Missouri has agreed to an incentive package with Boeing that provides the aerospace giant up to $229 million if employment grows – and less if it shrinks moderately.
The deal reflects worry that Boeing’s local employment may tumble as major fighter programs wind down, according to the St. Louis Post-Dispatch, which obtained details of the subsidies through an open records request.
Under the deal, Boeing will get $229 million over 18 years if its current St. Louis-area workforce increases by 2,000 jobs. If it maintains employment at its current level of 14,500 jobs, Boeing would collect up to $146 million of the state incentives over 10 years. And the company would collect a smaller subsidy as long as its job count stays above 12,500. Boeing would have to give back money if the job count falls below 11,000 any time in the next decade.
“We want them to retain their current employment and create 2,000 new jobs. That’s our primary objective,” said Mike Downing, director of the Missouri Department of Economic Development.
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Paying Boeing to retain the jobs it already provides is “pretty unique,” said Richard Ward, a longtime St. Louis development consultant. “It’s not normal, not frequent. The state is trying to make sure they continue a significant presence.”
If Boeing maintains practically all the current jobs, the company will get a tax credit equaling 20.5 percent of the money withheld from workers’ paychecks for state income taxes, capped at $146 million. The percentage of Boeing’s take would decline as the job count declines, and disappear if Boeing drops below 12,500 St. Louis employees.
To get the job retention subsidy, Boeing would also have to make a capital investment – such as new buildings and equipment – equaling half the subsidy within three years. Boeing has already begun work on a new north St. Louis County facility valued at $200 million to build parts for the 777X airliner.
A second program would provide an extra reward that would cap out at $78 million over six years if the company adds 2,000 well-paid jobs. Finally, the company expects to tap $4.9 million through a state job retraining program.
Boeing has already announced plans to add about 2,000 jobs in St. Louis. Those include 700 new jobs expected by 2021 to build wing and tail parts for the new 777X airliner. Other Boeing jobs moving here include service work for the F-22 fighter, information technology and research jobs.