The Elephant in the Room With the Boeing Deal | Eastern North Carolina Now

    Publisher's note: The author of this post is Michael Lowrey, who is an associate editor for the Carolina Journal, John Hood Publisher.

    RALEIGH  -  To economic development officials, the pursuit of big game  -  plants, offices, and headquarters  -  bringing a lot of jobs is described as an "elephant hunt."

    And there's certainly no larger such pachyderm in existence than the plant Boeing will build to produce its new 777X jetliner, a facility that could bring 8,000 very high-paying jobs to a community. As with most economic development campaigns, it's a game, with some of what happens being little more than a ruse.

    Boeing now builds most of its wide-body jets in Everett, Wash., at a plant that opened about 45 years ago to build 747s. The company still builds 747s there, along with 767s, 777s, and 787s. (Boeing has a second 787 line in Charleston, S.C.)

    The 777 is the big production item, though; Boeing currently produces an even 100 a year, or 8.3 per month. But that production rate is unsustainable  -  pretty much everyone who plans to buy a current-generation passenger 777 already has committed to doing so, and follow-up orders from existing customers will go only so far.

    Airbus, Boeing's main competitor, is working on a new jet called the A350 that could take significant market share from Boeing as older 777s come up for replacement. Boeing thought it had plenty of time to develop a new generation of 777s to combat this threat, but the A350 program has been moving along rapidly and without major issues.

    Thus we see Boeing's sudden rush to build a new generation of 777, which will feature two models, the -8X and -9X. The simplest solution would be to build the new models at the existing 777 plant in Washington state. Washington has offered up $8.7 billion in incentives to try to make that happen.

    One big problem: The Everett plant is unionized, and the machinist union voted down the cost concessions Boeing said it needed to build 777Xs there. Boeing has responded by soliciting proposals for a new site to build the plane.

    Boeing identified 54 airfields in 22 states as possible locations for a new 777X plant. Included in the original list were three North Carolina airports: Charlotte, Greensboro, and Kinston.

    Even before each of those communities learned they had been dropped from the list, there wasn't much of a reason to get too excited. The whole process creates a sort of economic development illusion.

    While Boeing must think that each of the locations it identified was somewhat plausible, the list was too long to serve any purpose other than amping up the hype. The bigger the casting call, the greater the pressure to make a big impression.

    In this case, making an impression requires offering a stunning amount of incentives to Boeing. Maybe not Washington-state big, but certainly in the billions. Moreover, Boeing whittled its list of possible sites from 54 to a few finalists less than two weeks after proposals were due, suggesting that the company did a lot of research well before it asked for proposals.

    "It tells me that they probably started the process before we realized it, and they have had a list of communities they were interested in," said Dan Lynch, president of the Greensboro Economic Development Alliance, which developed Greensboro's proposal, to the Greensboro News & Record. "So, they may have been doing their homework for several months, unbeknownst to us."

    Boeing's public hunt for alternative sites to build 777Xs also dialed up the pressure on the machinists back in Everett. Getting union members to accept a deal much like the one they voted down in November was likely an element of Boeing's plan all along.

    Sometimes the great elephant hunt is in fact a snark hunt, with some of those drawn in mere props.