"Hit And Run: Boeing Leaves Kansas After Promising The State Jobs For $35 Billion Contract And Slew Of Tax Breaks"
This week, defense and aircraft manufacturing giant Boeing announced that it will be closing the Boeing Defense, Space & Security facility in Wichita by the end of 2013, which “means the loss of 2,100 well-paying jobs at its Kansas facility, which was once considered the centerpiece of Wichita’s claim as the air capital of the world.” Boeing will instead be performing the operations that were scheduled for Wichita in San Antonio and Oklahoma City.
Boeing’s decision — which it blames on possible defense cuts that may take place in the future — is devastating to Wichita community, which also includes more than four hundred Boeing suppliers. Local news station Fox 4 covered the closure in a video report. Watch it:
The announcement is particularly shocking given the fact that Boeing had repeatedly promised to keep jobs in Kansas and add many more if it were able to land a $35 billion contract for an aerial tanker. Kansas lawmakers went to bat for the company in early 2011, with Sen. Pat Roberts (R) even calling on “everybody who’s out there tweeting, chirping and Facebooking” to push for the Air Force to grant the tanker contract to Boeing rather than European rival EADS.
The Air Force initially handed the contract to EADS, but reneged after loud protests from Kansas lawmakers. Boeing then went on to promise as many as 7,500 jobs and “an overall economic impact of $390 million” if it were to receive the contract. “Boeing’s chairman sat in my office 22 months ago during that battle and promised me, then-Senator Brownback and Congressman (Todd) Tiahrt that if we won the fight to get the tanker contract back, Boeing would stay in Wichita,” recalled Roberts.
Not only did Kansas lawmakers in Congress heavily lobby on behalf of Boeing to get the contract over its European rival, but state lawmakers also laid out a wide set of incentives “in the form of tax breaks, research dollars, workforce training” and other gifts. In 2007 alone, the legislature gave Boeing $2,175,355 for the IMPACT — Investments in Major Products and Comprehensive Training — program, to train new employees. The company has also benefited from a machinery and equipment property tax exemption, the repeal of the corporation franchise tax, and other benefits.
“Boeing is the poster child for corporate tax incentives. This company has benefited from property tax incentives, sales tax exemptions, infrastructure investments and other tax breaks at every level of government. These incentives were provided in an effort to retain and create thousands of Kansas jobs,” said Wichita Rep. Jim Ward (D) in response to Boeing’s move. “We will be less trusting in the future of corporate promises.” Indeed, the company’s ruthless behavior — promising jobs if the state granted it special treatment and then fleeing for lower costs elsewhere — is a cautionary tale not just to Kansas but every legislature in the country.
Former Kansas Congressman Todd Tiarht (R) doesn’t seem to be backing off the corporate appeasement strategy. “The bottom line is we have to make the business environment in Kansas receptive to keeping and creating jobs,” he said, defiantly.