Topeka Some Kansas officials felt betrayed when they learned Boeing Co. was contemplating closing its defense plant in Wichita, and the area’s congressman says he’s researching whether the company can be held to promises to bring thousands of jobs to the Sunflower State.
But the state’s leaders are pursuing another path, too, insisting that Wichita still will be able to define itself as the aircraft manufacturing capital of the world even without the Boeing plant. Gov. Sam Brownback is promising aggressive attempts to attract new commercial aviation work — even mentioning Boeing rival Airbus.
Boeing’s longtime presence in the Wichita area was a big part of the city’s claim to its title, and state officials were aggressive Boeing boosters over the past decade. As the company announced last week that its Wichita plant, with 2,160 workers, will close by the end of 2013, Brownback attempted to soften the psychological blow by predicting that the state’s aviation industry will emerge larger and more vibrant.
“For people in Kansas, this is tough,” said Carter Copeland, an aerospace analyst for Barclays Capital. “This is an aerospace center of excellence. There is a very skilled work force there that knows how to work in this industry.”
Boeing’s announcement that it will move work from the Wichita plant to Oklahoma, Texas and Washington wasn’t a surprise to Kansas officials because the company had disclosed in November that it was looking at closing the Wichita plant. But Kansas officials were upset because of the efforts they’d put into promoting Boeing’s bid for a contract worth at least $35 billion to build 179 refueling tankers for the Air Force.
The Air Force had awarded the contract to a rival consortium in 2008 but came under pressure from Kansas’ congressional delegation and other critics to reopen the bidding process. Boeing won the contract in February, and Kansas officials contend the company promised them that work would be done in Kansas — creating as many as 7,500 jobs with an economic impact of nearly $390 million.
Nor was it the first time Kansas officials helped the company. In 2003, with Boeing preparing to launch work on what became its 787 commercial jetliner, legislators and then-Gov. Kathleen Sebelius authorized up to $500 million in bonds to help bring work to Kansas. According to the state Department of Commerce, the incentives eventually were tapped by Spirit Aerosystems, which took over Boeing’s commercial operations in Wichita.
U.S. Rep. Mike Pompeo, a Republican whose 4th Congressional District in south-central Kansas includes the Boeing plant, said he and his staff plan to examine the bidding process for the Air Force contract more closely. He said the company made “a very public commitment to the workers in Kansas.”
“We’re going to go try to gather the data set so that we can understand whether the federal government got what it bargained for when it chose the Boeing Company,” Pompeo said. “We’re trying to go back and dig up precisely who was told what and when.”
A changed market
Boeing has said the market for defense work changed dramatically in the past 18 months and its Wichita site, with 97 buildings and 2 million square feet, wasn’t competitive. After Boeing spun off its commercial operations in the area in 2005, it kept 4,500 defense workers, but layoffs caused that number to dwindle.
“Boeing was not utilizing that facility to its full capacity,” said Jeremy Hill, director of Wichita State University’s Center for Economic Development and Business Research. “When someone holds onto a facility and they only use it marginally, it can be the worst thing for a community.”
Copeland said with ongoing debates in Washington over the federal debt and budget deficit and the prospects for large spending cuts, even in defense, it has become clear that there’s too much manufacturing capacity among aviation’s defense contractors.
And even before Boeing formally announced that it would close the Wichita defense plant, Brownback had suggested the Kansas aviation industry’s future was in its commercial side. In a December interview with The Associated Press, he predicted “a substantial decline in the defense sector.”
During a Statehouse news conference responding to Boeing’s announcement, the governor brushed aside a question about the potential embarrassment of the company leaving Kansas after state officials’ efforts on its behalf. Brownback said he expects positive announcements about commercial aviation in the near future.
“We are going to see more aviation work in the state of Kansas,” he said. “That’s the long term, and so all those investments have been proper, and they are moving us forward.”
Copeland said he sees Spirit “on the cusp” of significant growth and expects an increase in Boeing’s commercial business in the next several years, and Wichita already has a pool of industry talent. Hill said Boeing’s vacant defense plant can be marketed by local officials to other firms.
“There are not a lot of facilities on land available for new industry to come here,” he said. “There’s a value for the community to attract new industry there.”