Boeing's 737 Max troubles threaten booming Seattle-area economy
Ever since Boeing announced it would temporarily halt production of the grounded 737 Max aircraft, there has been a strong sense of deja vu among residents of Renton, a small city in Washington state where the planes are made.
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The city, just south of Seattle, has spent decades as an echo chamber for the company’s ups and downs.
But this time, thanks to population growth and a more diversified workforce that has sought to get away from being a “one-company town”, the community and its local economy appears prepared to weather this latest Boeing storm.
The suspension of production of the 737 Max, previously Boeing’s bestselling plane, was announced last Monday following two crashes that killed 346 people in October 2018 and March this year. The planes had been grounded worldwide, but when it became clear the Federal Aviation Administration was not going to sign off on the aircraft’s return to service before 2020, the company opted to temporarily stop making them.
Renton’s mayor-elect, Armondo Pavone, said that while it will affect Boeing employees and may affect smaller local restaurants, retail businesses and companies that supply parts for Boeing planes, this is not a “sky-is-falling moment”.
“As a longtime Boeing community resident, you get used to a little bit of the ebb and flow of a large company like Boeing,” said Pavone, who also owns a neighborhood steakhouse in the downtown area. “Because of that I think I’m very comfortable saying that as long as this doesn’t go on for years and years, that it will have some impact. But it’s going to be something that the community gets through.”
Boeing has been a fixture in Washington state since it was founded in Seattle by Bill Boeing more than a century ago. When it landed in Renton in 1941, it catapulted the area “from a fourth-class city to a second-class city basically overnight,” according to the Renton History Museum’s city history database.
Since then, each time the company has gone through a major change, Renton has been the first to feel the effects. During the second world war, when planes were in high demand, the city flourished and its workforce dramatically expanded. But in the 1970s, when the Vietnam war was ending and the need for planes declined, Boeing cut its workforce by two-thirds and Renton fell into a severe recession.
In more recent times, the city again felt the effects when the company moved its corporate headquarters to Chicago in 2001. And then there were the times when the company moved departments from their branch in Everett, Washington, to Renton, and then back again, explained Pavone.
He said whether or not the recent production suspension will have a more profound effect in Renton will probably come down to how long it lasts.
Pavone said if Boeing and the FAA are able to wrap this up quickly, “there’s kind of enough margin and flexibility in the market to kind of absorb this where it’s not going to have any real, long-term, lasting negative impacts.”
But experts predict the production cut will have an impact on economic growth and employment across the US.
In August, Wilbur Ross, the commerce secretary, told CNBC that the 737 Max’s troubles had caused nearly a half-a-percent decrease in the country’s gross domestic product during a recent quarter. The production suspension could bring it down once again.
Boeing said on Monday it does not plan to lay off or furlough any of its thousands of employees at the Renton factory, but may temporarily reassign some of them to other teams in the area.
“As we have throughout the 737 Max grounding, we will keep our customers, employees, and supply chain top of mind as we continue to assess appropriate actions,” the company said. Its next update is expected to come in January.
Over the past few decades, Renton’s workforce has diversified dramatically. In 2019, there were about 15,000 people in Renton working for Boeing, which accounted for 25% of the city’s total working population, according to Cliff Long, Renton’s economic development director. However, this percentage was a noticeable decrease from previous decades, he explained.
The city is now home to key healthcare companies, including Kaiser Permanente and Providence, and has a large manufacturing sector separate from the aviation industry, producing such products as Kenworth Trucks.
Renton is also one of the few remaining affordable communities around Lake Washington, a large waterway next to Seattle. People looking for a less pricey home have taken up residence, according to Heather Maddox, a real estate broker.
Maddox, who grew up in Renton, said that Boeing is a huge staple and she does not want to see it go. But it has nowhere near the influence on the community it once had, she said.
“I don’t feel that it’s going to be so impactful that it’s going to be something that we need to have high concern about as relators or as home owners for the value of our houses and livelihood of our city,” she said. “I feel like we’ve been through this with Boeing before and our city continues to thrive.”
But that doesn’t mean smaller restaurants and businesses will not feel the effects. There are dozens of businesses surrounding the Boeing facility in a shopping area known as The Landing. Many of their customers are Boeing employees.
About half of the lunch customers at Torero’s, a family-owned business at The Landing, are Boeing employees, according to Veronica Medina, the restaurant’s manager. She said she expects that they may see a decrease in sales and will probably need to adjust payroll.
“In the past I’ve never had to lay anybody off, so I’m hoping we can figure things out,” she said.
Kristen Fisher, manager at The Hop Garden, mere blocks from Boeing, said the restaurant has been extremely quiet. She said they are working to try to diversify through outside catering and trivia events, so the business won’t be quite as reliant on Boeing.
As a longtime Renton resident whose mom and stepdad worked for Boeing, she said she has “nothing but good feelings” for the company and hopes the aircraft production starts up again. But she also said she recognized the magnitude of these crashes.
“It’s an awful tragedy, and I hope they do the right thing,” said Fisher. “I would like it to be safe and them cranking out airplanes.”
