Boeing and State Incentives — Update — What Are the Implications?

Boeing Dreamliner
Boeing employees voted today in favor of contract and pension limitations to secure their jobs.  This was against the advice of their union leaders. This vote has convinced Boeing to keep production of the new 777X in the State of Washington.
This vote stops the multistate competition over new state incentives.  Washington, California and South Carolina, among others, were battling it out with the winner gaining Boeing’s new production facility for the 777X.
The vote dramatically highlights that it aren’t only state incentives or favorable regulations that are crucial to retain industries. Retention and expansion of industries already located in a state also involves fostering pragmatic expectations of employees and realistic contract and pension negotiations.
Tax and economic incentives aren’t always the most critical to corporate decisions concerning retention and expansion of corporate activities. Corporate decision-making makers and corporate boards are particularly sensitive to issues relating to corporate – employee contractual relations. This is an exceedingly important factor in retaining firms of all sizes since it has an immediate impact on the bottom line. 
Promoting sensible corporate – employee contractual relations is beneficial to states and is primarily derivative from an overall business-friendly culture in a state and a well-educated and responsible work force. Governors of states who are actually responsible and on the front lines for promoting jobs know this very well. (Sometimes the federal government forgets. But that’s another story.) A state can foster this culture by a myriad of actions. The employees in Washington and the State of Washington have belatedly learned this lesson once again.
Hopefully, states throughout the United States have done so as well.
Previous Blog ……………. Malawer, State Incentives and Jobs (December 29, 2013).

About Stuart Malawer

Distinguished Service Professor of Law & International Trade at George Mason University (Schar School of Public Policy).
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