Dallas area could land Boeing

Thursday, March 22nd 2001, 12:00 am
By: News On 6

The Dallas-Fort Worth area is on the short list to become the new corporate home of the world's largest aerospace manufacturing company.

Boeing Co. said Wednesday that it would move its headquarters from Seattle to one of three areas: Dallas-Fort Worth, Chicago or Denver.

The relocation will not bring a big injection of jobs – perhaps 500 executives and white-collar employees. More meaningful will be the winning city's bragging rights. Internationally famous, the $51 billion-a-year company is the nation's 10th biggest and America's largest exporter – a giant trophy for any municipal mantel.

The city is ready to campaign, said Dallas Mayor Ron Kirk.

"I have not talked to them, but that will change," Mr. Kirk said. "We're putting together a package. If we can't get them in Dallas, I want to make sure we get them in North Texas."

The news jolted leaders in Boeing's home territory. Seattle Mayor Paul Schell said that he was "totally blindsided." He pledged to "do everything I can to change their minds." Washington Gov. Gary Locke said he was "surprised and deeply sorry."

Boeing's surprise decision is being driven by the changing nature of today's international business environment.

The company's massive jet manufacturing plants will remain in the Seattle area, along with its research and development work. A wealthy lumberman named Bill Boeing first set up shop in that city 85 years ago.

But about 60 percent of Boeing's nearly 200,000 employees work outside of Washington state. By moving its headquarters, the company aims to shake its historic roots and make it easier for top managers to operate in what the company calls a "new definition of the aerospace industry." Boeing today is involved in everything from finance to satellite communications. In the last five years it has invested more than $20 billion in acquisitions, including former aircraft rival McDonnell Douglas Corp. and the satellite business of Hughes Electronics Corp.

"We intend to take a more global view of opportunities," said Phil Condit, Boeing's chairman and chief executive officer, in making his announcement in Washington, D.C. "As long as we are side by side with commercial airplanes, the view always is that's what we're about," he said.

He said the "new, leaner corporate center" will become a strategic base from which managers can "seek new growth opportunities around the globe."

Boeing plans to move 400 to 500 of its 1,000 headquarters employees. The choice would be made this summer, and the company would begin operations in its new home by the fall, Mr. Condit said.

He said the company wants its top executives to be in a central location that would provide easy access to both coasts, Boeing operations in 26 states and a roster of customers spread across the world. Mr. Condit noted that he makes frequent trips to New York and Washington, which now eat up 10 hours round-trip from Seattle.

Mr. Condit acknowledged that Boeing will weigh such factors as Chicago's more abundant flight schedule to Asia and Europe against Dallas-Fort Worth's better flying weather and superior record on delayed and canceled flights.

"Those are the kinds of issues that we clearly have to work our way through," Mr. Condit said. Proximity to Boeing's U.S. customers is also a consideration, he said. Texas is home to three of the company's major commercial aircraft customers: American Airlines Inc. of Fort Worth, Southwest Airlines Inc. of Dallas and Continental Airlines Inc. of Houston.

The company said it is interested in any tax and other economic incentives the three contenders might offer, though Mr. Condit said Boeing isn't trying to start a bidding war.

But the announcement all but guarantees one. "Obviously, we would go out of our way to create an opportunity for them," said Fort Worth Mayor Kenneth Barr. "It's a flagship company."

Mr. Condit also said the final choice will depend in part on a pro-business civic climate in the winning area.

He said the company isn't dissatisfied with Seattle. But only two years ago, a top Boeing executive bluntly told the city's chamber of commerce that the state wasn't competitive in terms of the cost of doing business.

"Compared to everywhere else we do business, Washington is below average," said Deborah Hopkins, who at the time was chief financial officer. She's now a top officer of another company.

Boeing's board approved a headquarters move in December, but uncharacteristically it remained a secret. Jan Hart Black, president of the Greater Dallas Chamber of Commerce and former city manager, said that she had "not even heard a rumbling." Chicago Mayor Richard Daley also said he wasn't aware of it but indicated that he and Illinois Gov. George Ryan are now eager to fly to Seattle.

The company decided to make the three final cities public because word would leak out once executives started talking to local representatives.

"If you are going to start walking around talking to people, it is going to become public."

About 500 employees will not make the move and will face transfers to other units. A few might lose their jobs, although Mr. Condit said the company was growing and almost everyone is expected to be placed in other jobs.

Boeing is dependent on the federal government for its defense business, and Mr. Condit said he was aware the relocation might have political consequences. But he said the decision was based on what would best maximize profits and is best for shareholders.

"My fundamental responsibility is to run the best possible business, and that is what we are going to do," Mr. Condit said. "...What you conclude is make the right decision for the corporation, that is what is defendable."

Even so, the announcement drew quick reaction from Capitol Hill.

Dallas-Fort Worth is well-positioned to land the Boeing headquarters, said Rep. Eddie Bernice Johnson, D-Dallas. "You always have some feelings for those who are losing a major corporation, but we are very willing to host them in the Dallas area," she said.

Lawmakers from Washington state were clearly distressed. "Boeing is part of the family, and this feels like a member of the family leaving without telling you why, or for what reason, or where," said Rep. Jay Inslee, D-Wash.

Boeing at first made wooden seaplanes, but soon became to Seattle what General Motors Corp. is to Detroit.

While more recent arrivals such as Microsoft Corp. and Starbucks Corp. now share the limelight, Boeing helped define the Seattle area for much of the 20th century. The company built bombers that helped win World War II, and its engineers invented the jetliners that forever changed global air travel.

Mr. Condit announced the relocation as part of a broader effort to restructure and transform the giant aerospace manufacturer into a more profitable company.

He said the major business units will remain in their current locations. Those units include commercial aircraft in Seattle, military aircraft in St. Louis and Space and Communications in Seal Beach, Calif.

In North Texas, Boeing has two electrical components plants. One in Irving employs 1,700 employees and one in Corinth has about 1,800 workers.

Staff writers Katie Fairbank, Gromer Jeffers Jr. and G. Robert Hillman; reporters Jim Fry and Mike Goldfein of the Belo Capital Bureau in Washington, D.C.; KING-TV in Seattle; The Associated Press; and Bloomberg News contributed to this report.