Gov. Jay Nixon on Tuesday, Dec. 10, joined business, labor and education leaders in front of the Missouri-made Mercury space capsule at the James S. McDonnell Planetarium in St. Louis to sign Senate Bill 1, bipartisan legislation to help Missouri compete for production of Boeing’s next-generation commercial aircraft, the 777X.
With more than a dozen states vying to build the 777X, Gov. Nixon called the legislature into a special session last week to help Missouri compete for this transformative project by adding capacity to four of its existing performance-based economic development programs. In less than five days, Senate Bill 1 passed the Senate by a vote of 23-8 and the House by a vote of 127-20.
“Just as workers right here in St. Louis helped our nation reach for the stars by building the Mercury space capsules a half century ago, today we send a clear message that Missouri is ready to open the next great chapter for high-tech aerospace manufacturing in our state,” Gov. Nixon said. “This bipartisan legislation demonstrates once again that when it comes to opportunities to create thousands of family-supporting jobs and grow our high-tech manufacturing industry, Missouri competes to win.”
With new technologies such as a composite wing, the Boeing 777X will be the largest and most efficient twin-engine jet in the world. Winning production of this next-generation aircraft would bring billions of dollars in new investment and thousands of new advanced manufacturing jobs to the St. Louis region and throughout the state by creating opportunities for a whole new supplier base. For example, in Washington State this aircraft’s predecessor, the Boeing 777, generates $20 billion in economic activity annually and supports 56,000 direct and indirect jobs.
Senate Bill 1 provides additional capacity of up to $150 million annually for an aerospace project that creates at least 2,000 jobs under four of Missouri’s performance-based economic development programs: Missouri Works, Missouri Works Training, Missouri BUILD, and the Real Property Tax Increment Allocation Redevelopment Act. The total amount of benefits Boeing could earn would be based on the number of new jobs created and the wages of those jobs, the amount of new capital investment, and the cost of training workers to build this next-generation aircraft.
Under these programs, a project must demonstrate a net positive fiscal benefit to the state, before any incentives may be authorized. In addition, companies must invest and create jobs first before being eligible to defray these costs by keeping a portion of the revenue they generate. By retaining these existing safeguards and creating a separate cap to accommodate an aerospace project of this scale, Missouri can compete to win production of the 777X without jeopardizing other economic development projects or investments in public education or other vital services.
“The way these programs work is that companies, including Boeing, must invest and create jobs first, then and only then are they eligible to defray the cost of that investment and job creation by keeping a portion of the new revenue they generate. So it is not like writing a check,” said Gov. Nixon. “By using the same time-tested economic development programs we’ve used to bring our unemployment rate to a five-year low and protect our AAA credit rating, this legislation puts Missouri in a strong position to compete for the Boeing 777X without putting taxpayers at risk or undermining support for public education.”
To meet the company’s workforce needs, Gov. Nixon’s administration formed a consortium of area community colleges to train and certify thousands of additional graduates in aerospace and advanced manufacturing areas to grow a pipeline of highly-skilled workers for this project and others in this sector.
Strong support from St. Louis-area construction labor councils has also given Missouri a competitive edge, with a historic agreement among St. Louis-area construction labor councils to work a 24-hour schedule and forgo overtime. In a letter to the Governor, the St. Louis Building and Construction Trades Council, the Eastern Missouri Laborers’ District Council, and the Carpenters District Council of Greater St. Louis committed to 24-hour work schedule without overtime during construction of Boeing’s facilities.
In the summer of 2010, Gov. Nixon called a special session of the General Assembly to pass the Missouri Manufacturing Jobs Act and attract next-generation automotive manufacturing to the state. Since then, Missouri’s automotive manufacturing industry has rebounded. Ford and General Motors are investing more than $1.5 billion and creating thousands of jobs to build all-new vehicles at their facilities in Missouri. This year, the automakers announced plans to put even more Missourians to work, with an additional stamping press at GM’s Wentzville facility and a third shift of F-150 production at Ford’s plant in Claycomo. The historic expansions by Ford and GM have helped spur a parallel resurgence among automotive suppliers all across the state.
Senate Bill 1, combined with the strong support from the education and labor communities, will help the state to submit a competitive response to Boeing’s Request for Proposal, which was due by close of business on Tuesday, Dec. 10.