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All eyes now turned to 737 future for Boeing in Renton

The 737 MAX will offer a highly fuel-efficient engine; it
The 737 MAX will offer a highly fuel-efficient engine; it's drawing hundreds of orders for Boeing.
— image credit: Boeing

Boeing’s workforce in Renton and elsewhere in the state, plus an unrivaled network of suppliers, are key reasons to keep the production of the new 737 MAX in Washington state.

Those are two key conclusions of an Aerospace Competitiveness Study commissioned by the Washington Aerospace Partnership.

“Washington currently holds an advantage in the 737 MAX competition due to the high productivity and knowledge of its workforce,” according to the Accenture study.

Accenture tested the state’s strengths and weaknesses against 14 cities in eight states, including California, New Mexico, Texas, Kansas, Alabama, Florida, South Carolina and North Carolina.

San Antonio, Texas, is a particularly tough competitor because Texas already has a highly developed aerospace industry, in part because Boeing has a defense presence there, according to the study.

Boeing is expected to make its decision in the next few months.

But Washington has a distinct advantage because of its network of aerospace suppliers, about 650 throughout the state – the largest concentration in the world.

“The network of existing Boeing and supplier facilities in Washington that support the 737 production are likely to provide Boeing a faster return on its 737 MAX manufacturing investment versus building brand new in-state or out-of-state assembly facilities,” according to the Accenture study.

The reasons for locating the 737 MAX production in Renton – or at a minimum Washington state – grew by several billion last week.

Boeing and the Jakarta-based Lion Air announced a a $21.7 billion deal for 230 737s, including 201 737 MAXs, that when finalized would be Boeing’s largest commercial-airplane order ever as measured in dollars and number of airplanes, according to the company.

The order includes a Lion Air commitment for an additional 150 airplanes, valued at $14 billion.

“The 737 MAX will be the future of Lion Air,” said Rusdi Kirana, Lion Air founder and president director, in a Boeing press release. “The highly efficient, technologically advanced airplane will help Lion Air continue to bring low fares and allow us to open new destinations because of the longer range of the airplane.”

Boeing’s order announcement came just a days after Gov. Chris Gregoire released the results of the Accenture study, which formed the basis of the Washington Aerospace Partnership’s plans to keep the 737 MAX production in Washington.

“There is no question that Washington state is the best place in the world to build the Boeing 737 MAX jetliner,” Gregoire said last week.

Leaders from across the state, including Renton Mayor Denis Law, attended Gregoire’s announcement at Renton Technical College, which will play a key part in her plan to train future Boeing workers.

Boeing already is adding buildings to its Renton production plant to ramp up its 737 production, which could hit 60 planes a month. Law said the City of Renton has worked closely with Boeing to expedite the permits for these projects.

The city is getting positive efforts from Boeing for its efforts, he said.

“They are very pleased with our commitment to working with them on their multiple needs here,” he said.

Renton is also working with other cities to ensure that the state’s transportation continues to improve to get workers to Boeing’s plants, he said.

Law acknowledged that the current initiative is to keep the 737 MAX production in Washington. But, he said, Boeing workers show day in and day out what can be done at the Renton plant. “It’s phenomenal,” he said.

“If the company itself decides it wants to build in Washington, I can’t imagine we would not be a strong contender as a site for that,” he said.

One of the key recommendations of the Accenture study is strengthening of high school training in math and science, new airplane assembly and other training programs at two-year colleges such as Renton Technical College and the addition of 775 new engineering positions at Washington State University and the University of Washington.

Gregoire proposes to spend $9.8 million to mostly go to strengthening education and training across the state.

In her speech Gregoire talked of preserving family wage jobs.

Steve Hanson, RTC’s president, said in an interview “that is exactly what we are providing.” RTC is already working with Boeing on what particular skills it will need, especially in the face of the retirements of thousands of workers that loom.

RTC also will offer an assembly electronics program.

RTC moved quickly to ramp up the programs and find the place for them, Hanson said. That’s RTC’s mission, he said, “to get people trained and get them employed.”

“We have a reputation at this college for being able to do that in a very innovative fashion and to get it done,” he said.

 

THE ACCENTURE STUDY

Accenture developed an Aerospace Competitiveness Study that carefully looked at Washington state’s ability to win the production of the new 737 MAX.

Strengths

Washington’s primary strengths in a 737 MAX competition: workforce and supply chain network

• The quality and productivity of the current Washington workforce strongly support 737 MAX program objectives

•  The workforce’s current learning curve supports 737 MAX launch and production more quickly and cost effectively

• The location of major Boeing fabrication and back shop facilities in Washington and their integration with the Renton 737 final assembly operation, enhances 737 manufacturing productivity and supports on-time delivery to customers

• The in-state supplier network to the 737 program, supports Boeing’s goals for efficient and cost-effective manufacturing

Weaknesses

Washington’s primary weaknesses in a 737 MAX competition

• A significant portion of Washington’s aerospace engineering and manufacturing workforces are nearing retirement, but Washington is not prepared to provide quality engineers, manufacturing workers and industry relevant research at the  scale needed to support the 737 MAX across its production lifetime

• A reduction in workforce quality and productivity would increase 737 MAX program risk and cost to Boeing

• The cost of building and staffing new manufacturing facilities in Washington is significantly higher than in other states,  placing a premium upon supporting improvements and investment in 737 facilities currently in Washington

• The outcome of ongoing Boeing labor contract negotiations is outside of the state’s direct control, but may cause 737 MAX program risk in Boeing’s eyes that could outweigh economic and other considerations in a site decision.

Boeing’s impact in state

•  As of September, 2011, Boeing employed 80,600 people in the State of Washington, approximately  8,000 of whom have been hired since January 2011

• An additional 8,000 workers are employed in more than 150 other aerospace firms across the state

• Several thousands more employees work in roughly 650 firms such as machine shops, tooling companies, etc. that may not be exclusively aerospace focused, but serve the aerospace industry

• Based upon the 2002 Washington State input-output model , the 89,000 aerospace-specific workers in  Washington have a net jobs impact of more than 250,000 jobs across the state. This is purposefully conservative; other studies have found an even greater multiplier (e.g., the Washington Research  Council’s estimate based on a REMI model, which states a “jobs multiplier” of 3.96 vs. DoC’s 2.81)

• Approximately 2,800 Boeing suppliers and vendors are located in Washington

• In 2010 Boeing purchases from Washington suppliers and vendors totaled approximately $3.36 billion

• In 2010 Boeing made approximately $42.7 million in charitable contributions in Washington, including  organizations such as:

- Forterra (formerly the Cascade Land Conservancy)

- Farestart

- Pacific Northwest Ballet

- Seattle Opera

- Special Olympics

- United Way (of King County, of Pierce County, of Snohomish County)

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