Boeing Tanker Bid: States Against States

July 10, 2010 at 12:50 pm Leave a comment

A line from today’s Herald article about the Tanker Project caught my attention: “The tanker contest has pitted Southern lawmakers against those in Washington, Kansas and Oregon.”

All the political hoopla about the Tanker project has me wondering what does the deal mean for Snohomish County, Greater Seattle, and Washington State if Boeing gets this project. Also, what happens to Boeing’s facilities in these locations if it does not get the Tanker deal?

I have been trying to look at “all sides” of this situation to get a handle on what is what.

The Real American Tanker by Boeing (A Boeing Website): This statement is a good truthful starting point for anyone interested in this issue: “This year the U.S. Government will have an important choice to make about where to invest $35 billion for its next generation aerial refueling tanker.” I wonder though how much this project will really cost!

Where is the tanker built if either Boeing or Airbus builds it? “Boeing says the tanker would be built at existing plants in the United States, and it says that Airbus would build most of the project in Europe and some at its promised Alabama-based tanker plant.” This confirms what the Herald article said today about state competition. And we know that Charleston, SC and Chicago, IL have already grabbed some Boeing economic development prizes in recent years.

So, what does Snohomish County, Greater Seattle and Washington State get out of this deal if Boeing lands the contract? The answer to this question is unclear to me. We do know that Renton, WA got the first tanker deal many years back. Is Boeing’s best productive capacity for parts of the Tanker project in Washington State? If so, which parts? And what will Washington State Government have to give to land these pieces of the project? And yes it is true that incentives as we know them in other states are unconstitutional in Washington State, but there are “other ways” the State of Washington can help Boeing. How about changes to Worker’s Compensation and Unemployment Insurance?

The government subsidies issue has been raised in this Boeing-Airbus bidding war. The World Trade Organization (WTO) has been called in to investigate on both sides (Airbus and Boeing). Subsidies, or what economic developers call incentives, have been factors in almost all major business recruitment and relocation projects in America. Has Airbus and EADS received them? Yes. Has Boeing received them? Yes. Is there a “level playing field” in place relative to Tanker Project or any major economic development project. Heavens no! There never has been. Big government contract projects like the Tanker deal are loaded with government incentives. National governments provide these incentives in many countries around the world. State and local governments carry this ball in the United States.

Why does the US Federal Government allow the use of state and local incentives on Federal projects? It’s simple. The state and local incentives produce a financial advantage to the Federal project by lowering the private contractor’s costs. Why else? Because the Federal Government uses these projects to garner political and public support at the state and local levels for its budget projects through the bidding process.

This one will be interesting. I can tell you that my economic development friends in several other states, including SC, AL, KS, and many others are working hard to get a piece of this deal whether the contract goes to Boeing or Airbus.

We know something about these bidding wars in Cleveland. We just lost the big LeBron Tanker. The South wins again!


Entry filed under: Boeing, Boeing Tanker Bid, US Air Force Tanker Project. Tags: , , , , , , , .

Our Jobless Recovery Job Creation by the Tanker Deal

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