Mulally stings state, but others come to its defense

David Groves read about Boeing's biting criticism of the state business climate yesterday morning, and it only took him until 7:43 a.m. to fire off an e-mail to thousands of union members headlined: "Washington: We Don't Suck."

The blunt words a day earlier from Boeing Commercial Airplanes chief Alan Mulally clearly hit a sore nerve in labor and government circles.

Appearing before the Rotary Club of Seattle, Mulally said he was "really encouraged" by what the state has done to improve its competitiveness. But when asked to sum up his feelings about the state's business competitiveness and transportation network, he answered, "I think we suck."

Groves, a spokesman for the Washington State Labor Council, said the words stirred more response from union members than any message he has sent out all year.

Gov. Gary Locke had no comment yesterday. State economic development director Martha Choe, who has worked to entice Boeing to build its proposed next-generation plane, the 7E7, in Washington, said "it would have been nice to hear a different message," but she added "everyone knows there is more work to do." She said that despite Mulally's blunt remarks, she remains convinced the state can compete for the 7E7.

Rick Bender, president of the state Labor Council, said the comments aren't helpful, but he wasn't jumping to conclusions because he wasn't sure if Mulally really meant what he said.

Still, the words were eye-opening, considering the stunning, perhaps unprecedented success Boeing and its allies had this year in the Legislature.

To name just a few victories, Choe pointed to changes in the regulatory system, the $4.2 billion transportation plan, balancing a $2.6 billion budget deficit without raising business taxes, and plans to build a new Mukilteo pier to serve Boeing's Everett plant.

Locke and the Legislature also enacted a $3.2 billion aerospace industry tax break if the 7E7 is built in Washington, and dramatic changes to save businesses money on unemployment insurance and worker's compensation.

"Boeing got just about everything they wanted last session, and some of it we supported," Bender said. "When you look at the list, it can't be taken lightly."

Bender said everyone who has worked on transportation understands that the state package is "a start" and that it needs to be complemented with a regional package. He said business, labor and Boeing representatives are working on it right now.

Groves said the criticism of the business climate has been a winning political strategy for the business community, a strategy he's concerned will be used to seek a sweeping overhaul of the workers'-compensation system next year. Despite recent increases in workers' compensation premiums, Washington's system is not ranked among the nation's most costly.

"The business community may be overplaying its hand," Groves said. "They've had great success convincing policy makers that we're not business-friendly, and it's translated into political victories for them, but at some point they'll come across as whining or ungrateful for what's been done."

Dick Davis, president of the Washington Research Council, a business-backed think tank that has done numerous studies on the business climate, said Mulally's comments accurately reflect what many in the businesses community believe. In interviews with state business leaders over the summer, Davis said, he found those who pay attention to state government were pleased with its actions, but many remain pessimistic about the state's economy.

He said that the $4.2 billion transportation package is a down payment that will not fix traffic congestion overnight. Despite reforms to unemployment and workers' compensation, many businesses will still face steep increases this year — which would have been much steeper if things had remained status quo.

"The analogy I like to use is, if this is a 1,000-meter race, and you're looking good in your first five or six steps out of the blocks, you still haven't won the race," Davis said.

Tom Alberg, a member of the Competitiveness Council and managing director of Madrona Venture Group, a high-tech investment firm in Seattle, said the region does have some positive factors, such as the highest per capita concentration of scientists and engineers in the nation.

He said Boeing places a higher priority on some issues than other businesses — permitting, for example — but he said Mulally's words largely ring true for business.

"It would be nice to always be positive, but it won't make things better if we're always Pollyanna about things," Alberg said.

Luke Timmerman: 206-515-5644 or