Olympia Business Watch

South Carolina Never Gave Up on Boeing.....and Won't

Don Brunell — Tue, 10 Nov 2009 16:15:27 -0800

Winning the second 787 production line started in 2003 when Boeing decided to assemble the 787 in Washington. At the time, Boeing was considering sites in Myrtle Beach and Charleston. But South Carolina elected officials never gave up. They focused on landing two Boeing suppliers, Vought and Alenia plants, for North Charleston shortly thereafter with an estimated $120 million in state and local incentives. Those plants, which make and assemble the rear fuselage for the 787, employ about 2,500 and now are owned by Boeing

Last month, South Carolina won Boeing’s new assembly line for the 787 Dreamliner. The impact of the Boeing deal is huge for South Carolina, a state staggering under the nation’s fifth highest unemployment rate. Here is why state and local leaders are so jubilant:

-the state legislature passed $450 million in incentives to attract a company that will employ an estimated 3,800 workers by the middle of next decade--more which will be nearly two and a half times the current aerospace workforce in North Charleston.

-$750 million in initial investment from Boeing — the state’s biggest, topping the $500 million BMW pledged in 1992 for its Greer plant, a number since far surpassed.

-$10 billion in direct and indirect investment over the next 15 years from Boeing and its suppliers, according to a forecast from a state economist.

There is an interesting story in The State, the daily newspaper in Columbia, South Carolina's capitol, on how the state nailed down the Boeing line. It is a story that we, with Boeing's largest footprint, workforce and production facilities ought to pay very close attention to. Other state and foreign economic development directors have locked-in on Boeing and other Washington prized manufacturers.

South Carolina's legislature is feeling a renewed sense of optimism and vigor after the Boeing announcement. For example, House Speaker Bobby Harrell (R-Charleston) said:

"lawmakers used this special session as an opportunity to finalize an economic development incentive package that played a big role in landing Boeing. And let me be absolutely clear, this announcement is huge for our state and it couldn’t have come at a more needed time. Boeing’s decision to pick South Carolina for this major expansion will translate into billions of dollars in new investments and will create thousands of high-paying jobs for our citizens.

All of this good news would not have been possible without the combined and collaborative efforts at all levels of our state government. It was extremely gratifying to see the House, Senate and Executive Branch push aside partisan politics and personal motives to work together for the betterment of our state. This just shows the great things we can achieve when we are all focused on South Carolina’s future success.

And this formula for success is something I would like to see us implement further in the coming 2010 legislative session."

As Sir Winston Churchill said on Oct. 29, 1941 at the Harrow School northwest of London: "Never, never, never, never give up!" South Carolina has taken Churchill's advice to heart and it is starting to payoff.

Don C. Brunell, President (DonB@awb.org)

Tacoma paper looks at Washington's liquor, workers' comp monopolies

Jason Hagey — Mon, 09 Nov 2009 16:24:26 -0800

The Business Examiner has published an interesting article (subscription required) examining the state's monopoly approach to liquor control and the selling of workers' compensation insurance.

Washington is among the few states that hold business monopolies on those areas, reporters Breanne Coats and Hilary Reeves write in the introduction.

Many business advocates, they write, wonder whether it's best to open up these two services to the private market.

The article quotes Mark Johnson of the Washington Retail Association making the case that state-run liquor stores should be privatized, but the examination of workers' comp is more nuanced.

AWB member Larry Treleven, owner of Tacoma-based Sprague Pest Solutions, notes that "a monopoly in anything is not good," while Kris Tefft, AWB general counsel and government affairs director, finds some good to say about the state's current system as he continues calling needed reforms.

"Our state fund does a good job of fraud prevention and rooting out premiums that ought to be paid in by employers who aren't currently," Tefft says. "On the other side of the ledger, there are some problems with the management of claims."

Tefft notes, for example, that the number of complex claims that remain in the system for years at a time is rising, and he points out the huge disparity between pensions paid out annually in Washington -- 1,800 -- versus Oregon -- nine.

For readers of this blog, the arguments will sound familiar. Last month, Tefft called on state officials during a hearing to fix problems with the workers' comp systems, and he's published several items on the subject in recent months, including this and this.

Brunell: Flags at half-staff signal the start of suffering

Jason Hagey — Mon, 09 Nov 2009 14:06:30 -0800

Lowering our flags to half-staff has been an all-too-familiar sight lately, AWB President Don Brunell writes in his weekly column.

The solemn act that recognizes fallen heroes -- whether in the armed forces or a Seattle officer killed in the line of duty -- is a vivid reminder of the ultimate sacrifice made by those who serve us.

But too often, we fail to remember the family members of the fallen once the flags go back to the top of the pole and some time passes, Brunell writes.

In his call to action, Brunell shares the story of Father Tim Vakoc -- the only military chaplain to die from injuries sustained in Iraq-- and his own brief contact with Vakoc a few years ago.

"Hopefully, this Veterans Day we will not only pause and remember but go the extra step to help those grieving families," Brunell writes.

River Otter Wipes Out AWB Fishery in Downtown Olympia

Don Brunell — Thu, 05 Nov 2009 10:29:55 -0800

You've heard of coyotes, bears and cougars coming into town looking for a meal, but a river otter?

That's right yesterday, a river otter visited the Association of Washington Business (AWB) ponds and feasted on our collection of goldfish and Koi. Today, the otter returned to the ponds and polished off the remaining survivors who managed to hide from the initial assault.

Now, AWB is not exactly out in the country. Our headquarters building with its two small ponds is 2 blocks east of the state capitol building and 2 blocks west of I-5. So we are along the busy main access street to the capitol and downtown Olympia. We are surrounded by homes and buildings. That didn't seem to bother our venturesome friend.

The only thing we can figure out is there is a watershed park just east of I-5 which is natural and full of springs and it is not too far from Capitol Lake and the Deschutes River which feeds the Lake.

So when things settle down, we will restock the AWB ponds and re-establish our fishery with the nickel goldfish from the pet store.

The moral of the story is if you have a fish pond, the predators will eventually come.

Don C. Brunell (DonB@awb.org)

Strident new $1.2 trillion health care bill a step backwards on reform

Jocelyn McCabe — Tue, 03 Nov 2009 16:42:25 -0800

Last Thursday, U.S. Speaker Nancy Pelosi introduced the "Affordable Health Care for America Act," which by all accounts, does little to live up to its name. Especially if you're an employer.

For months now, AWB and many other state and national business organizations have advocated for more reasoned health care reform -- an effort that reduces costs, improves access to care and capitalizes on private sector innovations that improve wellness while reducing costs (see, for example, our post on the Safeway Healthy Measures program). Unfortunately, the current legislation is a step back from those goals. We've also led a coalition of businesses and chambers -- Employers for Quality Health Care -- that is identifying reform ideas that can be implemented without jeopardizing health care choices or incurring historic levels of debt.

The revised bill now being rushed through Congress ignores these concepts and ideas and will have significant negative impacts on businesses of all sizes and industries in our state and nation at a time they can least afford it. It will also send the national debt into unfathomable figures and dramatically expand government control of health care.

This morning, the U.S. Chamber, along with the NFIB, NAM and nine other business groups, launched a massive ad buy in 19 states aimed at stopping what the Wall Street Journal called "The Worst Bill Ever:"

Democrats have dumped any pretense of genuine bipartisan 'reform' and moved into the realm of pure power politics as they race against the unpopularity of their own agenda. The goal is to ram through whatever income-redistribution scheme they claim to be 'universal coverage.' The result will be destructive on every level -- for the health-care system, for the country's fiscal condition, and ultimately for American freedom and prosperity.

Perhaps most concerning is the uncanny price tag associated with the new proposal -- $1.2 trillion or more over 10 years according to the Congressional Budget Office.The bill also includes $572 billion in new taxes, mostly by imposing a 5.4 percentage-point surcharge on joint filers earning over $1 million or $500,000 for singles. Businesses would also have to yield 8 percent of their payroll to the federal government if they don't offer insurance or pay at least 72.5 percent of their workers' premiums, which would likely come out of wages.

What's more, the 1,990-page bill, H.R. 3962, is targeted for a speedy vote in the House, so that lawmakers can get home before the Veterans Day holiday. And once the bill is released to House members, they will have just 72 hours to digest and analyze the mammoth bill.

AWB is encouraging its members to call their Congressional representatives and encourage them to vote NO on this legislation. If you're not familiar with your Congressional district, you can identify your Congressional reps through the Washington State Legislature's Web site or the U.S. Chamber of Commerce's Web site. When you call or e-mail, tell your lawmakers:

This bill includes one of the largest tax increases in the history of the country.
Businesses are being targeted to bear the brunt of these costs, at a time they are fighting to keep their doors open -- and that will cost jobs.
The public option will only drive private insurers out of the market and result in massive government expansion through nationalized care.
This is NOT the kind of change voters want when it comes to their health care.

The association is also joining thousands of businesses and organizations in a letter to Congress urging defeat of this legislation and advocating for a more balanced, bipartisan approach to health care reform. We will post a link to that letter here, once it is finalized.

AWB calls for fixes to workers' comp system

Jason Hagey — Fri, 30 Oct 2009 15:00:57 -0700

AWB called on state officials Wednesday to think carefully before going ahead with a proposed 7.6 percent average workers' compensation rate hike.

"You have heard how the day-to-day operations of real jobs providers in this state are affected by any increase in cost, but especially an increase in cost that is this significant at this time," said Kris Tefft, AWB general counsel and government affairs director, during a public hearing in Tumwater.

Tefft's testimony came during the middle of one of six public hearings held by the state Department of Labor & Industries on the proposed rate hike.

Many business owners also testified at the Tumwater meeting, giving first-hand accounts of their frustrations with the workers' comp system, and the damage that will come from a rate hike.

Approximately 65 people turned out for a hearing Thursday in Bellingham, and many of them echoed similar concerns, according to this report in the Bellingham Herald.

It's true that the bad economy partly explains the state's need for a rate hike, Tefft told officials.

But it's far from the only explanation, he said.

Despite fewer overall claims going in the system, the number of long-term claims has been rising for years, which leads to higher medical costs, Tefft said. And the longer a claim stay in the system, the more likely it will become a pension and therefore stay in the system for life.

Washington state award pensions to injured workers at a rate that's "far and way" higher than other states, he said.

Tefft urged officials to join AWB in looking for solutions that will get injured workers back on the job sooner, and cut down on the number of pensions awarded.

Contrary to what some people have suggested, that can occur without attacking worker benefits or lowering the benefits paid to injured workers, Tefft said.

Simple solutions, such as allowing a claim to be settled rather than going on indefinitely, can bring significant savings, he said.

Tefft noted that Washington's workers' comp system is on the verge of its centennial anniversary.

Without reform, Washington runs the risk of celebrating that milestone with a workers' comp system that's insolvent.

"And that's just not acceptable," he said.

The public hearings concluded today in Spokane and Richland.

Final rates will be adopted in late November.

Washington business leaders react to Boeing 787 decision

Jason Hagey — Wed, 28 Oct 2009 16:35:29 -0700

Boeing's announcement today that it would build a second 787 assembly line in South Carolina rather than Everett is disappointing and a call to action, the state's business leaders said.

"Boeing's decision underscores the changing landscape of today's worldwide business climate," AWB President Don Brunell said in a statement issued shortly after the company's announcement. He added, "It is imperative that we redouble our efforts to lure new production lines and other companies to Washington and we will continue to do our part to make sure that happens."

Steve Mullin, president of the Washington Roundtable, said Washington state faces an important challenge.

"We need to work even harder to make the changes necessary to make our state more competitive, or we will lose more family wage jobs in today's highly competitive global economy," Mullin said in a statement.

Phil Bussey, president and CEO of the Greater Seattle Chamber of Commerce, said Washington state must act decisively to protect the thousands of aerospace jobs it already has and to grow the industry.

"This isn't just about the 787 second line," Bussey said in a statement. "It's about the future of aerospace and all manufacturing, large and small, in our state."

The Washington Aerospace Partnership said the decision shows that Washington can't take its long history in aerospace or with Boeing for granted.

Its focus now is the competition with Airbus for the U.S. Air Force refueling tanker contract, the partnership said in a statement.

"To win this contract, we need to be vigilant, to challenge our state and its workers and we must continue to create an environment that is forward thinking," the statement read.

Gregoire, business leaders agree on strategy to create new jobs

Jason Hagey — Tue, 27 Oct 2009 09:51:24 -0700

Rogers Weed, director of Washington's recently re-named Department of Commerce, unveiled a list of priorities Monday that will guide the effort to create new jobs and boost the state's economy.

The priorities, which offer a preview of a full report from the Commerce Department that's due next week, drew praise from Gov. Chris Gregoire and many of the state's business leaders.

They so-called "global" priorities include:

Competitiveness and innovation
Education and workforce training
More efficient regulation
Infrastructure investment

In addition, the Commerce Department plans to zero in on four specific priorities -- building up communities by investing through community service agencies and local governments, focusing on rural areas, helping small business and focusing on industry sectors.

In a news release, Gregoire said Weed outlined "the right priorities at the right time" and called on business, labor and community groups to work together to build the state's economy.

AWB President Don Brunell also praised Weed's effort to re-define the Commerce Department, which was formerly known as the state Department of Community, Trade and Economic Development.

"We are encouraged by the work he and his team have done to date and appreciate their willingness to include input from businesses of all size and industry," Brunell said.

The governor's press release included quotes from an array of business leaders, including the heads of the Washington Roundtable, Greater Seattle Chamber of Commerce, Greater Spokane Incorporated, Tri-City Development Council, and Washington Technology Industry Association.

Weed, a former Microsoft executive, thanked the representatives from the business community and others who helped his department prepare the report.

"Government doesn't create jobs, businesses do," Weed said. "About 80 percent of our state's economy comes from the private sector, so we must have a strong, mutually beneficial relationship between government and the community if we are to succeed in our mission to grow and improve jobs throughout the state."

A job by any other color: Puget Sound corridor a "hotbed" of green jobs activity

Jocelyn McCabe — Mon, 26 Oct 2009 16:52:40 -0700

Washington state again finds itself on another list of "best places to be," and this time, it's for jobs in the new "green" clean energy economy. Given record state and national unemployment figures, news of any jobs growth is a welcome relief.

This month, the green research firm Clean Edge released its list of top 15 metro areas in the U.S. for clean-tech jobs, which includes jobs in fields such as renewable energy or energy efficiency. The top "hotbed" for clean-tech jobs is the San Francisco/Oakland/San Jose area. Seattle/Tacoma/Bremerton earned a seventh-place ranking, just ahead of our neighbors in Portland/Salem.

While specifics as to why each metro region was selected are not explicitly detailed, the study does say rankings were based on an array of data points, including early investment activity, an existing presence of clean-tech jobs and clean-energy patent activity. According to the study, this jobs cycle will differ from others -- like the recent dot-com build ups -- because it is a "highly dispersed phenomenon":

"No one place or region will control any one clean-tech sector. Clusters of clean-tech activity, supported by local technology development, capital flows, and supportive public policies, are springing up across the U.S. and around the world."

Other researchers in the field of clean-tech jobs appear to have a similar view.

By 2007, more than 68,200 businesses across all 50 states and the District of Columbia accounted for more than 770,000 green jobs, according to the Pew Charitable Trusts.

This is a noteworthy figure in light of employment in other established industries, such as biotech (220,000 positions) or telecomm (989,000). In their June 10 study, "The Clean Energy Economy," Pew reported that these clean-energy jobs are also a mix of white- and blue-collar positions, ranging from scientists and engineers to electricians, machinists and teachers. The field also grew by 9.1 percent between 1998 and 2007, while total jobs grew by only 3.7 percent.

Colorful news in an otherwise bleak landscape.

Brunell: High tech poised to lead Washington's recovery

Jason Hagey — Fri, 23 Oct 2009 16:57:44 -0700

Spending on information technology is expected to grow at three times the rate of gross national profit in 52 countries, and create some 5.8 million new jobs between now and 2013, according to a global study released earlier this month by the International Data Corporation.

In the U.S., spending on IT will reach $488 billion in 2009 and will increase at almost five times the rate of GDP, the study found.

So what does it mean for Washington?

It could possibly give us an advantage over other states as the nation struggles to emerge from the recession, AWB President Don Brunell writes in his weekly column.

"While most people know that The Boeing Company is a key player in our state's economy, IT is a major force as well," Brunell write. "The Washington Technology Industry Association represents more than 1,000 member companies with more than 100,000 employees in the state -- most of them in the IT sector."

But we must maintain our advantage, Brunell writes.

That means making sure Washington's regulatory and tax policies support its existing IT sector and encourages growth.