Kansas joins bidding for Boeing contract

12/06/2013 8:09 AM

08/08/2014 10:20 AM

Wichita and state officials have joined the bidding to build the Boeing 777X commercial aircraft here.

Republican Gov. Sam Brownback said the state is aggressively pursuing Boeing, which decided last year to move its Wichita operations to Oklahoma City, San Antonio and Puget Sound in Washington state.

“Kansas has a great deal to offer Boeing,” Brownback said in a statement. “We … have put together a competitive bid package.” Officials wouldn’t disclose the details, citing a nondisclosure agreement with Boeing.

The contract could result in 7,000 to 10,000 new aviation jobs.

Boeing contacted Kansas and other states to bid on the work after the Machinists union in Washington state last month rejected contract concessions aimed at keeping the project there. The deadline for offers is Tuesday.

In Missouri, senators approved a financial package for Boeing worth up to $1.7 billion stretched over two decades tied to employment levels. It has been sent to the House for consideration.

Kansas is relying on existing economic incentive programs related to job training, workforce development and provisions that could allow the expensing of new equipment purchases over several years.

“We have the use of our standard economic development toolbox,” Dan Lara, a spokesman for the Kansas Department of Commerce, said in an e-mail. “Our Legislature has given the Secretary (of Commerce) the ability to work with local communities to craft proposals.”

Wichita Mayor Carl Brewer said the city would welcome Boeing back – and that Boeing should take a hard look at what Wichita can offer.

“You’d certainly hope that they’d hear us out,” the mayor said.

Boeing announced in January 2012 that it would close its Wichita facility and move the work elsewhere. At the time, officials cited cited high overhead costs at the plant, due in part to too little work on such a massive campus, and cuts to the nation’s defense budget, which meant little potential for new work.

No hard feelings, Brewer said this week.

“They made a business decision,” the mayor said. “And certainly when you look at our long-range plans for aviation, the business decision they made didn’t fit with those long-range plans.

“Yes, we’d love to keep Boeing here. But they made a business decision.”

The mayor, who worked for Boeing for two decades, was confident that the city’s engineering and Machinists unions would “be willing to look at this globally, to work with Boeing” if the company is interested in Wichita.

“It’s a totally different climate in Wichita in the aviation industry than when I was in my 20s,” Brewer said. “The Machinists, they look at the overall picture of putting people to work. I am totally confident they’ll do what they possibly can here.”

It makes sense for the 777X to be built in Wichita, said Rep. Mike Pompeo, R-Kansas.

“We have the heritage, the trained personnel, the suppliers, and so much of the infrastructure that’s necessary to build these planes,” Pompeo said in an e-mail. “I’ve spoken to the Governor’s office, Boeing, and the machinists about 777 manufacturing in Wichita, and I’m confident the Governor is going to do everything possible to make it happen.”

‘Open to options’

Teal Group aerospace analyst Richard Aboulafia said he thought Seattle, Charleston, S.C., and possibly Long Beach, Calif., have the best chance of getting the 777X work.

Seattle has the trained workforce, a port on the Pacific Ocean, an existing infrastructure and the facilities.

To have the flexibility to outsource some of the structures, Boeing needs access to a port.

“And Wichita doesn’t have that,” Aboulafia said.

Still, “I guess everyone needs to respond” to Boeing’s request, he said.

Frank Molina, president and directing business representative for the Machinists District 70, said a coalition of unions would like to work with local and state political leaders to see what needs to be done.

“At least we can make a run at it,” Molina said.

Wichita has the labor pool and a skilled workforce, he said.

The Machinists at Boeing Wichita work under the same master contract as the Puget Sound group, which recently rejected Boeing’s proposal to amend the contract to get the 777X work in Washington state. Union members said the proposal included too many concessions for it to be acceptable.

Molina said he’d favor the local lodge breaking off from that master contract and negotiating a separate contract with Boeing.

It would be up to the membership to approve a move like that and to accept changes in wages and benefits.

But “if these folks thought they could keep working, you’d be surprised what they would consider,” Molina said. “I think they would be very open to options today.”

Separation from the master contract would be in the Machinists’ best interest in Wichita, he said.

“I think we’d have a better chance of figuring something out … in keeping Wichita open if we were out from the master contract,” Molina said. “That’s the only way we’d survive here in Wichita. Us being separated from them I think would help us all.”

He’s had talks with Boeing and plans to contact economic development officials in Kansas.

“We’ve got to be open-minded to work with the Boeing corporation to get it done,” Molina said.

A ‘lot of positives’

Boeing’s engineering union said it would work with Boeing if it were to bring 777X work to Wichita.

The Wichita site has primarily performed military work since 2005.

Moving to commercial work is “a whole different mindset,” said Bob Brewer, Society of Professional Engineering Employees in Aerospace’s Midwest director. “It’s a whole different philosophy, a whole different accounting process, everything is a lot different from a Boeing military division to a Boeing commercial division.”

SPEEA would talk with Boeing about how to staff that and what it means.

“That’s something we can do if Boeing is interested,” Bob Brewer said. “We’d love to have that work here in Wichita.”

He thinks securing the work, however, will be a challenge.

“Boeing left Wichita for a reason,” he said.

The question is whether the state and local government can entice Boeing to stay in Wichita and bring the 777X work here.

“There’s got to be some attraction there for Boeing to have an interest in coming to Wichita or staying in Wichita,” he said.

Wichita has many advantages.

For one, it has the existing Boeing complex, which would have to be modified to set up a production line.

“But from a cost aspect, you’re not starting from the ground up,” Bob Brewer said. “We’ve got the runway here. We’ve got everything here. There’s a lot of positives. I’m sure that everyone that has an interest in keeping Boeing here and bringing that work here would do everything we could to sit down to make sure we could structure some kind of agreement.”

15 cities

Mayor Carl Brewer and Vice Mayor Pete Meitzner said they’ve heard reports that Wichita isn’t an option for the work. But Wichita isn’t accepting that as the final word, Brewer said.

“I know it’s been said they’ve picked 15 cities, and when I saw that I said to myself, based on what I know we have here, our skilled workforce that can build what they need built, our commitment to aviation, I would really struggle to believe we’re not one of those 15 cities,” Brewer said.

Meitzner agreed.

“How all that plays out with Boeing is above my pay grade,” he said. “I haven’t heard that we’re on their list, or that we’re not.”

Contributing: Brad Cooper of the Kansas City Star and Associated Press

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