Washington View: Boeing’s prospects are bright now, but that can change

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You may have missed it, but amid the global economic turmoil, riots in London and our volatile stock market, there is some good news.

Boeing has completed flight tests on its long-delayed 787 Dreamliner and has asked the Federal Aviation Administration to certify the plane for production. The company is hoping to earn FAA approval in time to start delivering planes in September.

Despite the delays, the 787 remains a major source of future income for Boeing. Boeing Commercial Airplanes Chief Jim Albaugh says they have 830 orders for the 787 from 52 customers, and the plane is sold out through 2019.

This is good news for the entire state, says Arun Raha, Washington’s chief economist. Noting that Boeing has added 6,200 workers since 2010, Raha writes, “We expect the aerospace job growth to continue over the next couple of years as Boeing plans significant production increases in all five models of commercial aircraft. Between now and early 2013, total production will rise from the 42 planes per month to 60 planes per month, an increase of more than 40 percent.” Reuters reports that Boeing has taken orders for a net total of 268 commercial planes so far in 2011.

Obviously, things are looking up — but all that could change.

Boeing’s rosy outlook is by no means assured. Next year, the company must negotiate new labor contracts with its machinists and engineers — a relationship that has been marked by four crippling strikes in the past 22 years. A strike on top of the three years of 787 delays could jeopardize future production in Washington state and the U.S.

In addition, the National Labor Relations Board is pursuing claims by Washington labor leaders that Boeing’s decision to build a second production line in South Carolina — a right-to-work state — constitutes illegal retribution against the unions for the walkouts. The case has garnered national attention with critics charging that a favorable NLRB ruling would essentially give unions veto power over where any company does business. Officials in South Carolina say the NLRB’s move is a slap at nonunion states that could stall their economic recovery.

But Boeing’s future isn’t dependent solely on what happens here in the U.S.

Foreign competition

China, Brazil and Canada all have aircraft manufacturers who are encroaching on Boeing’s cash cow — the 737 — and Airbus, which is subsidized by the European Union, rivals Boeing each year for the number of commercial airplane orders.

To survive in this aggressive global marketplace, Boeing needs certainty and stability at home, with its workforce and with government regulators. Without it, Boeing’s future prospects are uncertain.

In his most recent revenue forecast, Raha warned, “Our guarded optimism about the second-half prospects of the national economy has given way to a sinking feeling of pessimism. Consumer confidence is in the tank. The risk of the national economy slipping back into recession has increased significantly. The state, along with the nation, is now facing additional shocks and uncertainties.”

The decisions made over the next couple of years by federal officials, government regulators and union leaders will help determine the future of our state and perhaps our nation. They should proceed with caution.

Don Brunell is president of the Association of Washington Business, Washington state’s chamber of commerce. Visit http://www.awb.org.