Business Columns & Blogs

The good, bad and the ugly for aerospace after air show and local summit

By the time this hits your real or digital doorstep, the Farnborough Air Show will have largely wrapped up business. Boeing, Airbus and the rest will have shown off their latest shiny aircraft and announced a few orders, and after some schmoozing everyone can go home and get back to the job of actually building planes.

For some of the attendees, most notably those from the state of Washington, they’ll be arriving back in town just in time for the Pierce County Aerospace Summit, scheduled for this Wednesday at the convention center.

Among the topics to be addressed is “The Good, The Bad & The Ugly: How is Pierce County Competing With the Rest of the World in Aerospace,” presented by the head of the Economic Development Board for Tacoma-Pierce County, one of the event’s organizers.

Hmm – that sounds like an inviting subject upon which to ruminate. Let’s requisition (“steal” is such an ugly word) that theme for our own purposes and reflections.

The Good

Certainly the mood ought to be more upbeat than at last year’s soiree. Between then and now Boeing has agreed, however grudgingly, to put final assembly of the 777X at Everett, and fabrication of the plane’s composite-based tail section at Frederickson. That’s majorly good news for the workers at those facilities, the communities they’re based in, the state’s economy and the suppliers and vendors who won’t have to worry, for the moment at least, about chasing work to wherever else Boeing decides to build airplanes. It also helps secure the 737 at Renton, a plant already in the middle of multiple rounds of production-rate increases.

Removal of uncertainty also means companies that want to supply the 777X and do so in relative proximity to Everett or to Renton for the upcoming 737 Max can move forward on investment decisions for new plants and facilities. That’s particularly welcome news to Tacoma and Pierce County, which has industrial land available and somewhat less congestion for moving people and stuff to and from those plants than King and Snohomish counties.

Two more optimistic notes, on an industrywide level: We have seen in decades past periods where one of the two major competitors seemed to have all the momentum in orders and new-model rollouts, while the other floundered with production delays. For the moment, though, Boeing and Airbus appear to be roughly in balance. And customers are still placing orders and taking planes.

The Bad

The announcement that Mitsubishi will test its new regional passenger jet in Grant County can be taken as a piece of good news, which it is for Moses Lake and environs. But it’s a reminder that Boeing and Airbus do not have the market to themselves. Mitsubishi’s MRJ, Bombardier’s C Series, China’s Comac and whatever the Brazilians and Russians are building occupy the passenger-capacity slice just under that dominated by the 737 and the A320, or in some cases directly compete. Either way, the presence of those planes (and larger models that will inevitably follow) gives airlines more choices in building fleets and configuring routes, and gives Boeing more competition.

The Mitsubishi announcement also reflects more competition for Pierce County for aerospace investment; supplier plants can be here, but they also can be in Grant County, the Yakima Valley, in Spokane’s aerospace cluster or on the Olympic Peninsula. Or they could be in Utah, a state making a big move into aerospace, or even farther afield. Those decisions will be influenced by the availability and cost of land and labor, and traffic congestion.

Speaking of which, the time to start work on projects to unsnarl some of the local tangles, such as state Route 167 from Puyallup to the port, was a few years ago. But that and multiple other projects were stalled by the nonsense surrounding the Columbia River Crossing on I-5 between Vancouver and Portland. That’s still unresolved, but if legislators can tell the involved parties “come back when you’ve figured it out,” and move on with the rest they might get something approved and endorsed by voters (provided, of course, that the Seattle projects don’t get mired in delays and overruns any worse than they are now, and gasoline doesn’t hit $4.50 a gallon).

The Ugly

Two big concerns. One is the global economy. A correspondent recently asked what was going on with speculation about an aerospace bubble and the current cycle of orders being exhausted. There hasn’t been widespread conversation about those topics lately, not like during the recession when people marveled at how aerospace seemed to being growing in the midst of financial chaos. But it’s always an issue; airlines are prone to periods of spewing red ink and canceling orders.

The other big concern has to do with Boeing management. Does the Puget Sound region fit into its long-term plans for future plane models? Will the next generation of executive leadership exhibit the same antipathy for this area? Has management been sufficiently chastened by its experience with the 787 to move away from the model of a dispersed global supply chain, and back to where people know how to make planes (like us)?

For some of these factors, particularly in the “ugly” category, the locals can’t do a lot, unless they’ve mastered the art of controlling the global economy. For others (like traffic), the community has direct influence that will also sway long-term decisions. How it accomplishes that will make for interesting discussions this week. At least there’s enough in the “good” category to make those conversations worth the time an effort – and enough in the “bad” and “ugly” baskets to keep participants from getting too carried away with deadly isms like “booster” and “optim.”

  Comments