The Boeing Announcement Is a Vote of Confidence in Virginia

Boeing Advanced F-15 jet fighter

by James A. Bacon

The Boeing Company’s decision to transfer its official headquarters location from Chicago, Ill., to Arlington gives Virginia significant bragging rights. The move will have little detectable short-term economic impact. The more consequential news is a promise to “develop a research & technology hub” in the area “to harness and attract engineering and technical capabilities.”

Plans at this point are vague. I’m guessing a big winner will be Virginia Tech, which last year unveiled a $248 million project to replace Randolph Hall, which houses the aerospace engineering department. Randolph Hall is connected to one of the largest university-owned stability wind tunnels in the United States. Mitchell Hall, which will replace it, will accommodate the wind tunnel and partially enclose it. Tech also is developing a major campus in Arlington in collaboration with the Amazon project there.

With $66.2 billion in annual revenue in 2021, Boeing will rank as the second largest Fortune 500 company headquartered in Virginia. The first is Freddie Mac, which had $80.6 billion in revenue and logged in at No. 47 nationally. If Boeing recovers to the $100 billion-plus level of a few years ago, it would be the largest company based in Virginia.

Some are spinning the Boeing announcement as a victory for Virginia’s technology sector. It’s more appropriate to describe it as a win for Virginia’s high-tech defense sector.

Military contracts now account for more than half of Boeing’s business, and its Defense, Space and Security business unit is already based in Arlington. Boeing joins General Dynamics and Northrop Grumman, both headquartered in Falls Church, and Huntington Ingalls Industries in Newport News. (Martin Marietta is headquartered in suburban Maryland.) The nation’s major defense contractors have decided it is mission-critical to locate near the Pentagon, Congress, and, in the case of Boeing, which also produces civilian aircraft, the Federal Aviation Administration

Boeing’s office in Arlington’s Crystal City, near Amazon’s East Coast HQ, has 400 employees, but the company has “no immediate plans” to expand the office footprint or shift employees — other than a few top executives — to Virginia.

The Youngkin administration was uncharacteristically terse in its acknowledgement of the Boeing announcement. It is standard fare for Virginia governors, state economic development officials, and local officials to make a big deal about major economic development announcements, but the Boeing coup garnered a mere one-paragraph statement from Governor Glenn Youngkin:

Boeing is one of America’s great pioneering businesses and we are thrilled the company has decided to headquarter in Virginia. The decision to call Virginia home shows that the Commonwealth is the premier location for aerospace companies. I look forward to working with Boeing to attract even more talent to Virginia especially given its reputation for engineering excellence. From day one, our goal has been to make Virginia the best place to live, work, and raise a family. I want to thank Boeing, its CEO Dave Calhoun, and its leadership for choosing Virginia.

In its press release, Boeing thanked Youngkin and Senator Mark Warner for their support “as we worked through the process.”

“We are excited to build on our foundation here in Northern Virginia,” said Calhoun. “The region makes strategic sense for our global headquarters given its proximity to our customers and stakeholders, and its access to world-class engineering and technical talent.”

Don’t expect a big boost to Northern Virginia’s conventional office market.

Over the past two years, the Boeing press release stated, the company has implemented “flexible and virtual solutions” that have enabled it to reduce its office space needs. At its Chicago office, less office space will be required for the employees who will continue to be based there. “Boeing will adapt and modernize the workspace to better support future work requirements.”

“In today’s business environment, we have adopted a flexible work strategy in parts of our company and are taking steps to be more efficient within a reduced footprint. This helps us channel investments toward our critical manufacturing and engineering facilities and training resources,” Calhoun said.

What makes the announcement positive for Virginia is the potential to enhance the region’s robust tech sector. Boeing plans to establish an R&D hub that will focus on innovations “in the areas of cyber security, autonomous operations, quantum sciences, and software and systems engineering.”

“The future of Boeing is digital,” said Greg Hyslop, Boeing’s chief engineer and executive vice president of Engineering, Test and Technology. “Focusing our R&D and talent development in areas that support digital innovation will fuel the introduction of cutting-edge capabilities. This new hub in Northern Virginia will follow the successful implementation of this technology strategy in other regions.”

Bacon’s bottom line: I have every confidence that Virginia’s higher-ed sector can deliver the engineering programs that Boeing is looking for. The big question is whether the state’s K-12 system can push enough kids through the educational pipeline to feed the voracious demand for graduates with math and science skills. Math performance as measured by standardized test scores isn’t heading in the right direction. The Youngkin administration will have to turn that around, and the job will be a lot harder than doling out subsidies and tax breaks as Virginia did for Amazon.

Speaking of subsidies and tax breaks, there is one refreshing angle to the Boeing news: there is no indication in any of the press releases or news reports that Boeing is asking for any. However things pan out, that makes the deal a win for Virginia taxpayers.

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8 responses to “The Boeing Announcement Is a Vote of Confidence in Virginia”

  1. LarrytheG Avatar

    This is probably more about their HQ and and a closer proximity to it’s DOD Government and Congressional contacts than major R&D per se.

    Some folks say Virginia should do better on economic development but NoVa does it’s share and then some with it’s built-in proximity to the Fed Govt.

    Where Va really lags on economic development is, like most states, in their rural areas where education levels of the prospective work force are low and not suited to things like R&D and further deficits with quality-of-life amenities that would attract those with higher education levels for R&D.

    Maybe Charter Schools could help them produce more R&D workers?

    Maybe more Conservative folks in those rural regions would support Charter schools to help their kids?

    1. Nancy Naive Avatar
      Nancy Naive

      “One word Son. Coal.”

  2. James McCarthy Avatar
    James McCarthy

    The nectar in VA for Boeing the Bee is intimate association within the military-industrial incest. Any effect upon the state’s educational enterprise is, for the moment, fancifull. Of course, the administration may nonetheless pay heed to that fancy.

    1. Nancy Naive Avatar
      Nancy Naive

      Whaaaat? You mean lottery proceeds don’t go toward education?

      Bet these BR’ers ain’t read this…

      “Boeing was recognized with a 100% rating and the designation of “2022 Best Place to Work for LGBTQ+ Equality” for taking steps to ensure greater equity for LGBTQIA+ teammates.”

  3. Richard Smith Avatar
    Richard Smith

    Freddie Mac is not a business. It’s a Government Sponsored Enterprise that wouldn’t exist without (UnConstitutional) government guarantees..
    As for providing technically competent HS graduates to feed engineering colleges, think Thomas Jefferson High School that has been ruined by woke liberal democrats..

    1. LarrytheG Avatar

      Well, TJ does not seem to “help” the low income demographics that advocates of Charters claim they will.

      If/when we see a legitimate Charter proposed that will ONLY or primarily serve truly economically disadvantaged kids vice high income Asian kids , we might get to the place we claim we want to be.

      Perhaps that IS (note the caps) – THE way to help economically disadvantaged kids get their share of enrollment in TJ!

      Youngkin can do three things to win me over:

      1. – Charter Schools restricted to economically disadvantaged kids.

      2. – SOL testing and disclosure of results

      3. Close any charter that fails 1 and 2.

  4. Nancy Naive Avatar
    Nancy Naive

    Just latching tighter on the teat…

  5. Ruckweiler Avatar

    When I saw this in the article “Speaking of subsidies and tax breaks, there is one refreshing angle to the Boeing news: There is no indication in any of the press releases or news reports that Boeing is asking for any” which doesn’t mean that out of the kindness of their hearts Boeing hasn’t dickered for and received promised incentives. Maybe I’ve become cynical in my old age.

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