Recent news about Boeing has demonstrated the prudent choice Washington state made to adjust public policy affecting the business community to keep the company's airplane assembly operating locally.

As observers expected, Boeing topped Airbus for airplane orders in 2006. More importantly, the advantage was accomplished with superior sales for the more profitable wide-body classes, with the 777, 787, and 747 outdistancing the A340, A330/A350, and A380 respectively.

Why does an advantage in those classes matter? Because even while Airbus was delivering more planes in 2006, Boeing delivered planes of higher value because of its advantage in those larger planes. Boeing and Airbus went nearly plane for plane in deliveries and orders in 2006 for their highest volume sellers, the 737 and A319/A320 respectively, but that narrow-body class produces a small profit-per-plane for both companies. The true business advantage is in superiority of the larger plane classes.

Such an understanding of the finances of the industry is even more relevant given Airbus' ongoing problems. The financial impacts of continued delays in the A380 are more severe than expected, meanwhile Airbus has to struggle to raise the capital necessary to produce the A350, their competitor to the 787. Yet, even if the A350 is developed on schedule it will still only come into service in 2013, a full five years after the 787's projected first delivery.

Even with such advantages, pressure is still on Boeing to deliver the 787 on time, and to stay in front of Airbus as it responds to Boeing's gains (just as Boeing had to respond to Airbus' ascendancy in the 1990's). If the 787 were to run into difficulties, the consequences would be immediate (witness today's stock market news about Boeing).

In the meantime, Boeing's recent accomplishments bode well in the long-term for local aerospace employment, including an increase in Boeing suppliers locating nearby to meet the needs of Boeing's latest models. It also serves as a reminder that working with the business community to ensure a competitive playing field for Washington state is a good thing. In Boeing's case that has in recent years included reform of the state's unemployment insurance system and B&O tax credits for the aerospace industry. There was gnashing of the teeth in some quarters when those policies were approved, but they sure look like wise choices now.

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Footnotes:

Here are full 2006 order breakdowns for Boeing and Airbus (scroll down to "Airbus Orders").

Those interested in national commentary on Boeing's success in a globalized economy can find thoughts from George Will here.