News Is One More Jolt for City That Has Had a String of Setbacks

They tried to put the best face on it. Boeing isn’t really leaving, said the city that’s been joined at the hip with the aerospace giant, almost since Boeing was a company and Seattle was a city.

Boeing is repositioning, city officials said. It’s moving its corporate offices somewhere else, but 80,000 Boeing manufacturing jobs will stay. “That’s reason for people to stay calm,” Mayor Paul Schell advised.

Schell, meanwhile, looked like he had been kicked in the stomach.

The announcement that the airplane company William Boeing founded in Seattle in 1916 will move its headquarters elsewhere--precisely where hasn’t been decided, the implication being “anywhere but Seattle”--was a body blow. For good or ill, Seattle’s aspirations as an international city, and its general well-being, have always been linked to the aerospace giant.

“This community built Boeing. Bill Boeing would be turning over in his grave if he knew they were moving his house,” said Mark Blondin, the local machinists’ union president.

For years, the economic health of the Puget Sound region has been tied to the precipitous swings of the Boeing work force. Only in the last decade has the technology boom that positioned the city as a center of the new economy lessened the aerospace giant’s grip on the regional economy.

Yet Boeing’s corporate departure comes just as Seattle is in the throes of a dot-com meltdown that has seen an erosion of at least 6,000 high-tech jobs over the last 15 months.

And now this--a phrase Seattle is getting used to, after a year of World Trade Organization riots, Mardi Gras mayhem and, most recently, a 6.8-magnitude earthquake.

In some ways, Boeing’s announcement shook harder than the earthquake--certainly, it did more to rattle the city’s self-confidence.

“I was stunned and very saddened to hear that any part of the Boeing Co. might be leaving the Pacific Northwest. Boeing has been an integral part of the pioneering history and spirit of the state of Washington,” said Gov. Gary Locke, who learned of the news in a phone call from Boeing executives Wednesday morning.

“I was totally blindsided by this,” said Schell, the mayor. “Given all the history we have with them in this community, it is disappointing. I am going to do all I can to change their mind.”

A point of particular pain was Boeing’s indecision about where to go. It seemed to suggest that a good many cities, including Denver, Dallas and Chicago, might be suitable as long as they weren’t Seattle; Chief Executive Phil Condit’s declaration that the company was looking for a “culturally diverse” and globally connected city hit hard.

Seattle has pinned much of its image as an international city and important Pacific Rim outpost on Boeing’s status as America’s largest exporter and its important role in the development of international trade policy.

“We are globally connected, a lot more than Denver and Dallas,” Schell protested.

“This is a Washington-born company that’s one of the best-known corporations in the world. They’ve been highly respected, and the message is: ‘We’re moving our corporate headquarters; we don’t know where, but we know where we’re moving from,’ ” said state Assembly co-Speaker Clyde Ballard, (R-Wenatchee).

“They’re not going to say this, but they [Boeing] have been coming to the governor and the Legislature for years, saying Washington is a very difficult place to do business in,” Ballard said. “I’ve heard people say it’s all saber-rattling, the Boeing Co. would never leave Washington. Well. . . .”

In many ways, the 1,000 jobs at corporate headquarters will have little impact on a regional economy that is still strong despite the recent dot-com setbacks.

Microsoft still expects to add 2,100 jobs this year, about half of them in the Puget Sound region, and overall regional job growth is expected to be about 1.7%, at close to 30,000 new jobs by the end of this year, said regional economist Doug Pedersen of Pedersen & Associates.

Boeing has done relatively little to help that equation; the company only recently has begun recovering from a down cycle that resulted in 26,000 layoffs over the last two years, adding fewer than 100 jobs a month in recent months, Pedersen said.

But it is the less measurable impacts that are potentially more important.

“First, there is prestige and economic value to being a corporate headquarters for a company, which after all was founded and grew here. It’s part of the economic essence of Seattle and western Washington to be the home of Boeing. We’ve lost that, and it’s not a trivial loss,” said David Harrison, senior lecturer at the Evans School of Public Affairs at the University of Washington.

The big question on everyone’s mind was why.

Boeing has made no secret of the fact it has been uncomfortable with Washington’s corporate tax structure. Corporations here pay 47% of all taxes, the highest rate in the West, and unemployment insurance payments are the highest in the country, more than twice the national average.

“Compared to everywhere else we do business, Washington is below average,” Boeing’s former chief financial officer, Debby Hopkins, said at a Chamber of Commerce conference in 1999. “To remain a global leader for aerospace--and a global leader for other industries--Washington has to rank a whole lot higher than that.”

Another undeniable factor is the Seattle area’s transportation mess.

Even as explosive growth has choked freeways well beyond their capacity, regional government has stalled on construction of a light-rail transit system and citizen initiatives have slashed tax revenues for transportation.

Fixing one single freeway just east of Seattle, a major access to Boeing’s Renton construction plant, will cost $7.1 billion, state transportation officials revealed this week--and businesses no doubt can expect to be hit up for at least part of the cost.

“They’ve got their shipments going between plants stuck in traffic at all hours of the night. Even at 2 in the morning, there can be traffic jams,” Ballard said.

By Wednesday afternoon on a rare sunny day, hardly anyone had failed to hear the news.

“As long as it’s just their corporate headquarters and not all the jobs, it probably doesn’t matter too much. But it’s strange. I thought Boeing was a part of Seattle,” said Jill Palmer, who was out for a break from her job at a department store. “I guess it isn’t anymore.”

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Times researcher Lynn Marshall in the Seattle Bureau contributed to this report.