March 22, 2001

Contact: Robert Lowery (509-963-1487/fax 509-963-2301/ email loweryr@cwu.edu)

ELLENSBURG, Wash. - Wednesday's announcement that The Boeing Company will move its headquarters away from Seattle came as a shock to many people around the state. However, Central Washington University business administration professor Don Nixon was not among them.

"This decision is not a surprise," Nixon says. "In strategic terms, it makes perfect sense. It's in line with Boeing's move to diversify. And, they're looking to subcontract more of their work out of state. From a corporate standpoint, this is just a redeployment of assets."

Despite the price tag of such a move, estimated to cost in the millions, "if Boeing can just subcontract out 5 percent more of its work the move will pay for itself," says Nixon, business administration program chair at the CWU SeaTac Center.

Boeing's concentration in the Puget Sound region has hurt the firm's bottom line because of high operation and labor costs there, Nixon adds.

"It's part of a long-range strategy, probably on the part of Boeing management, to take a harder line with the unions," he points out. "This is a clear signal that, if things don't go their way in future labor negotiations, Boeing can move more of its operations, particularly to states that are more pro-business as opposed to pro-labor."

According to Nixon, Texas is a state that would fit that bill. Dallas-Fort Worth is among three sites where company officials say Boeing's headquarters could relocate. The others are Denver and Chicago.

"I see disadvantages in each of the three sites as corporate headquarters," Nixon says. "But, you have to remember, the company's global management is now comprised of both Boeing and McDonnell Douglas employees."

A move out of the U.S. of other portions of Boeing's operation is also a possibility, Nixon says, noting that Canada and Mexico could be among the locales where the company relocates as a way to "limit the power of the IAM (International Association of Machinists and Aerospace Workers union), in particular, which they feel is driving up their cost and making them non-competitive with Airbus. This will make the next round of negotiations even more strident."

Nixon says he doubts the move was announced as a way for Boeing to gain tax breaks or other concessions from the state.

"You never know how they make these decisions," he adds. "You don't know what the hidden agenda is. Even as a business-type decision, you have personal values affecting this as well. And what those are, we'll never know."