Puerto Rico pursuing Boeing’s manufacturing business

Written by  //  December 4, 2013  //  Manufacturing  //  No comments

United Airlines was the first commercial carrier to fly the Boeing 777, the predecessor of the 777x. (Credit: Wikipedia)

United Airlines was the first commercial carrier to fly the Boeing 777, the predecessor of the 777x. (Credit: Wikipedia)

Puerto Rico government officials confirmed Tuesday the García-Padilla administration is working on a proposal to persuade aerospace giant Boeing to build its new 777X aircraft on the island, which could create thousands of jobs and billions of dollars in much-needed economic activity.

Antonio Medina-Comas, executive director of the Puerto Rico Industrial Development Company, said the agency has been working for several weeks on a proposal to show the “value Puerto Rico offers aerospace industries.”

“Efforts have been directed toward getting this segment and other businesses to establish some degree of their manufacturing operations and export services on the island,” said Medina-Comas in response to the appeal made by the Resident Commissioner, Pedro Pierluisi, for the government to pursue business opportunities with that company.

He said Pierluisi’s call to the government to “act with a sense of urgency and to submit a formal bid to Boeing” is late.

“The contents of the approaches and conversations that Pridco has made with this and other companies are kept confidential until a formal agreement is reached to responsibly ensure the establishment of an operation in Puerto Rico,” he said.

“Seeking to foster and maintain trust from industries in our administration, we must be responsible with regard to the information we provide on these processes to not affect their expectations and respect their internal business processes,” Medina-Comas said.

Earlier in the day, Pierluisi pointed out that recently, Boeing — one of the largest manufacturers of commercial airplanes in the world — was unable to agree on a new contract with its machinist union in Washington State, and the company began contacting other states in an effort to find a new assembly site to build the 777X.

Production of the 777X is scheduled to start in 2017 and airlines are expected to begin flying the plane in 2020.

“In light of the economic and fiscal challenges that Puerto Rico confronts, we need to think big and aim high. To achieve success, the first step is to be prepared to compete,” Pierluisi said. “Evidently, more than 20 states have submitted proposals to Boeing.  If the governor of Puerto Rico has not yet done so, he should immediately contact Boeing with the purpose of submitting a good proposal.”

The governor and his economic team, Pierluisi said, should “advise Boeing that Puerto Rico is a U.S. jurisdiction that is home to thousands of skilled and productive workers. Our universities and community colleges have excellent engineering, aerospace and advanced manufacturing programs.”

Several aerospace companies already have operations in Puerto Rico, including Lockheed Martin, Honeywell Aerospace, Pratt & Whitney-Infotech Enterprises, Hamilton Sundstrand and Essig Research.

Boeing and Puerto Rico already have a business relationship, as the manufacturer has reportedly purchased more than $30 million in airplane parts from six different suppliers on the island in the last year, and the company recently conducted performance tests of its new 787 Dreamliner at Rafael Hernández Airport in Aguadilla, he sad

Resident Commissioner Pedro Pierluisi

Resident Commissioner Pedro Pierluisi

“The state governments that are competing to build the 777X in their jurisdictions have been enacting special tax legislation to attract Boeing. The governor should explain to Boeing that Puerto Rico could offer the company very attractive tax and other benefits under existing law, including Law 73 of 2008,” said Pierluisi.

Law 73, among other things, permits the government of Puerto Rico to offer Boeing a corporate tax rate between 1 percent and 4 percent for up to 15 years, to exclude from taxation dividends provided to shareholders or partners in the local Boeing operation, and to receive a 90 percent exclusion from property taxes.

Boeing could also qualify for financial incentives from Pridco for the jobs that it creates and the infrastructure investments that it makes.

Pierluisi mentioned various municipalities that could be ideal locations for the Boeing plant. His suggestions include, among others, the former naval base at Roosevelt Roads in Ceiba and the former air base in Aguadilla, as well as the Municipality of Ponce, which has sufficient land and the necessary infrastructure to support an operation of this magnitude.