Seattle Flying High On Boeing Boom

A year ago, the world looked grim for the aerospace giant Boeing Company, the largest employer in the Puget Sound region.

It had eliminated 12,600 jobs in 1995 alone, the fifth year of a downsizing effort that lopped off a third of its work force. It limped along with few new commercial-airliner orders, hitting a nadir of 120 in 1994. It faced a defiant machinist strike and its hope for the future teetered on diplomatic tensions between the US and China, a potential customer worth a trillion dollars in airplane orders.

But while Boeing was cutting back, the area's other economic mainstay, Microsoft, was steadily generating jobs and revenue. The two companies have provided Seattle with what some say is a formula for economic success that can weather most economic storms.

Now, in a turnaround no one predicted, Boeing is back in a big way and its boom - capped by last month's megamerger with rival McDonnell Douglas Corp. of St. Louis - is giving the region's economy a boost that will last through 1997 and possibly longer, experts say.

"It's a city where the industries of the future are growth industries: software, aerospace, telecommunications," says Mike Parks, editor of Marple's Business Newsletter.

Boeing does not own the economy here as it once did, but its lagging performance in the first half of the decade certainly put the brakes on economic expansion, experts say. And while everyone knew Boeing was bound to come out of its down cycle, no one expected it to happen so fast.

"The size and speed of the build up of Boeing is almost unprecedented," says Paul Sommers, executive director of the University of Washington's Northwest Policy Center.

A record number of commercial jet orders and a Pentagon contract that could eventually be worth $219 billion in sales led Boeing to hire 13,380 new workers. By December, it had increased production for its 737 series four times in 13 months. On the heels of these lucrative deals came the $13.3 billion merger agreement with McDonnell Douglas - the nation's 10th largest if isn't impeded by antitrust laws.

While Boeing has taken center stage as the turbine that drives the economy here, a recent study showed that the newest player on the block - Microsoft in Redmond, Wash. - has been playing a growing role in keeping the local economy vital during the first half of the 1990s.

Microsoft's 11,000-member area work force pales compared with Boeing's 85,000 local employees, but the software company is creating many more additional service and support jobs - and bolstering Seattle's place as a high-tech hothouse. A recent study showed Microsoft accounted for 12 percent of the increase in gross state product and 15 percent of the gain in jobs from 1990 to 1995.

No one knows how long the software giant can keep up the pace, but it's expected to last for the foreseeable future. And now that Boeing's back, so is the local economy. "The turnaround is more dramatic in scope and timing than anybody, particularly Boeing, had forecast," says Parks.

Mr. Sommers of the University of Washington cautions that, "Nobody is expecting quite as big a boom as in the late 1980s. We may have seen a high point this year." But he adds that, "1997 is going to be at least as good as this year in terms of overall growth."

Evidence of that is beginning to trickle in. November retail and business tax payments were almost 10 percent higher than last year and $9.9 million more than estimated. Parks points to other growth signs: an unemployment rate below the national level; high hotel occupancy; and a thriving downtown with new glittery operations such as NikeTown and Planet Hollywood.

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