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 Notwithstanding crippling budget crises, 19 states have responded to the bait set out by the Boeing Co. and proffered bids some breathtakingly large to land the assembly plant for Boeings proposed new, fuel-conserving 7E7 jetliner. Appropriately, the new aircraft is dubbed the Dreamliner.
The biggest bidder of all is Washington State, which put together a subsidy package estimated to total $3.2 billion (yes, billion!) in value. For 1,000 jobs the midpoint of the 800 to 1,200 Boeing is estimating that works out to roughly $160,000 per worker per year over a plant lifespan of some 20 years. Yet the jobs will average just $65,000 a year in pay. When I saw $3 billion, I thought The number is a typo, economist Art Rolnick of the Federal Reserve Bank of Minneapolis told a Minnesota reporter.
In Washington State, still stung by Boeings 2001 decision to move its corporate headquarters to Chicago, polling shows solid public support for the massive subsidy offer. State officials told Stateline.org, which made a careful nationwide survey of the bids, that they project the 7E7 plant could generate as many as 17,000 spin-off jobs and $60 million to $70 million in annual tax revenues. Boeing employs some 60,000 Washingtonians.
Hoping for the same kind of mega-gains, Michigan Governor Jennifer Granholm last month offered Boeing $300 million in the form of tax abatements, infrastructure assistance and worker training.
Even California, on the brink of fiscal insolvency, is working up a package reportedly worth $250 million over five years. Governor Gray Davis asserts that the states generous incentive package will include enterprise zone tax credits, a foreign trade zone, employee training grants, and local incentive programs.
The global economy is shifting the industrial competition game rapidly, notes William Stafford, president of the Trade Alliance of Greater Seattle.
First, manufacturing is getting dispersed. Stafford suggests that Dreamliners major assemblies wings, tail sections and fuselage, for example will likely be fabricated around the world in the location of Boeings customers. The U.S. plant will simply put the sub-assemblies together.
Thats why the job total is around 1,000, not the 5,000 to 7,000 local total for major airplane projects of past years.
Second, foreign competition is heating up, with rules of the game different from Americans free-market theories. Suggest a joint venture with a Taiwan company in a designated area there, and the government may co-invest with you, notes Stafford. Consider a plant in a Shanghai industrial park and the government there might even build it for you.
Recently Massachusetts thought it had the inside track on a $300 million, cutting-edge biotech plant to be constructed by Merck, the German pharmaceutical company. It thought its chief competitor was North Carolina. But unbeknownst to Massachusetts officials, the German state of Theuringen, struggling with a 17 percent jobless rate, made a secret bid of $90 millionenough to win the plant.
Such competition makes it tougher to argue that industrial subsidies are a zero-sum game that one states gain is anothers loss so the subsidies are effectively so much cash down the drain.
And that means not just a little cash, but lots. Greg LeRoy of Good Jobs First in Washington, D.C., who monitors the practice closely, estimates that state subsidies to lure or hold corporations have soared to some $60 billion a year.
Think what that money could mean in creating regions with improved transit and roads, livable city centers and neighborhoods, superior schools and universities, trained workers, and fiber-optic broadbandthe very assets critical to competition in the new global economy.
The real arena for competition in the new global economy, Stafford suggests, is the metropolitan regionthe meaningful labor pool, educational center, finance hub, and environmental area for economic competition. And basics count: If you dont have good infrastructure and qualified workers, you may not be in the game to start with. Fail to provide the basics and you wont be on anyones list anyway.
Stafford worries about American regions inability to plan cohesively if theres no governance agreement of any kind. The Seattle area, for example, has four counties, 70-plus municipalities and scores of special districts. But who, says Stafford, is the regional leader? Not just Seattle, but no U.S. region, he suggests, [is] structured to compete internationally very well.
Its deadly serious business, Stafford adds, because keenly competitive international regions will be out to grab our industries, equal our research labs, and train workers who can outperform many of ours. Given those harsh realities of the emerging 21st century economy, one has to wonder all the more about American states cutting back on transportation, schools and human serviceseven while they fall over each other to lure sexy new plants with money they dont have.
Copyright © 2003 Washington Post Writers Group
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