{"id":3576,"date":"2015-01-14T12:38:49","date_gmt":"2015-01-14T18:38:49","guid":{"rendered":"http:\/\/peaceeconomyproject.org\/wordpress\/?p=3576"},"modified":"2015-01-14T12:38:49","modified_gmt":"2015-01-14T18:38:49","slug":"boeing-may-reap-229-million-in-new-subsidies-from-missouri","status":"publish","type":"post","link":"https:\/\/peaceeconomyproject.org\/wordpress\/boeing-may-reap-229-million-in-new-subsidies-from-missouri\/","title":{"rendered":"Boeing may reap $229 million in new subsidies from Missouri"},"content":{"rendered":"

by\u00a0Jim Gallagher<\/a>
\nclick here for original article<\/a><\/p>\n

The state of Missouri will hand Boeing $229 million over 18 years if the aerospace giant grows its current St. Louis-area workforce by 2,000 jobs, according to details of the state\u2019s incentive package.<\/p>\n

But the lucrative deal will allow Boeing to pocket millions in state tax money if it just maintains the jobs it already has here. It can even collect some subsidies if some Boeing workers are laid off.<\/p>\n

The deal is unusual. It reflects worry that Boeing\u2019s local employment may shrink drastically as major fighter programs wind down later in this decade. It dangles a rich carrot to tempt Boeing to hire more people in the St. Louis area.<\/p>\n

\u201cWe want them to retain their current employment and create 2,000 new jobs. That\u2019s our primary objective,\u201d said Mike Downing, director of the Missouri Department of Economic Development.<\/p>\n

Boeing would collect up to $146 million of the state incentives over 10 years if it maintains employment at 14,500 jobs, which is roughly the current employment in the St. Louis area. The company\u2019s defense unit is based in St. Louis County.<\/p>\n

The company would collect a smaller subsidy as long as its job count stays above 12,500. But it would have to give back money if the job count falls below 11,000 any time in the next decade.<\/p>\n

State and local governments often pay up to lure lots of new jobs. But paying Boeing to retain the jobs it already provides is \u201cpretty unique,\u201d said Richard Ward, a longtime St. Louis development consultant. \u201cIt\u2019s not normal, not frequent. The state is trying to make sure they continue a significant presence.\u201d<\/p>\n

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\u2019 paychecks for state income taxes, capped at $146 million. In effect, Boeing would pocket a bit less than 1 percent of its local payroll.\u00a0<\/span><\/p>\n

The percentage of Boeing\u2019s take would decline as the job count declines, and disappear if Boeing drops below 12,500 St. Louis employees.<\/p>\n

To get the job retention subsidy, Boeing would also have to make a capital investment \u2014 such as new buildings and equipment \u2014 equaling half the subsidy within three years. The company seems to have that covered. Boeing has already begun work on a new north St. Louis County facility valued at $200 million to build parts for the 777X airliner.<\/p>\n

A subsidy of $146 million over a decade isn\u2019t much considering Boeing\u2019s size here, Ward said.<\/p>\n

\u201cIt\u2019s almost a goodwill offering,\u201d he said.<\/p>\n

But a second program would provide an extra reward if the company adds 2,000 new jobs. It caps out at $78 million, paid over six years. The subsidy amounts to $39,000 per job.<\/p>\n

Under the Missouri Works \u201cMega 140\u201d program, the new jobs would have to pay 140 percent of the statewide average wage. Currently, $60,800 is 140 percent of the statewide average wage.<\/p>\n

The state expects that new Boeing jobs will actually average $86,000 per year. Boeing would have 10 years to start the hiring, and the state could claw back part of its subsidy if some of the 2,000 jobs are later cut.<\/p>\n

As the deal is written, Boeing could lay off some workers, then hire 2,000 more, and still get the new-jobs benefit, although it would lose some of the retention money.<\/p>\n

Finally, the company expects to tap $4.9 million through a state job retraining program.<\/p>\n

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.<\/p>\n

COMPETITIVE ENVIRONMENT<\/strong><\/p>\n

Landing pieces of the commercial aircraft business is a \u201cbreath of fresh air\u201d for Boeing\u2019s St. Louis operation, said Ward. Until now, Boeing\u2019s St. Louis production has been almost solely military.<\/p>\n

It comes against a background of worry about future layoffs. Boeing\u2019s biggest local production lines \u2014 the F\/A-18, E\/A-18 and F-15 fighters \u2014 will probably run out of orders later in this decade.<\/p>\n

That could put thousands of jobs on the chopping block. Congress last month authorized 15 more E\/A-18s \u2014 the electronic warfare version of the F\/A-18. That should keep the line operating until late 2017, a one-year extension.<\/p>\n

Missouri officials hope their deal with Boeing sets up the St. Louis operation to receive other projects as the fighter programs wind down. One of those may be the new Air Force bomber. Boeing is competing against Northrop Grumman for the $55 billion project.<\/p>\n

The state of California last summer offered $420 million in tax breaks if Boeing and Lockheed Martin, who are partners on the bid, build the new Air Force bomber in California. Florida this year handed millions of dollars in subsidies to Northrop Grumman to help land more defense jobs for Melbourne, and in hopes of bringing bomber work to Florida.<\/p>\n

That points to the reason for Missouri\u2019s deal with Boeing: It\u2019s being lured elsewhere.<\/p>\n

\u201cWe live in a competitive world, and we have 50 states competing with each other,\u201d said Ward, who runs Ward Development Counsel in St. Louis. \u201cIt\u2019s bad, but true. A part of our world.\u201d<\/p>\n

The state released details of the subsidies in response to an open records request from the Post-Dispatch. In his offer letter to Boeing, Downing noted that 50 companies in Missouri make aircraft products, employing 17,600 people at an average wage of $105,000.<\/p>\n

At $39,000 per job, the new-job subsidy is \u201cnot bad compared to other deals we\u2019ve seen,\u201d said Philip Mattera, research director at Good Jobs First, a nonprofit group that studies economic development. But the subsidy for existing jobs is \u201ca lot more problematic.\u201d<\/p>\n

He said he\u2019s seen companies demand such subsidies, be refused, and maintain the jobs anyway. It can be \u201ckind of a bluff,\u201d said Mattera, whose organization in Washington is often critical of subsidies to business.<\/p>\n

Mattera also dislikes the idea of letting companies pocket part of employees\u2019 income tax withholdings. Part of the benefit if new jobs is the employees\u2019 taxes support schools and other public services. Cutting those tax collections works against a state\u2019s interests, he says.<\/p>\n

Downing notes that Boeing\u2019s retention subsidy is less than those granted to GM to maintain jobs in Wentzville and to Ford in Kansas City.<\/p>\n

Government incentives are far down the list when companies decide where to build products, development officials say. An available workforce, labor rates, land, transportation and access to customers and suppliers usually rank higher.<\/p>\n

But gifts from government can swing a close call.<\/p>\n

\u201cRarely do they cause a deal to happen in the first place. They cause it to happen in the last place,\u201d Ward said.<\/p>\n

Government negotiators are often flying blind. They don\u2019t always know what the competition is offering, or how the company views its options.<\/p>\n

In an email, Boeing said the incentives \u201cremove barriers to doing business in the state.\u201d They create a \u201cbusiness-friendly environment\u201d that gives Missouri a competitive advantage, the company said.<\/p>\n

Part of the subsidies stem from a bill passed in a special session of the Legislature in late 2013. Gov. Jay Nixon called the session when Boeing was seeking a site to assemble the entire 777X, dangling the prospect of at least 2,000 jobs for St. Louis.<\/p>\n

Boeing had threatened to move the project out of the Seattle area due to a labor impasse with the International Association of Machinists there. The Legislature passed a $1.7 billion package of tax breaks, and St. Louis County officials approved $1.8 billion more. However, Boeing decided to build the plane in Washington State after machinists there agreed to a new labor contract.<\/p>\n

St. Louis County also has offered to abate part of the property taxes the new 777X facility.<\/p>\n","protected":false},"excerpt":{"rendered":"

by\u00a0Jim Gallagher click here for original article The state of Missouri will hand Boeing $229 million over 18 years if the aerospace giant grows its current St. Louis-area workforce by 2,000 jobs, according to details of the state\u2019s incentive package. But the lucrative deal will allow Boeing to pocket millions in state tax money if […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"nf_dc_page":"","om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[8],"tags":[],"class_list":["post-3576","post","type-post","status-publish","format-standard","hentry","category-news"],"acf":[],"aioseo_notices":[],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/peaceeconomyproject.org\/wordpress\/wp-json\/wp\/v2\/posts\/3576","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/peaceeconomyproject.org\/wordpress\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/peaceeconomyproject.org\/wordpress\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/peaceeconomyproject.org\/wordpress\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/peaceeconomyproject.org\/wordpress\/wp-json\/wp\/v2\/comments?post=3576"}],"version-history":[{"count":1,"href":"https:\/\/peaceeconomyproject.org\/wordpress\/wp-json\/wp\/v2\/posts\/3576\/revisions"}],"predecessor-version":[{"id":3578,"href":"https:\/\/peaceeconomyproject.org\/wordpress\/wp-json\/wp\/v2\/posts\/3576\/revisions\/3578"}],"wp:attachment":[{"href":"https:\/\/peaceeconomyproject.org\/wordpress\/wp-json\/wp\/v2\/media?parent=3576"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/peaceeconomyproject.org\/wordpress\/wp-json\/wp\/v2\/categories?post=3576"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/peaceeconomyproject.org\/wordpress\/wp-json\/wp\/v2\/tags?post=3576"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}