Governor Gary Locke’s Remarks
Washington State Supplier Lean Training Kick-off Event
September 3, 2003

Good afternoon. It’s a pleasure to be here.

Washington is an aerospace state. We’ve been an aerospace state for a long time. Back in 1916 when Bill Boeing started his little airplane company, Washington was celebrating just 27 years as a state.

The Boeing Company grew up as our state grew up. Boeing made it through some tough times to become our state’s largest private employer for decades to follow. Everyone in this state has family or friends who work in aerospace. We are proud to be the home of Boeing, and the home of some of the world’s best aerospace suppliers.

And we believe that our state’s future economic vitality depends in part on a healthy, thriving aerospace industry.

This past Legislative session, we showed that we’re passionately committed to keeping our state’s aerospace industry strong. We worked hard and resourcefully to make sure 7E7 Dreamliner assembly stays in Washington. We passed a $3 billion tax incentive package. We passed reforms to Unemployment Insurance and Injured Workers’ Compensation.

We did this because keeping the 7E7 in Washington is the right thing to do. The best airplane assembly workforce in the world lives and works here. The best aerospace engineers on the planet live and work here. Our people are well trained, highly skilled and experienced.

We have the manufacturing facilities, the equipment and the tooling in place. The infrastructure is in place. Hundreds of supplier companies and their thousands of employees already work with final assembly here. So we’re ready to build the 7E7.

We are confident in the proposal we submitted to Boeing in June. And we are confident that Boeing will choose Washington as the best place to build this airplane.

Why so much effort for the 7E7? It really only translates into a few thousand direct Boeing jobs, a few thousand supplier/subcontractor jobs and a few thousand indirect jobs in retail, construction, finance, etc.

But if Boeing builds the 7E7 in another state, it could also – 10 or 15 years down the line – decide to build the next generation of the 747 or the 737 in that other state that lands the 7E7.

That could mean a potential loss of 48,000 direct Boeing jobs, 10,000 supplier/subcontractor jobs and 77,000 indirect jobs.

The work to land the 7E7 continues. It isn’t making headlines. It is not be as visible as before. But behind the scenes we are relentlessly doing all that we can to make sure Boeing chooses Washington.

And when the first 7E7 rolls out, it will be from a Washington factory. When the first 7E7 takes to the skies in test flight, it will be from a Washington airfield. Years from now when we see the Dreamliner in airports and skies around the world, we will be able to proudly say “Made in Washington!”

Many here today will play a part in building the 7E7 in our state. Suppliers are a vital part of the industry here. Our state’s suppliers make an important contribution to our economy. And suppliers from all over the world contribute to the success of Boeing.

Suppliers will be more important than ever before, based on early discussions about how and where parts of this airplane will be built. Suppliers will be in equity partner roles. They will participate in R&D. They will assume some of the risk of the program. And they will be part of history as the most successful Boeing airplane ever takes to the skies and changes the air travel industry forever. Watch out Airbus!

Puget Sound is an ideal location for 7E7 assembly. The distance to key Boeing suppliers in Japan is the shortest. The supply line to Boeing is most direct here. And we’re already working with some of the world’s best suppliers here in our state.

Any assembly location outside of Puget Sound is a minimum of a day longer to receive critical parts and sub-assemblies from overseas. And some proposed sites are up to 4 or 5 days farther away. In an acutely cost-conscious environment, such delays are unacceptable. A tight, efficient supply line will help make the 7E7 a great success. Washington is the best place to assemble the airplane.

We understand the importance of suppliers in our state. That’s why the tax incentive package we passed this year benefits both manufacturers of commercial airplanes and manufacturers of component parts for commercial airplanes.

How do suppliers benefit from the tax incentives package? They benefit from:

· Lower Business and Occupancy tax rates; and
· A Retail Sales Tax and Use Tax exemption for computer hardware, software, and computer peripherals used in manufacturing component parts. This applies to items not otherwise eligible for the Manufacturing Machinery and Equipment exemption—M&E.

Here in Washington, we understand the vital role suppliers play in commercial airplane production. We know we have the winning site and the winning team in place to build this airplane. That’s why the tax incentive package includes suppliers. We want to continue building our successful aerospace industry.

The continued health of the industry depends on the effectiveness of Boeing and its suppliers working as a team.

The tax incentives will ensure it’s cheaper to build the 7E7 in Washington than other states. That means the lowest possible sale price for the 7E7, which will translate into increased sales to airlines. Our goal is to work with Boeing to beat Airbus.

The health of the industry also depends on lean manufacturing. And that’s why we’re here today. We are only the fifth state to initiate this training. Our presence here today attests to the importance of manufacturing to our state’s economy.

Raising and enhancing the skill level of manufacturing workers within all tiers of the value stream will make our suppliers even more competent. And more competitive—with other states, and other countries. Strengthening our manufacturing excellence will more competitively position us to earn more manufacturing work. Including the 7E7.

Boeing has long been a leader in lean manufacturing. From the Japan Study Missions more than a decade ago to sweeping changes in processes and techniques in the factory the past several years, Boeing has shown the courage and foresight to change and improve.

The company has led by example, proving how lean manufacturing leads to dramatic reductions in flow time, cycle time, work-in-progress inventory and costs. The company has demonstrated how productivity and efficiency can be dramatically improved through lean manufacturing. This has enabled Boeing to remain competitive against a heavily subsidized Airbus.

The training we’re kicking off today will extend this expertise and leadership across the enterprise. It will benefit suppliers and strengthen our state’s aerospace industry.

As a state, we are proud to be a part of this training. It is an investment in aerospace manufacturing, and an investment in our future. As we continue to work our way through today’s tough times, we know that we must also continue to position ourselves for tomorrow. And lean manufacturing is the key to a bright future in the aerospace industry.

I want to thank the represented suppliers here today for taking part in this training. And thanks to Boeing for leading the way in keeping other aerospace manufacturing and supplier companies competitive and innovative.

Thank you.

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