July 10, 2007 in Business

787 launch is Boeing’s chance to validate strategy

Bert Caldwell The Spokesman-Review
 

Boeing Co. and the state of Washington play the trade game better than anyone else in the United States, with the Sunday rollout of the 787 the newest case in point.

Boeing has not only booked record launch orders for its next-generation airplane; it has done an impressive job coordinating a global supply chain, although there are concerns: enough fasteners in the near term, and the longer term capacity of some partners to ramp up production.

Enthusiasm for the plane – 600 orders and growing – has put enormous pressure on Boeing to perform. The clumsy Airbus debuts of the A380 – wrong wiring – and A350 – wrong design – created an unexpected opening for Boeing and its latest creation.

If the company can get the 787 into customers’ hands next year, the on-time deliveries will affirm Boeing’s decision to piece out development, financial risk and production to international partners. After all, foreign airlines have been the biggest buyers of the plane to date, and their dominance is expected to continue over the next two decades.

Airbus also outsources work, but not the way Boeing has. The European company is reportedly adopting the model of its U.S. rival.

Although labor dislikes the Boeing strategy and the export of many jobs that used to be done in Washington, the aircraft maker’s resurgence has driven growth in manufacturing employment across the state, Spokane included. More than 6,000 aerospace jobs were created in 2006. A like number is expected for 2007.

But the value of trade is not an article of faith everywhere, and discussion of its virtues has become more tortured as it has become entangled in issues such as immigration. In the last few weeks, trade agreements with South Korea, Colombia, Peru and Panama have drawn heavy fire in Congress. There is a strong possibility none will be approved.

If so, Washington farmers will be among the losers. The pacts were expected to expand markets for Washington fruit and potatoes. State farm exports are a strong second to aerospace in total value.

Also, as of June 30, the president’s ability to negotiate “fast track” trade agreements expired. The law, enacted by Congress in 1974 and renewed several times since then, allows the president to negotiate an agreement, then submit it to Congress for a simple up or down vote. President Bush, working with the Democratic leadership in the House and Senate, agreed this spring to include labor and environmental safeguards in those and future compacts.

That did not save his authority. New trade agreements, like immigration reform, are probably off the table until a new president takes over in January 2009.

One wonders how long Washington and Boeing can sustain their healthy relationships around the world against such a backdrop.

The state scored twin coups last year by hosting China President Hu Jintao and outgoing Mexico President Vincente Fox. Gov. Chris Gregoire and a delegation of other government, education and business leaders are in Mexico this week exploring additional opportunities with one of our biggest trading partners.

Sen. Maria Cantwell, D-Wash., is promoting a November energy trade summit in Seattle, with China among the participants.

Washington officials and businesses approach discussions like this with the attitude there’s something in it for both sides. In too many other places, that does not seem to be the case. Trade is not an absolute good, but its opponents too often claim almost anything less is not acceptable.


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