Where is Boeing going? Everett's big advantage: location

EVERETT — Everything is in place right here.

Blue water and green fir frame a location where air, road, rail and ocean transport systems converge on the largest building by volume in the world.

Across from the plant's huge exit doors, jets are painted and tested beside the 9,000-foot runway of Paine Field, where, in this mild climate, they can take off and land almost any day of the year.

Highways extensively widened and upgraded for Boeing in the last dozen years connect to Interstate 5 to the east and the south.

A Boeing rail spur connects the plant to the port, delivering parts arriving by sea from Japan and around the globe.

It's an ideal place to make planes. It's taken 35 years to build the infrastructure. Why would Boeing think of leaving all this?

The 'green field'

Home of one of the most famous factories in the world, Everett is now just one of a number of contenders for Boeing's next-generation jet, the 7E7.

Everett's geographical advantages are being weighed against other locations' lower labor and utility rates, possibly lower taxes, and the very fact that they would be new.

Boeing's manager responsible for the 7E7, Mike Bair, speaks of the advantages of starting from a "green field" — meaning from scratch — for a plane that will be built in a revolutionary way. Bair notes this could happen inside the existing factory.

Nevertheless, Everett is being prodded and analyzed by the company's site-selection team along with places such as Harlingen, Texas; Savannah, Ga.; and Moses Lake east of the Cascades.

A generation ago, in another competition like this, Everett was itself "green field" — actually, mostly green forest.

It was 1966, Boeing had just won orders to build the world's first jumbo jet, the 747, and needed to build a plant quickly. According to Robert Serling's Boeing history, "Legend and Legacy: The Story of Boeing and Its People," Everett ranked no higher than fifth in a company analysis of 50 potential sites.

But it had thousands of acres for expansion. It had Paine Field and Puget Sound next door. With established plants in Renton and Seattle, the workforce was nearby.

Everett has been home to Boeing's wide-body planes ever since. The 767 joined the 747 in 1981; the 777 in 1994. (Boeing's smaller narrow-body models are made in Renton and Long Beach, Calif.)

'Aerospace rust belt'?

But over the last decade, as Boeing faced growing competition from European consortium Airbus, the company's relationship with the region frayed.

In the early 1990s, when Boeing embarked on the 777 program, the state was in a budget crisis similar to this year's. Strapped for cash, state leaders required Boeing — which hadn't seriously considered building the 777 anywhere else — to pay $47 million toward road improvements to deal with the extra congestion at Everett.

It was a small item in an airplane program that cost more than $10 billion to get off the ground. But Boeing executives were furious to be presented with a bill when they expected a bouquet.

Frank Shrontz, Boeing's chairman at the time, made his displeasure public in a 1991 speech to the Greater Seattle Chamber of Commerce. "Could Puget Sound turn into an aerospace rust belt in the 21st century — complete with padlocked factories, unemployment lines and urban blight?" he said. "Yes, it could."

Shrontz's vision has never seemed more possible than now. At its peak in 1997, Boeing employed 30,000 in Everett; that has fallen to 18,000 today — and the monthly layoff announcements show no sign of slowing.

Boeing's top executives have continued to bluntly criticize the state for everything from its overcrowded interstates to its high unemployment taxes. They moved the corporate headquarters to Chicago and are making clear that new jetliner production could be next to go.

If Everett doesn't get the 7E7, it would probably continue operating for at least another 20 years. But it could be a lame duck.

The 747 and 767 are nearing the end of their lifespan, squeezed by newer Airbus and Boeing models. When the 777 program is retired, perhaps around 2025, Everett could have nothing left to build.

Everett pulls for Boeing

No one's more aware of that than local leaders in Everett and Snohomish County, which depend on Boeing to a remarkable extent. One example: Employees and the company account for close to 50 percent of local giving to the county's United Way campaign.

Paul Roberts, Everett's longtime director of planning and community development, says he doesn't need much discussion of Boeing issues with Everett Mayor Frank Anderson.

"I don't have to ask him," Roberts said. "It's understood: If there's something they need, let's go find a way to do it. I have a green light."

The road infrastructure in place today is as good as it is because Roberts used all $370 million of the 777 impact mitigation fund (Boeing's $47 million plus state and other money) exclusively to service Boeing's access needs — with every dime spent OK'd by the company.

When Boeing was frustrated by Washington's strict land-development and environmental regulations, Roberts led an effort to get the company comprehensive permits for future expansion.

"We pushed Boeing. We said, let's not go through this process again," Roberts said. "Permit as much as you can dream. Let's get it all permitted."

If Boeing or a supplier wants to build anywhere within the entire 4,000-acre area around the plant today, there's no need to hire consultants to do a survey. Every stream and patch of wetland is mapped, and the applicable regulations are set down.

In the fall of 2001, when Boeing was promoting the concept of a superfast jet called the Sonic Cruiser — later shelved for the 7E7 — John Mohr, executive director of the Port of Everett, remembers worrying about how to move very large parts from the port into Boeing's plant.

"I literally sat up in bed one night and said, 'Oh my God, we could be the choke point here,' " he said.

Ensuing talks with Boeing came up with the idea of a special pier at Mukilteo for airplane parts. From that dock, which the state will pay for if the 7E7 goes to Everett, ocean barges would be able to unload onto trains that would climb the short, steep grade directly from sea to plant. In all, shipping parts from Japan to Everett would take many days less than shipping them to Texas or the East Coast.

Private concern

Boeing in Everett: The history 1966: Boeing announces in June that it will build its proposed jumbo jet, the 747, at a new site in Everett. 1969: The factory is completed. First flight of the 747, the iconic Boeing airliner for more than 30 years. 1968-1971: The Boeing Bust. The company downsizes from 101,000 employees in 1968 to just 38,000 in April 1971. 1980: The plant is expanded by 45 percent to house the assembly line for the 767, Boeing's second widebody jet. 1981: First flight of the 767. 1994: At a cost of $1.5 billion, the main assembly building is expanded again to enclose 472 million square feet. First flight of the 777. 2003: Everett competes with cities across the nation to build the 7E7. Current headcount: about 18,000 workers.

Boeing shocked Washington by moving its corporate headquarters to Chicago in 2001. But this year's threat to begin making airplanes elsewhere kicked off an unprecedented effort in Olympia to try to make Boeing happy.

First, Gov. Gary Locke won legislative approval of a gas tax to improve the state's road system. Then in a special "Boeing session," the Legislature passed dramatic, Boeing-friendly changes to the state's unemployment and workers-compensation systems, followed by a $3.2 billion, 20-year package of tax incentives if the company builds the 7E7 here.

Locke proclaims that all this adds up to a "winning proposal" for either Everett or Moses Lake.

But privately, people who have worked on Washington's 7E7 bid warn against overconfidence.

"(The governor's package) doesn't make Washington bulletproof," said one. "There is a strongly articulated view within the company that — notwithstanding all the things that Washington has done — in the final analysis, Boeing should look for a fresh start altogether."

"This whole process has made Boeing take a harder look at Everett. There is serious consideration now," he added. "One might not have predicted that going in."

Talks with unions

Locke's office is also working on another big issue for Boeing executives: trying to broker talks with the unions over the 7E7.

Boeing production in Everett has been interrupted three times in 15 years by strikes. The Machinists Union walked out in 1989 and 1995 and came close again last year. Engineering and technical employees shook management with their first strike in 2000.

"Union-management relations here in Washington have been really hand-to-hand combat at times," says Scott Hamilton, a local aviation consultant. "Boeing management is just fed up with that kind of labor atmosphere."

Another longtime Boeing-watcher, Highline Community College professor T.M. Sell, says that atmosphere is mostly the company's doing. "I don't blame the unions; I blame the company," said Sell, author of "Wings of Power: Boeing and the Politics of Growth in the Northwest."

"The reason Boeing succeeded in part is that they had this really loyal, hard-working workforce that time and time again when they needed it went to the mat for them," he said. "In the last 10 years, they've been frittering that all away."

Last year, Boeing got changes in the Machinists Union contract that give it more flexibility on the factory floor. But it will want more for the 7E7. The company is planning dramatically different manufacturing techniques that would mean new work rules and probably new job descriptions.

If the 7E7 program were to move to a Southern state, Boeing would get new contracts or possibly no unions at all.

Locke's office is quietly shuttling between the company and its unions, trying to start discussions about 7E7 issues, say people familiar with the talks.

Machinist district President Mark Blondin, who represents about 18,000 Boeing workers, said through a spokeswoman that he could not comment on any talks. But Blondin has called for government and unions to do what's necessary to win the new program. Earlier this summer, the Machinists broke with organized labor and helped Boeing get changes to the states' unemployment and worker-compensation systems.

The 7E7 competition "demands creative thinking and a departure from the way things have been done in the past," Blondin wrote in the union's latest newsletter.

A deal over work rules could be a crucial element. In 1995, McDonnell Douglas was set to move to Texas to build its MD-95 jet (now the Boeing 717). The company changed its mind and remained in Long Beach, Calif., after a last-minute agreement with the unions.

Can Everett pull it off?

Company executives have been virtually silent in recent months on all the efforts to keep Boeing in Washington. Analysts, longtime Boeing watchers and even company insiders are divided over Everett's chances of getting the 7E7.

"If Boeing wanted to do the most efficient thing," says professor Sell, "they'd just shoe-horn it into Everett." But Sell guesses Boeing is headed to Texas, a move that would win congressional clout for its defense business.

Roberts, Everett's chief planner, hopes Boeing will realize its best option is at home.

"I think the grass is not greener," he said.

Times researcher Miyoko Wolf contributed to this report.

Dominic Gates: 206-464-2963