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Governor signs Boeing incentive package

Gov. Jay Nixon today 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.

“Associated Industries applauds today’s signing of an incentive package that will allow Missouri to present a competitive proposal for a large commercial aircraft project,” said AIM president Ray McCarty. “We have heard from our supplier manufacturers that this project could present an opportunity for many of them to mitigate the impact of federal sequestration and defense budget cuts. With some retooling, these manufacturers may be able to make parts for commercial aircraft and allow these employers to sustain themselves and grow.”

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.

To meet the company’s workforce needs, a consortium of area community colleges formed 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. 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.

Senate Bill 1 will help the state to submit a competitive response to Boeing’s Request for Proposal, which is due by close of business today (Dec. 10).

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