The headline for this post is not a joke. It's something that Boeing and civic leaders should consider, because the evidence shows us that the plane manufacturer is leaving our region and that it may be irrelevant by 2025 anyway.
The news today (another Boeing plane, this time operated Russia's Rossiya Airlines, had engine problems) is not actually that bad. The same is true for the incident that happened over Denver this weekend. As terrifying as that fiery engine looked, the situation was not at all dangerous for those in the air (the same, of course, cannot be said for those on the ground). The same is true for the incident in the Netherlands (falling bits of plane, the emergency landing, and so on), which happened on the same day as the one in Denver. These incidents can all be reduced to a public relations nightmare for Boeing, but not expanded in any meaningful way to the catastrophe of the 737 Max.
The aviation experts I communicate with regularly even point out that the maker behind the rash of bad engines, Connecticut's Pratt & Whitney, has had a long and complicated relationship with Boeing, a corporation that was once about engineering and, since 1997, has devoted every ounce of its existence to a program that in neo-classical economics is called Shareholder Value Maximization.
Longtail Boeing 747-400F (VQ-BWT, built 1991) experienced heavy engine damage very soon after departure runway 20 at Maastricht (EHBK), NL. Engine parts fell in the town of Meerssen resulting in 1 injury and damage to cars. The 747 diverted to Liege.https://t.co/PI1MYFkHBO pic.twitter.com/Yx58CfpI5K
— JACDEC (@JacdecNew) February 20, 2021
Pratt & Whitney also make engines for Boeing's top rival, Airbus. The company is also playing a key role in the demise of Boeing by selling Airbus an engine that's helped it split open the once uncrackable 100-passenger market. Airlines want this plane because it solves so many problems that Boeing's new class of planes simply do not solve, such as customer satisfaction, flexibility, load-factor, and so on. And so, as the Chicago-based plane manufacturer cuts jobs, cuts R&D, and leaves the Pacific Northwest, it has a new class of huge planes that are not fitted for the supple post-pandemic future.
And then there is Boeing's debt. Last year, the company spent, according to one analyst I spoke with, $700 million servicing just the interest on the company's ballooning debt. By 2025, Boeing will have no planes to sell (Airbus will be doing that kind of business) and lots of moolah owed to the banks.
What should Washington state do under these circumstances? There really are only three options, according to the sober experts I have spoken with. (They can't come out of the dark because they do not want to lose favor with Boeing.)
But first, my option: The state buys or appropriates the production facilities in Renton and Everett and then offers grants to startups in the aviation sector that have credible (or even fantastic) business plans to revolutionize air travel in the age of global warming.
This solution, which had the work of the economist Mariana Mazzucato and neo-infant industrialism as its aspiration, was not taken seriously at all. Its key or fatal problem, the experts told me, was the very one Boeing failed to escape. You can make cars for cheap, but not airplanes. These flying machines demand the gargantuan transformation of liquid capital into fixed capital. The financial commitment for Washington state would be way beyond its resources. A startup in the flight transportation sector is not the same as a startup for apps or software.
The experts explained to me that it would be better to just turn the Renton and Everett sites into affordable housing—and they were serious about this. Demolish the plant in Renton and make it a vibrant neighborhood for working and middle-class people. If that is not politically viable, which is most likely the case, then there is option two: Make an agreement with Amazon to covert the plants into bases for its very own cargo planes. This would mean Amazon acquiring FedEx and relocating its headquarters from Memphis (a city I love) to Everett (a city I rarely think about). A lot of talk has already been circling something that's close to this possibility.
For years Amazon has been eating everyone else’s lunch when it comes to e-commerce, but in 2019 the field of battle shifted as Walmart began to catch up in online shopping and Amazon’s advantage in next-day delivery began to erode. As improbable as it may sound, Amazon may face a unique dilemma that can only be solved by a radical move—the acquisition of FedEx.
There's one more possibility for the region's post-Boeing future, which is to offer the plants in Everett and Renton to China for the coming production of planes made by the Commercial Aircraft Corporation of China (or Comac). The logic? Because China would recognize the prestige of making a large number of its aircraft in the US, and it would jump at the offer in a hot minute.
Also, look at Airbus, which is currently running circles around Boeing. Europe's defining plane-maker actually has massive plants in Canada and Alabama. As China gets its act together and enters the market, it, too, will have to globalize its operations. Why shouldn't Washington be the first to throw open the door for them as it slams the door shut to Boeing? No need to get nationalistic about this. Boeing didn't think twice about leaving the region when it relocated to Chicago in 2001 and opened a new plant in South Carolina.
But if you think any of this is fanciful, and that my ears on the aviation beat are a touch too speculative, check out this post in Puget Sound Business Journal. It appeared yesterday, and opened with:
A Canadian aerospace firm says it has won a contract to help COMAC, the Chinese government-owned jet maker, conduct certification flight tests at its facilities in North America and one C919 prototype will be flying one into Canada for the effort.
The plan to conduct certification tests in Canada moves the Chinese jet one step closer to being a competitor to Boeing's 737 Max single-aisle jet. Though a China-made aircraft, the C919 uses many of the same suppliers in North America as Boeing for key components and the jet has several suppliers in the Puget Sound region.
The important thing to know in all of this, and a point that has been made to me again and again, is that Washington State's present relationship with Boeing has no future that does not end badly for the public's purse. The company costs too much to keep around, and what it returns to the public is so diminished that it's hardly worth even the smallest of tax breaks. Our state is now in a position to make bold decisions and enter a post-Boeing period that is more balanced and rewarding.