Boeing’s plan to shutter its Wichita operations by the end of 2013 is a body blow to the Wichita and Kansas economies.
Although the most direct impact of Boeing’s decision will register in the Wichita area, the broader state economy, which can’t replace the plant’s 2,100 jobs, will suffer as well.
According to the Wichita State University Center for Economic Development and Business Research, $1.5 billion in wages will leave the local economy in the decade after the plant closing. The economic impact will multiply, however, as the Boeing payroll won’t be making consumer purchases, buying homes and paying taxes.
Gov. Sam Brownback and other officials are justified in feeling betrayed. For 10 years, the Kansas congressional delegation worked to win Boeing a $35 billion U.S. Air Force contract. Officials believed they had a deal with Boeing to keep the Wichita plant open and support 7,500 jobs in Kansas.
However distressing, this economic catastrophe offers a sobering lesson for state officials, one that Republican members of the Kansas Legislature should heed as they open their 2012 session with an eye toward further budget tightening.
No Kansan should have missed the irony in Republicans’ lamentations of the past few months, as the likelihood of the Boeing plant’s closing came into focus. Brownback, Rep. Mike Pompeo, R-Wichita, and the two U.S. senators, all die-hard free marketeers, decried the pending Boeing move as a terrible thing.
Yet all the corporation has done is align its business plan with changing market conditions. Given cuts in the federal defense budget and the expiration of contracts that had brought work to the plant, Boeing made a profit-driven calculation.
But shrewd economic decision making looks, and feels, a lot different on the receiving end.
As a result, the fate of the Boeing Wichita plant invites a long list of analogies with recent moves in the executive branch and the Legislature to cut spending – in response to changing economic conditions and in service of free-market principles.
How is the Boeing situation any different from the reduction of state jobs?
Or the effort under way in the Legislature to eliminate the defined-benefit retirement plan for state employees?
Or the decision last year to close nine local offices of the Kansas Department of Social and Rehabilitation Services?
Or the elimination of state funding for the arts and proposed elimination of funding for public broadcasting?
Parallel to the Boeing decision, cuts in state programs can reduce the state budget but transfer costs and hardship to local governments or the private sector. Indeed, a key factor in Boeing’s change of direction was the shrinking federal defense budget.
As many hardworking folks in Wichita are coming to understand, government’s economic choices have a very real human dimension.
Economic realities will force this year’s Legislature to be prudent, but it’s hard to see anything noble in sweeping state budget reductions, given the effect such cuts have on people’s lives.
Now that the shoe is on the other foot, maybe Kansas lawmakers will temper their zeal for smaller government.