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Boeing next in line

Wednesday, Dec 11, 2013

* The widely expected decision to consolidate the newly merged Office Depot and OfficeMax headquarters in Florida means the loss of up to 1,600 well-paying jobs for Illinois. The company had sought a state tax break, but none were approved last week

Office Depot spokeswoman Karen Denning said Illinois’ lack of an incentives package was partly behind the company’s decision. Other factors included taxes and the ability of the existing 625,000 square-foot facility in Florida to accommodate all of the new company’s employees. That facility is almost twice as big as the OfficeMax facility in Naperville.

Office Depot doesn’t yet have a timeline for moving its operations in Naperville and other headquarters staff in the Chicago suburb of Itasca to Boca Raton, Denning said.

The company has an existing incentives package from the state of Florida but officials there have not commented on any potential new tax breaks or other perks.

Dave Roeder, a spokesman for Illinois’ Department of Economic Opportunity, said the agency offered to work with the company on incentives that didn’t require lawmakers’ approval, but “the company did not pursue those options with us.”

* ADM is expected to announce soon whether it will locate its new “world headquarters” in Chicago without a state tax break

ADM reiterated its statement from last week, saying it is reviewing its options in the wake of inaction in the House.

“We expect to make an announcement soon,” a company statement noted. […]

However, a spokesman for House Speaker Michael Madigan, D-Chicago, said the speaker would like to implement a more intensive process to help guide the state through the economic development process.

“We’re hopeful of putting together some kind of evaluation plan,” Brown said.

* And now Boeing is putting a new factory out for bids

Boeing had conditions from the beginning on the 777X [production factory]: big incentives from the State of Washington and big givebacks by its largest union here, the International Association of Machinists and Aerospace Workers. The state came through, delivering in a special session of the Legislature a package worth $8.7 billion through 2040. But union members balked, voting down a contract extension last month that would have frozen their pensions. So Boeing began sending out requests for proposals to more than a dozen states and cities around the nation.

State legislators in Missouri last week delivered a $1.7 billion Christmas gift should Boeing come their way. Economic development officials in Alabama, Kansas, North Carolina and Utah — Boeing has declined to provide a full list of suitors — were putting together bids, too, and bragging about their respective environments of can-do optimism. […]

But [Washington{ state officials said they believed the region had aces in the hole that would ultimately prevail: experience in producing airplanes under deadline conditions and closer proximity than most of the competition to Asian suppliers and customers, an important consideration for ocean-borne freight shipment.

* St. Louis already has some big aircraft facilities, so Illinois could tap into that local expertise and was also invited to submit a bid

Illinois is assembling its own package, according to Illinois Department of Commerce spokesman Dave Roeder. “Illinois is responding to Boeing’s call for proposals regarding its 777X manufacturing center, which has the potential to create thousands of jobs,” he said. He added that the proposal will be submitted electronically today and a hard copy will be delivered to Boeing tomorrow.

“We believe our proposal is compelling for a company that already has its headquarters in Illinois. However, a confidentiality agreement prevents us from discussing details at this time,” Mr. Roeder said.

Boeing does have a plant in the Metro East area. But I’m really skeptical that Illinois could win this war.

A main reason Boeing moved its headquarters to Chicago was so that it could be the big cheese in its new home state rather than fight against its unions for political influence.

- Posted by Rich Miller        

  1. - Downstate Illinois - Wednesday, Dec 11, 13 @ 11:31 am:

    I was wondering if Illinois was even in the running. Missouri is going all out for the plant, and Illinois hadn’t even squawked a peep.

    St. Louis has nearly a century of history associated with the aviation industry. Nothing says Boeing could tap in to the aerospace expertise there and land a plant on the east side of the river, on or adjacent to MidAmerica Airport and Scott Air Force Base.

  2. - wordslinger - Wednesday, Dec 11, 13 @ 11:35 am:

    –A main reason Boeing moved its headquarters to Chicago was so that it could be the big cheese in its new home state rather than fight against its unions for political influence. –

    Exactly right.

    Boeing’s already turned down an $8.7 billion state incentives package from Washington? This poker game’s too rich for my blood.

    I didn’t realize Boeing shipped their big jets overseas. I just assumed they flew them for delivery. Go figure.

  3. - Reality Check - Wednesday, Dec 11, 13 @ 11:36 am:

    They should have written into the conference committee report a requirement that retirees send their pension checks directly to Boeing et al.

  4. - anonxx - Wednesday, Dec 11, 13 @ 11:47 am:

    First, a big reason Boeing located HQ in Chicago is that the execs all travel the world and it’s easier doing that from here than Seattle.
    Secondly, how can the State issue a proposal to a company and have it covered under a confidentiality agreement? Does FOIA not apply here?

  5. - CircularFiringSquad - Wednesday, Dec 11, 13 @ 11:55 am:

    Boeing wanted $8.7 billion from the AND worker concessions. Now they want free land and no taxes for $8-10 billion building.
    BTW Office Depot decision to stay in FL should surprise no one since new CEO was last posted in Atlanta with Arbys/Wendys and SC with parent of Food Lion. He seems to like warm places.

  6. - Pensioner - Wednesday, Dec 11, 13 @ 12:03 pm:

    Bye bye. Enjoy the swamp. ENOUGH corp welfare!

  7. - foster brooks - Wednesday, Dec 11, 13 @ 12:05 pm:

    Boeing is looking for a right to work state

  8. - Union Man - Wednesday, Dec 11, 13 @ 12:15 pm:

    No way is Boeing coming to Illinois!! Save your breath.

  9. - dupage dan - Wednesday, Dec 11, 13 @ 12:22 pm:

    Boeing would be happier in a right to work state, given their actions in other states. Hard to see Illinois getting the nod on this one.

  10. - Arthur Andersen - Wednesday, Dec 11, 13 @ 12:29 pm:

    Word, that story was misleading. The customers, domestic or foreign (say United or British Airways) come to the assembly plant to pick up the new plane and fly it home. It’s a rather big ritual in the airline world, with a final inspection, paper signing, money transfer, and a little bubbly.

    To the Post, I think Illinois’ chances are very slim. It’s unlikely that we could offer a deal even as good as Missouri. Secondly, I don’t see them building in their HQ state as noted earlier. They have also tended to pick Coastal locations. The St.Louis complex is old McDonnell Douglas property Boeing inherited in the takeover, like the Long Beach plant they are closing (very old and inefficient but sitting on land worth a gazillion)

  11. - PolPal56 - Wednesday, Dec 11, 13 @ 12:31 pm:

    Never thought for a second Office Max would HQ in Illinois, so I’m not buying that lack of incentives had anything to do with it. That’s just a big business having a bit of a pout that it didn’t get Illinois to play its game.

  12. - PublicServant - Wednesday, Dec 11, 13 @ 12:45 pm:

    U of I has one of the top Aerospace Engineering programs in the country, and the midwest is strong in Aerospace Engineering programs with Purdue and Michigan in the top ten too. Illinois would be a natural fit in that respect. I hope they’re playing that up in the Illinois bid.

  13. - Newsclown - Wednesday, Dec 11, 13 @ 12:47 pm:

    The corporatists keep trying to gin up a feeding-frenzy of tax give-aways and incentives on the part of the government. We shouldn’t buy into the hype. Companies this big wind up paying relatively little in taxes, no matter what, wherever they go.

    There’s a case to be made to put a Boeing plant near Peotone’s proposed airport. Not too far from the Corporate HQ for regular visits on-site. (Teleconferencing can only do so much) You have a tremendous logistics network of roads and rails and barges nearby to supply the plant, as well as to ship out completed sub-assemblies. A similar advantage comes with locating near Scott AFB, and the local economy would really like the jobs. Illinois has a strong workforce in A&P mechanics already, and aviation schools in Champaign and Southern IL to churn out fresh ones to order. We have in Illinois access to multi-gigabit dark fiber perfect for moving massive CAD and CATIA files around and doing complicated fluid dynamics computation.

    DCEO’s job is to push all these natural advantages, not give away the store to anybody with a good poker face, without getting anything back. I understand the fear, should we lose a “whale” to a competitor. But don’t give up all the boats, just on the *possibility* of keeping the whale another year or two. And then what happens when they up the ante the next time? The only sensible strategy is a blanket “no” to simple give-aways. Work infrastructure deals, work on bonding agreements, that kind of thing, leave the fire-sale auctioneer hysteria to the chumps.

  14. - Mokenavince - Wednesday, Dec 11, 13 @ 1:01 pm:

    I believe we have as good and chance as anyone.
    Newsclown makes a good case for our state, we have great schools in rural Illinois and a good work force.
    We should never give up.

  15. - My Thoughts For Whatever - Wednesday, Dec 11, 13 @ 1:17 pm:

    There are many long, drawn-out stories being written about Office Depot and now Boeing and what Illinois should do or should not do in regard to offering incentives. I have a very short and simplistic way of looking at these stories by asking one question: Do the positives significantly outweigh the negatives? It was an easy decision to not fall for Office Depot’s half-hearted attempt to seduce Illinois when the deck was already stacked for Florida. It sounds like there might be more of the same with Boeing. It reminds me of the story a few years ago about a very well-known sports agent who’ll I call SB that had a very wealthy team owner basically bidding against himself for an available free-agent, while at the same time the price kept going up and up. That’s one of the problems with confidentiality.

  16. - DuPage - Wednesday, Dec 11, 13 @ 1:29 pm:

    Sometimes these “package deals” are misleading. The 8.7 billion deal in Washington state might include waiving or reducing taxes that the company might already avoid in Illinois. It seems a lot of corporations avoid paying much Illinois income tax.

  17. - 32nd Ward Roscoe Village - Wednesday, Dec 11, 13 @ 1:35 pm:

    Kansas would love to lure a Boeing plant back–its military arm used to employ 1% of the population of the entire state. Also Wichita has other aircraft plants (Cessna, Learjet) and WSU has strong aerospace engineering program and National Institute for Aviation Research (a legacy of Senator Bob Dole).

  18. - Motambe - Wednesday, Dec 11, 13 @ 1:57 pm:

    Illinois should twist some arms in St. Clair County and offer to give Mid America Airport to Boeing. The county’s management is so incompetent they have turned it into a money pit year after year. Could be a winner for Boeing - runway, building, Air Force Base adjacent, interstate access for supplies and employee travel, and a decent technology-trained workforce.

  19. - Jabes - Wednesday, Dec 11, 13 @ 2:03 pm:

    It all feels like extortion to me: “Nice corporate headquarters we’ve set up here. It’d be a shame if you lost it.”

  20. - Pete - Wednesday, Dec 11, 13 @ 2:03 pm:

    The Boeing operation in St. Louis has been so disjointed from the operation in Seattle. A production plant in Illinois would be a huge shot in the arm to Missouri.

  21. - 32nd Ward Roscoe Village - Wednesday, Dec 11, 13 @ 2:14 pm:

    As others has said before, Illinois will not get it–it will go to a right to work state.

  22. - Demoralized - Wednesday, Dec 11, 13 @ 2:32 pm:

    Boeing isn’t going to build a new production facility in Illinois unless we pay for the construction, eliminate all of their taxes and let them pay their workers squat.

  23. - Formerly Known As... - Wednesday, Dec 11, 13 @ 2:46 pm:

    This is all part of Illinois’ “crazy like a fox” strategy.

    Let some of the smaller fish walk while saving up that corporate welfare to land a really big fish like Boeing.

    It all makes perfect sense, can’t you see? lol

  24. - Formerly Known As... - Wednesday, Dec 11, 13 @ 2:55 pm:

    === Boeing’s already turned down an $8.7 billion state incentives package from Washington? ===

    It looked like a done deal until union members voted against the contract. The fascinating part will be learning the final numbers on wherever Boeing winds up now.

    Boeing balked at $8.7 billion over the union’s refusal to accept the contract. But will Boeing’s new deal match the $8.7 billion they already had in hand?

    Will Boeing’s push for ever larger cumulative “savings” on this one wind up actually costing them money in the end?

  25. - 4 percent - Wednesday, Dec 11, 13 @ 2:56 pm:

    Illinois has a chance. Boeing needs to be near an airport and MidAmerican is perfect. It’s not used commercially and there is plenty of space, qualified workers, aerospace background, etc.

  26. - Ahoy! - Wednesday, Dec 11, 13 @ 3:07 pm:

    With Illinois Workers comp rates Illinois would probably need to put together a massive incentive proposal, especially with places listed in the article above being right-to-work.

  27. - walkinfool - Wednesday, Dec 11, 13 @ 3:10 pm:

    This specific decision is all about power versus unions. That attribute is not one of Illinois’ relative strong points.

  28. - Arthur Andersen - Wednesday, Dec 11, 13 @ 4:02 pm:

    Pete, part of the “disjointed” Boeing STL is that it is part of the Military division, which isn’t the cash cow it used to be. The way cool but aging FA-18 Super Hornet is built there.

    Keep in mind that Boeing actually flies sub-assemblies of the 787 cross-country to NC for final assembly (in a bizarre-looking modified 747) so central location doesn’t mean diddly these days.

    Boeing will never go back to Kansas-Wichita is having a difficult time maintaining the aviation jobs they have due to the downturn in the private/business jet markets (See Hawker Beechcraft)

  29. - wordslinger - Wednesday, Dec 11, 13 @ 4:31 pm:

    AA, good stuff.

    Does Boeing ship sub-assembly to the Asia markets for final assembly? That threw me for a loop that much of their Asian product was ocean-borne.

  30. - Arthur Andersen - Wednesday, Dec 11, 13 @ 4:40 pm:

    word, I don’t think so. There may be components shipped inbound to the Washington factories, but all the final assembly is done here.

Sorry, comments for this post are now closed.

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