Boeing, new lobby group aim to keep $8.7 billion in state tax breaks

By Alwyn Scott

SEATTLE (Reuters) – Boeing Co <BA.N> has joined a new coalition lobbying to preserve $8.7 billion in tax breaks that Washington state gave its aerospace industry in 2013, the group said.

The organization, launched on Tuesday, indicates growing opposition to changing the incentives, and aims to counter efforts by some state lawmakers to tie the tax breaks to employment in the state, said Maud Daudon, chief executive officer of the Seattle Metropolitan Chamber of Commerce, which is leading the effort.

Several “claw-back” measures have been proposed since the tax breaks were approved in 2013, but did not pass.

“Our expectation is something like that may surface again” in the legislative session that started Monday, Daudon said in an interview.

She said the group will be a “megaphone” to spread the message that aerospace jobs in Washington state are at risk.

“We are in a competition to keep them here,” she said. “Any state in the country would die to get these jobs.”

The group, Aerospace Works for Washington, also could be involved in other issues, such as efforts by the European Union to roll back the tax incentives under World Trade Organization rules, Daudon said.

Chicago-based Boeing, the world’s biggest commercial aircraft maker, has its largest manufacturing centers in Washington state, employing 72,000 people, and is the state’s largest private employer.

As with previous efforts to change the tax law, “Boeing is opposed to any effort to alter the Washington aerospace tax incentives,” the company said in a statement on Tuesday.

“Changing the parameters of the incentives now would simply increase the cost of building airplanes in this state, and unnecessarily put excellent, family-wage jobs in Washington at risk.”

Aerospace Works for Washington has more than 30 members, including elected leaders, economic development organizations and chambers of commerce from regions in the state where Boeing and other aerospace manufacturers have factories. It includes trade groups of retailers, restaurants, hotels and other industries.

Alaska Airlines, owned by Alaska Air Group Inc <ALK.N>, is also a member. No labor groups are involved.

Preserving the tax breaks has become a key issue since the incentives passed in 2013. The law said the tax cuts were designed to “maintain and grow” aerospace employment in the state. They are available to any aerospace manufacturer, not just Boeing.

Despite the passage of the tax breaks three years ago, Boeing has since eliminated 11,414 jobs in Washington, about 15 percent of its workforce in the state, according to the company’s employment data.

The reductions are part of a cost-cutting drive at the aerospace and defense company in response to competition from European rival Airbus Group SE <AIR.PA> and recent years of constricted U.S. defense spending, Boeing has said.

Boeing’s job reductions have prompted some legislators to argue that the company should maintain a certain number of jobs or lose the incentives. Boeing said it fulfilled its commitment to locate the assembly line and wing factory for its new 777X aircraft in the state.

(Editing by Matthew Lewis)

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