Boeing Betrays Kansas Despite Promises, Contract

Boeing Betrays Kansas Despite Promises, Contract
January 10, 2012

Steve Stanek

Steve Stanek (sstanek@heartland.org) is a research fellow at The Heartland Institute and managing... (read full bio)

Aircraft maker Boeing last year won a $35 billion military contract to build mid-air refueling tanker planes, a contract the company said would support 7,500 jobs in Wichita, Kansas, where Boeing has been building planes since the late 1920s.

Instead, despite the huge contract and hundreds of millions of dollars of Industrial Revenue bonds and various tax breaks Kansas state and local officials have issued to Boeing in recent years, the company has announced it will pull out of Wichita by the end of 2013. Approximately 2,100 jobs will be lost, and the additional 7,500 jobs will not materialize.

The jobs will go to other Boeing facilities in Oklahoma, Texas, and Washington.

Angry Response

The imminent loss of Boeing has upset and angered many local, state and federal officials in Kansas.

Boeing’s decision “is a confession that it will not honor its commitment to Kansas,” said Rep. Mike Pompeo (R-KS), in a statement. “Boeing’s statement confirms that it will indeed break years and years of promises.”

Pompeo added, “As I have said repeatedly—both publicly and to Boeing—Boeing, like every company, has the right to change its business plans and operate in the best interests of its stakeholders. What neither Boeing, nor any other company, has the right to do is make false statements, violate long-held commitments to communities or to receive federal contracts based on representations that it knows are not accurate. The fact that Boeing now appears determined to leave our state will not prevent me from seeking to hold the company accountable for its promises and commitments.”

‘Poster Child for Corporate Incentives’

“Boeing is the poster child for corporate tax incentives,” said State Rep. Jim Ward (D-Wichita), in a statement. “This company has benefited from property tax incentives, sales tax exemptions, infrastructure investments and other tax breaks at every level of government.

“These incentives were provided in an effort to retain and create thousands of Kansas jobs. We will be less trusting in the future of corporate promises.”

Sedgwick County Commissioner Karl Peterjohn said, "Wichita and Kansas elected officials rallied to support Boeing during the tanker contract battle. The entire Kansas congressional delegation fiercely fought this extended multi-year fight. That support turned out to be a one-way street as Boeing's political bait and switch blindsided Wichita and the half million Kansans in the rest of Sedgwick County by eliminating over 2,000 jobs instead of providing the 7,500 additional aviation positions that had been promised.”

Peterjohn noted Boeing has long been the largest private employer in Kansas building aircraft from the World War II era B-29s to Cold War era B-47s and B-52s. Most recently Boeing in Wichita has fitted out the Boeing 747s that serve the president's air travel needs as Air Force One.

"The Wichita area was used by Boeing like an oil rag that was a vital tool during the tanker contract battle but as disposable as a dirty rag once the contract was won,” Peterjohn said.

‘A Severe Blow’

Wichita Mayor Carl Brewer said at a news conference, “The loss of 2,100 jobs will deal a severe blow to our local economy, and I offer my deepest condolences to the families who will be directly affected by this development.”

He added, “Wichita is still the Air Capital of the World, and the home to the highest qualified cadre of aviation workers. Boeing's decision was Boeing's to make, but we still hold the keys to our own future.”

Aircraft and aircraft parts manufacturers in Wichita include Bombardier Learjet, Inc., Cessna Aircraft Company, Raytheon Aircraft Company, and Spirit AeroSystems.

Bitterly Fought Contract

Boeing won the tanker plane contract only after a long and bitter fight with the help of Kansas government officials.

European Aeronautic Defence and Space Co., which builds the Airbus passenger aircraft, competed for the contract but lost out to Boeing despite a scandal that saw two Boeing executives sent to federal prison in 2004 and 2005 for corruption in trying to win the contract. EADS would have built the tanker planes in Alabama.

The scandal forced the government to reopen the bidding, and in 2008 the Air Force awarded the tanker plane contract to a Northrop/EADS consortium. Boeing then succeeded in getting the government to change the selection criteria and again reopen competition.

Steve Stanek

Steve Stanek (sstanek@heartland.org) is a research fellow at The Heartland Institute and managing... (read full bio)