numbers wouldn’t add up for such a conclusion. “I think we’ve created a really defensible infrastructure of numbers,” he said. “Absolutely, they verify that this is the best place to build a jet, a new jet program.”
He told GeekWire that South Carolina could make sense as an assembly site once all the bugs are wrung out of the operation, as was the case for the 787 Dreamliner, but that Washington state scored higher on the innovation and labor productivity required for a new type of airplane.
“It’s just that these guys are really good at what they do,” Aboulafia said of Washington state’s aerospace workforce.
One potential scenario could see Boeing consolidate its 787 production to South Carolina to make room for 797 production at its assembly plant in Everett, Wash. When asked about that, Inslee said there have been no discussions about that kind of trade-off.
“We do think that there’s no reason that Washington cannot accommodate this whole line … for a new airplane,” he said.
Could Washington do better? Aboulafia said the state could improve its score by boosting its educational resources and its infrastructure, particularly its transportation systems. “That’s something that government can do pretty well, in relatively short order,” he said.
In contrast, Aboulafia said the states ranked further down the list would have to put a “lot of hard work” and “a lot of money” into attracting a skilled workforce and fostering a grassroots aerospace industry.
He noted that when military programs are included, the global aerospace market amounted to hundreds of billions of dollars a year.
“It gets big fast,” Aboulafia said. “That kind of dwarfs the traditional ‘here’s a billion dollars’ sort of incentive package. … So much of the success in this giant, capital-intensive business is determined by productivity and cost base that it becomes really hard just to throw money at the problem.”
