Boeing scare cools confidence in Wichita economy

Company CEO says little to ease uncertainty

? A published report that The Boeing Co. was considering selling its manufacturing plant in Wichita has left behind a nagging uneasiness in this community — despite assurances from the company’s chief executive days later that Wichita will always play an important role in Boeing’s operations.

Wichita has faced one of its worst nightmares since The Seattle Times published its story Jan. 25, citing an internal strategic planning document it obtained from a top Boeing executive.

The company has done little to assuage lingering doubts that remain about the long-term future of a Wichita landmark that now employs 12,400 people.

“Wichita, though, whether there’s a Boeing sign on the side of the building or another sign on the side of the building, is very important to the future of the Boeing Company,” Boeing chief executive Harry Stonecipher said.

For many in this aviation-dependent community, it was cold comfort that Stonecipher acknowledged such studies are going on — even if no decisions have been made on an immediate sale.

Perhaps never again will its workers, their unions and the community look at Boeing’s plant here quite the same way.

For decades this city has called itself the air capital of the nation — the home of manufacturing facilities for not only Boeing but also for Cessna, Raytheon and Bombardier. But Boeing — the state’s largest private employer — dwarfs them all.

In 2002, Boeing’s Wichita payroll was about $1 billion, and the company did $193 million in business with local suppliers — generating, directly or indirectly, 17 percent of earnings in the city’s economy.

The local economy was plunged into chaos when an already weakening economy was hit by the Sept. 11, 2001, terrorist attacks. In its wake, Wichita employers laid off nearly 13,000 workers. The bulk of those layoffs, some 5,000 lost jobs, were at Boeing.

Mixed reactions

A survey taken on Jan. 6 found that for the first time in two years, people here were even beginning to feel upbeat about the local economy again — confident that the worst of the layoffs was behind them.

Then word Boeing might be selling the plant hit the news.

Janet Harrah, director of the Center for Economic Development and Business Research at Wichita State University, said the most immediate effect, if any, of the rumored sale would be on consumer confidence.

“Nothing has happened to impact anybody’s business. This is something that potentially could happen, but there is no timetable. It could be years from now,” she said. “While business people may be taking it into their long-range strategic planning, it is not going to impact their planning for the next two or three quarters.”

Vermillion Inc. is among the 250 small aerospace suppliers in south-central Kansas which depend on the region’s airplane manufacturing industry.

Its president, Bill Davis, said the sale of Boeing’s commercial operations would not affect his business — in part because he supplies parts for Boeing’s military programs.

Even if Boeing were to sell the plant, it would still make sense that whoever buys the operation will maintain operations and continue to supply Boeing, he said.

“From our standpoint it is not affecting us a bit in our thinking,” Davis said. “We are going right on.”

But he is less certain about how such rumors might affect the rest of the Wichita economy, particularly retailers.

“I think it might really impact their thinking and how they are looking at the future,” Davis. “Retailers have been suffering, and this might really make them cautious about things.”

Not everybody agrees.

Steve Martens, chairman of the Greater Wichita Economic Development Coalition, is also a commercial real estate agent. His company, Grubb & Ellis, recently released its 2004 forecast for the Wichita economy.

“I don’t believe this rumor and discussion is going to have any kind of chilling effect on retail,” Martens said.

Seeking diversification

Wichita has a long history of strides toward diversification of its economy so that it is not as dependent on the aerospace industry, he said.

“Clearly, there will always be a strong and heavy influence from the aerospace industry in Wichita,” Martens said. “But rumors like this cause people to take a more serious look at the makeup of the local economy and whether there are adequate plans under way to try to diversify the local economic base.”

The rumor also has rallied unions such as the Society of Professional Engineering Employees in Aerospace to demand contract language in negotiations to address worker protections in the event of a sale.

“We still have not heard anyone come out and say absolutely nothing is going to change at the Wichita facility — anything put out has several holes,” said Bob Brewer, SPEEA’s Midwest director.

Union officials fear the same thing will happen to workers in Wichita that happened when Boeing sold its airplane parts plant in Spokane last year. In that sale, production workers took a 15 percent pay cut along with some job cuts.

SPEEA has not yet gotten a response from Boeing to its request for a copy of the Wichita sale study cited by the Times story.

“Everybody is still shuffling — we are hearing news reports, reading papers, talking to people out there,” Brewer said. “I am not sure there is a very comfortable level for all involved.”