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Saturday, March 29, 2003 - Page updated at 12:00 AM

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Boeing shops around for 7E7 building site

Seattle Times business reporter

A top Boeing official said yesterday that company will pick the final assembly site for its next-generation jetliner, the 7E7, in a public competition similar to what it used in 2001 when it selected Chicago for its world headquarters.

Between now and the fall, Boeing intends to lay out publicly its requirements for building the new airplane here. Elected officials and possibly the voters will be asked to meet those criteria to try to win the airplane for Puget Sound.

"We'll soon be making some specific ideas known to Washington State," said Bob Watt, Boeing's vice president for government and community affairs. "We're committed to a fair and open conversation for final assembly of the 7E7. It will be public."

The list of criteria will not be presented as a do-or-die ultimatum; and meeting all of the criteria will not guarantee that Washington will win the competition. But it will be a wish list that state officials will find hard to ignore.

"It would not be this company's style to say, 'Hit this list or else,' " Watt said. "It will be our style to say, 'Here are some very important criteria in our decision; please let us know what you can do about these criteria.' "

The same kind of competition is already going on as the company selects communities to supply 7E7 components. This week, Boeing asked Kansas legislators for a $500 million package of tax breaks and other economic development incentives to ensure that Boeing's Wichita plant is in the running to build components and subassemblies for the 7E7.

The decision on a final assembly site can't be made until Boeing knows who its major global partners will be and where its parts will be shipping from.

The decision will be momentous for this state, the home of Boeing's commercial airplane manufacturing operations since its inception in 1916. The 7E7 represents the future of the commercial airplane division. If it's built elsewhere, airplane manufacturing here will wind down over a period of around 20 years, the life span of the newest jet currently built here, the 777.

Washington Gov. Gary Locke and other elected representatives have been consulting with Boeing on what its needs will be. "(Washington officials) have been calling," said Watt, "and we've told them, when we know more we'll get back with you for more conversations. We'll have those conversations with you first and then we'll have them with the whole rest of the country."

Watt acknowledged that with massive budget deficits, unemployment and recession, the state will have to dig deep to come up with what is needed.

He also addressed the political gridlock that has paralyzed state politics in recent years. Voters have twice rejected specific Boeing-backed proposals — unemployment-insurance tax changes, and a gas-tax proposal to improve highways.

Action on both these issues was recommended by the Governor's Competitiveness Council, chaired by Boeing Commercial Airplanes chief Alan Mulally. Boeing has repeatedly pointed to the competitiveness council report as a starting point for the state to keep Boeing production here, but Watt said there will be a specific 7E7-related request as well.

Though there seems little time for dramatic progress in Olympia before the 7E7 decision is made, Watt expressed confidence that legislators could overcome whatever obstacles exist given the political will.

"Is it too late? I don't think so," Watt said, "The legislature has on more than one occasion convened in special session and done remarkable things."

"This public conversation about the 7E7 will make that broader conversation considerably more pointed," he said. "We're thinking that's helpful."

In Kansas, Boeing has asked for $500 million in tax incentives and other government contributions, by far the biggest incentive package ever requested by a company, said Kansas Senate President Dave Kerr.

Jeff Turner, vice president and general manager of Boeing Wichita, told the Wichita Eagle the incentives could include tax breaks, bonds or any number of other economic development tools. The company is looking for financial help with technology development, design work and tooling that will be needed to build major components of the 7E7, he said.

Turner said Wichita's pool of skilled aircraft workers also is a plus, but competing sites around the globe have offered to put up money. Companies in Japan, Italy, France and Spain are competing for the work, he said.

Asked what Boeing Wichita would be building in the future without the 7E7, Turner replied: "I don't like to think about that."

Dominic Gates: 206-464-2963 or dgates@seattletimes.com

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