Boeing Scores Huge in the Lobbying Game – Will They Lose in the Long Run?

How would you like to spend one dollar for something you really wanted for your family, and get back $7250.00 in tax credits and subsidies to run your household?  Almost like going to Vegas and putting a buck in the slot machine…  That’s the dimension of the return Boeing has gotten on its recent lobbying efforts to keep the production of the 777X in the Seattle area.  The company spent about $1.3 million massaging the process in the Washington State Legislature from 2011 through 2013, and was rewarded with about $8.7 billion in tax subsidies, even though it’s an extremely profitable company without such assistance.

What was the threat backing up Boeing’s lobbying effort?  The claimed loss of 20,000 jobs and $20 billion in economic activity for Washington State, assuming the company actually picked up its marbles and went elsewhere. What else did Boeing get besides gargantuan tax subsidies?  What they’ve wanted for a long time – the evisceration of the Machinists union by putting to a vote before the union’s members, as the only alternative to the company leaving Washington, a contract which cut health coverage, ended the fixed pension program for all new hires, and ended all pension contributions after 2016 (to be supplanted by contributions to employees’ IRAs).

What is the potential cost to Boeing in the long term for screwing its dedicated and mostly long-serving workforce?  The contract vote caused a huge uproar as it squeaked by with a 51% majority.  Boeing may now be hard-pressed to replicate the collaborative effort from its workforce that has been instrumental in weathering past crises, such as the Dreamliner.  It is not lost on the Machinists that they generate $110 million in profit per day for Boeing.  Plus, stock buybacks and subsidies given to the company, resulting in huge management bonuses, could fund the International Association of Machinists’ pension plan for 15 years.

As one aerospace analyst has also observed, other states involved in Boeing’s lobbying and bidding war now see to some extent that their role was as pawns in Boeing’s efforts to squeeze Washington’s machinists, and may not support future Boeing efforts in Congress to compete again, for example, Airbus.  Boeing’s “bad chickens” may yet come home to roost…


Photo credit: x-ray delta one / Foter /Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)