Boeing’s fortunes have always affected Washington’s economy. That will hold true in 2020

Making a call on this region’s and state’s economic performance in 2020 was already a dicey proposition. Between elections at every level (and the general repulsiveness of the candidates and policies presented to voters), trade disputes, restiveness in the energy markets, clashes of the tech titans, signs of weaknesses in some global economies and long-term disruption in sectors like retailing, there were too many variables and moving parts to feel confident about any prediction.

Then along came Boeing.

Or, more properly, along came Boeing’s current miseries.

Boeing has always had an outsized role in determining the economic fortunes of the Puget Sound region and Washington state, both for bad (the series of Boeing busts and Boeing-driven recessions, most recently after 9/11) and for good (the series of Boeing booms and a decent aerospace market that kept the Great Recession from being worse in these parts than it was).

For all the chatter about what those tech titans like Microsoft, Amazon, Google and Facebook (the latter two having established outposts locally) have contributed to the state’s economy — and it’s been considerable; tech was another cushion during the most recent recession — Washington is still an aerospace economy. It reaches to corners of the state that the tech boom hasn’t touched. Depending on who is doing the counting and how loosely they’re defining the term, aerospace accounts for tens of thousands of jobs and hundreds of companies.

Any economic or financial hiccup for the industry, primarily airlines cutting back on new-plane orders, carries consequences for the broader economy, even for those with no apparent connection to aerospace.

But what Boeing is going through at the moment is no mere hiccup. This is a full body convulsion.

Each of Boeing’s commercial airplane programs has issues, and the one in the biggest trouble and causing the biggest pain to the company — the Renton-produced 737 — was until very recently regarded as the old reliable in the fleet, the one with the huge order backlog, a series of (outwardly, at least) relatively smooth production-rate increases and plans for more.

In less than a year and a half, Boeing has had its reputation shredded, gone through management upheaval that hasn’t ended yet and had to suspend production of its biggest plane program, the result of two fatal crashes and the decisions it made before and after. The Max debacle has cost the company billions to date, and the meter is still running.

Boeing may yet claw its way out of its current predicament, or things could, for employees, local operations and the supply chain that supports and feeds them, get a whole lot worse. The latter outcome would be very bad for the local economy (a prolonged suspension of 737 Max production, followed by layoffs at Boeing and at suppliers). But so is the current state of uncertainty.

Nothing is ever certain in business, but when companies and the people who run them reach a critical level of uneasiness about their economic future, the natural tendency is to sit tight, stay on the sidelines, see how the story plays out, to get a clearer sense of conditions before making any sizable commitments. They don’t expand, they don’t hire (and they may not fill openings created by attrition), they don’t invest in new plant and equipment. They wait.

That’s not as devastating to a regional economy as bad news like cancellation of an entire plane program, but it is a drag on the economy. And companies can’t wait forever. Eventually they’ll make decisions about their own production and staffing or go looking for other opportunities and markets.

Even in aerospace there are some. Lots of Washington aerospace manufacturers supply Airbus (which is now an American as well as a European manufacturer, and which recently bought a Mukilteo maker of robotic assembly systems). The “space” portion of the word aerospace is providing some interesting growth prospects, including at Jeff Bezos’ Blue Origin in Kent.

There also are opportunities in non-aerospace manufacturing. Multiple boatyards exhibiting at the recent Pacific Marine Expo in Seattle reported seeing sustained orders for fishing vessels, ferries, tour and excursion boats and workboats. One of those is Tacoma’s Modutech Marine, which is building small workboats for the military and a vessel for the Bristol Bay fishery.

Says Modutech’s Bruce House, “It’s going to be a busy couple of years.”

Food manufacturing is another growth market, especially east of the mountains. Investments in potato-processing plants in Othello and Richland generate jobs and economic activity not just at the facilities themselves but for farmers and those who supply them.

Beyond manufacturing, construction activity for highway and light-rail projects, warehouse space and residences should be decent. The tech sector has its political challenges and some problems with ludicrous valuations for money-losing ventures, but it also has some interesting prospects in the Industrial Internet of Things and other technologies that improve business efficiency.

Are those examples, and everything else going on in the economy, enough to counterbalance Boeing’s influence? Yes, perhaps, if uncertainty and delay is the worst outcome. No, not likely, if Boeing has to take more drastic action such as laying off employees.

All those factors mentioned at the top of this column that are clouding the economic outlook for 2020 pale in significance, for the region and the state, to the influence Boeing will have.

When we know how Boeing’s situation is resolved, and when, or if, then we’ll know what kind of year it’s going to be.

This story was originally published December 28, 2019 at 7:00 AM.