WTO Finding: Boeing’s 777 Project was Illegally Subsidized by State Legislature

LeehamNews.com does a great job covering the commercial aviation manufacturing industry, especially the often complex politics surrounding Boeing in the U.S. versus Airbus in the E.U. The latest blogpost, ‘Airbus, Boeing claim victory in today’s WTO ruling over Washington State tax breaks’, goes deep into the WTO panel report that was just issued today: ‘Dispute Settlement – Dispute DS487, United States — Conditional Tax Incentives for Large Civil Aircraft’. Essentially, WTO found Boeing’s 777 project was illegally subsidized by tax incentives created by the state legislature, in House Bill ESSB 5952. That legislation, passed in November 2013, was aimed at securing local jobs, thus improperly favoring the local economy.

This subject area is a bit off-topic for aiREFORM but worth archiving here, as it sheds further light on the extent of subsidy that props up aviation. We often hear that airports and aviation are huge catalysts for local economic development. Well, it turns out, this line is just more spin to dupe elected officials and citizens into accepting the latest aviation development scheme. In most examples, subsidies such as the huge tax reductions and tax credits given to Boeing, come with substantial costs elsewhere. Two key areas where the costs are transferred elsewhere:

  1. somebody has to pay the taxes that are excused when legislators offer sweet deals to large corporations; that burden falls more heavily on the regular Joe taxpayers, the ones raising families, for example.
  2. when jobs are sucked up into concentrated mega-factories, like the new wing production plant in Everett (at KPAE), those jobs no longer exist dispersed over numerous smaller communities. Time and again, those small communities start to shut down and become economic wastelands with relic facilities now standing silent.

When viewed objectively the ‘net economic benefit’ becomes just a wash, really nothing to get excited about.

Much like our federal laws have enabled banks to concentrate and become ‘too big to fail’, laws related to aviation have enabled airlines, airports, and manufacturers to concentrate, becoming ‘too big to function without imposing excessive impacts’. These impacts need to be objectively addressed, not glossed over because they do not conform to a propaganda campaign. Congress has failed us big time, these past few decades, and the trend does not look promising.


UPDATE, 11/29/2016: — Two months ago, WTO made a similar finding, but precisely opposite, finding illegal subsidies of Airbus by the EU. There is an apparent history of legal busy-bodies doing a huge amount of work and rendering critical decisions, but in the end taking no real action to change anything. This pattern is much like we see with FAA’s faux-regulation of aviation interests.
The documentation is deep, but a fascinating read. There is much to be learned about the politics (and complete absence of free and open markets) in aviation, by looking at related articles and past WTO actions. See, for example:
  • 9/22/2016 – a 574-page report issued by WTO, in response to the United States’ complaint against the European Union (EU)
  • 9/22/2016 – 154-page Addendum to the above report. See in particular the Executive Summaries submitted by the two parties.
  • 9/22/2016 – LeehamNews Post summarizing the report issued by WTO.
  • 11/29/2016 – 154-page Addendum to the above report. See in particular the Executive Summaries submitted by the two parties.

Boeing Slows 787 Production Rates, to Catch Up with ‘Traveled Work’

Boeing reacted with aggressive denial of charges in the recent news investigation about the 787 Dreamliner, Broken Dreams: The Boeing 787. One charge that nobody even tries to challenge, though, is that this new aircraft has been chronically plagued with delays, even before the first prototype was ready to fly.  The delays have continued in recent months.20140918cpy.. B787's on KPAE FlightlineA new airliner is large, thus difficult to hide … and made even more difficult when ‘spotters’ are avidly pursuing their hobby. Every day, these guys watch out for new aircraft and then share their photos online. The ramp area at Paine Field in Everett is loaded with lots of 787’s, each of which will quickly be flown off when all work is finished. These aircraft are a huge investment; thus, the airlines have no interest in letting them sit for extra days at the factory ramp.

Evidently, Boeing is doing so much ‘Traveled Work’ in recent months that the local paper reports total production is down. Furthermore, some Boeing workers are sharing ‘anonymously’ that they had to work 10- and 12-hour days and on Saturdays, to fix problems. Overtime in Boeing factories is not uncommon, but workers say their workload this time has been greater than usual. The workers have to answer anonymously, because Boeing forbids its workers from speaking publicly about the program.

Here is an excerpt from one of the many insightful comments, responding to the article:

“The FAA needs to send real inspectors, from Washington D.C., not the good ol’ boys that are stationed in the area, and do a complete investigation of the program from the bottom to the top. Come talk to the hourly guys that are doing the work BEFORE they talk to the top brass. They would pull the PC700 on the 787 program in a NY minute. It is funny that the quality of work on the Everett Flightline is great at the north end, Stall 101 and 102 being the best, and by the time one gets to Stalls 108 through 201, ….they all wear hockey helmets and the product shows!”

see also:

Dear Administrator Huerta…

…can you PLEASE bring real transparency to FAA’s business, so WE THE PEOPLE, can know what your employees are doing for OUR safety?

Copied below is a recent article, posted 2-5-13 at the very reputable news source, AviationWeek.com. The text has been modified by aiREFORM.com. Text not relevant to the issue of FAA transparency has been dimmed; text showing the inappropriate habit of FAA to excessively conceal information is in bold red.

Mr. Huerta, this is a clear no-brainer. The agency you lead needs to serve the public’s need for factual and timely information. President Obama articulated this quite well in his 1/21/09 Memorandum on Transparency & Open Government. NTSB Chair Hersman has done an excellent job communicating the Boeing 787 battery fires issue to the public, complete with photographs. Yet, FAA continues to try to keep the public in the dark. It again appears, as it did during the 4-3-08 congressional hearings about the Southwest 737 maintenance issues (and decades of other failures and scandals), that FAA is primarily serving its own ‘perceived customer’, the airlines and the aviation industry, while going against the objective of promoting aviation safety. I trust you agree, this is an FAA failure that you need to immediately correct. Here’s the article:

…a post at AviationWeek.com, February 5, 2013…

 

Japan’s Transport Safety Board (JTSB) has confirmed that Boeing is preparing to resume limited flight tests of the 787 as part of initial efforts to characterize the operating environment of the battery during typical flight cycles.

Boeing, which declines to confirm reports in the Seattle Times that it has requested permission from the FAA to conduct the data-gathering flights, is known to be evaluating several potential modifications to the battery system as part of urgent attempts to restore the 787 to service. The aircraft has been grounded since mid-January following two separate battery failures on aircraft in the U.S. and Japan earlier last month.

The FAA tells Aviation Week, “We are evaluating the request,” but declines to comment further.

The JTSB meanwhile is providing new details about the extent of the damage sustained by the main battery, which failed on the All Nippon Airways 787 on Jan. 16. The agency says its investigation has found evidence of the same type of thermal runaway event that the U.S. National Transportation Safety Board says occurred on the Japan Airlines 787 APU battery at Boston Logan International Airport on Jan. 7. CT scans and other analysis conducted by the JTSB found damage to all eight cells in the battery as well as indications of short-circuiting and thermal runaway–a condition in which the failure of a single cell rapidly leads to overheating and a spillover to the surrounding cells.

According to the Seattle Times, the initial flight tests will focus on measuring the impact of temperature and vibrations on the battery as experienced during typical flight cycles. As revealed earlier in Aviation Week, the report also indicates Boeing is evaluating potential means of beefing up the battery containment and venting system.

 

It is an embarrassment to both our country and our vaunted democratic process, that we have to go to Japan to find out what Boeing and FAA are up to here, in our own country. The effect is that Japan is needed to blow the whistle on us! Can you please fix this???

This concerned citizen simply asks: will you please bring your agency into this new age of full internet-driven transparency, in conformance with the White House’s 12-8-09 Open Government Directive? Get your 45,000+ permanent employees to quit hiding everything! Let us know all the facts, un-spun by FAA/industry marketing agendas, so that we may each become fully and meaningfully empowered to participate in this democracy.

Jeff Lewis
former FAA ATCS and Whistleblower