Brown, Boeing and Unions

Boeing-777X

 

In late Monday Sac Bee:

“California will be among states submitting bids to Boeing this week in an effort to land a production facility for the company’s newest commercial jetliner.

An official for Gov.¬†Jerry Brown‘s Office of Business and Economic Development, or GO-Biz, confirmed Monday that California will submit a proposal to Boeing ahead of the company’s Tuesday deadline for states to submit proposals to host production of the 777X.

GO-Biz declined to say what incentives, if any, are included in the proposal, though Brown has significant latitude to negotiate.”

He certainly has latitude in offering tax incentives to Boeing, or any company which qualifies under the state’s restructured enterprise zone. The Governor is permitted to offer tax incentives, up to $30 million this year, to lure business via the state.

The tax credits, administered under a newly-formed California Competes Tax Committee, can increase to $150 million next budget year and $200 million annually in subsequent years.

This would be a boon to California’s economy, since in 2015, Boeing is expected to shut down production on the C-17, a military plane. Presently, Boeing employs 20,000 people in California, 3,000 of whom work in the Long Beach facility on the C-17.

California is one of several states courting Boeing after the aerospace giant, mired in a labor dispute in Washington, began searching for another site to build the 777X. The company has billed the plane as its largest and most fuel efficient commercial aircraft.

Since California is not a “right to work” state and instead, is a forced union state, this will possibly hurt California’s chances to land such a lucrative opportunity to help the unemployed status in the state.

While Washington state is also a forced union state, Boeing, in recent years, has branched into states where right to work is the law and the opportunity to create jobs which are non-union exist. Certainly, the employees in those states are happy to have jobs, regardless of union status.

Governor Brown understands the uphill battle he and the state face to keep existing jobs in the state and to create more jobs to help his ailing economy. If Boeing decides to pull the remaining jobs and bring them to South Carolina or elsewhere, this could be the beginning of a real depressed job market in California. And he knows it.

The tax credits may help, but an entire revamping of the state’s labor laws may be in the offing. Meanwhile, Boeing looks.