What Boeing's new HQ may mean for the company's Seattle-area plans – Puget Sound Business Journal – The Business Journals

The Boeing Co.’s (NYSE: BA) decision to move its headquarters from Chicago to Arlington, Virginia, was a practical one, say industry watchers, reflecting the parity its defense and space operations have reached with its Seattle-area commercial aerospace programs.
Critics like Rep. Peter DeFazio, D-Ore., chair of the House Transportation and Infrastructure Committee, said Boeing’s move puts too much emphasis on its government relations, straying farther from the company’s engineering roots.
“Boeing’s problem isn’t a lack of access to government, but rather its ongoing production problems and the failures of management and the board that led to the fatal crashes of the 737 Max,” DeFazio said in a news release Thursday. “Boeing should focus on making safe airplanes — not lobbying federal regulators and Congress.”
But aerospace and defense analyst Michel Merluzeau said location matters little when it comes to how effectively the company’s corporate leadership communicates with its Boeing Commercial Airplanes executives.
“To have the right leadership in Seattle is more important than to have the corporate headquarters in Seattle,” Merluzeau said. “They have all the talent they need onsite to fix it. The question is, how do you translate the requirements and communicate those to corporate to get corporate to invest to give you what you need to fix the problem?”
Boeing announced its decision on Thursday to relocate its global headquarters, ending its 21-year tenure as a Chicago-headquartered company. The Puget Sound region remains the location of the company’s largest division, Boeing Commercial Airplanes, which accounts for around 57,000 of its 140,000 worldwide employees.
The new headquarters will tap into a more diverse pool of engineering talent without directly competing against Seattle’s manufacturing base, Merluzeau said.
Arlington is where Boeing currently houses its Defense, Space and Security division. Though that division’s $60 billion backlog was just a fraction of the nearly $300 billion in outstanding commercial orders Boeing had on the books at the end of 2021, it represented around 42% of the company’s revenue for the year, at $26.5 billion.
The Washington, D.C., area is a corridor rich with government IT and other tech talent that has gone largely untapped by the company, Merluzeau said.
The Arlington campus also provides Boeing cost savings by taking advantage of an underutilized facility, he added. The move comes after a year in which Boeing reassessed its commercial real estate needs, a result of which was the sale of more than 1.1 million square feet of space in the Puget Sound region.
The headquarters will serve as a base for Boeing’s cybersecurity, autonomous technologies, quantum sciences and other software development. Though the company did not specify how much it plans to invest in research and development at the site, work in those technology areas is unlikely to compete heavily with Seattle-area programs.
Boeing has been tight-lipped about its plans for development of a new midsize commercial jet to compete with European rival Airbus’ A321neo, but the move could mean development of digital technologies in Arlington that contribute to its design. The company has already been using so-called digital-twin technology across its 777X, T-7 Red Hawk and MQ-25 programs, said Scott Hamilton, director of aerospace advisory firm Leeham.
Boeing’s decision to relocate its headquarters does little to suggest where an eventual new plane would be built, Hamilton said. While the company could seek to absorb overhead costs of idled lines following the consolidation of the 787 Dreamliner in South Carolina in 2021 and the planned closure of the 747 this year, it would likely try to extract concessions from its unions and the state.
“The question of where the next Boeing airplane is assembled has existed as long as its headquarters was in Chicago,” Hamilton said. “I have very little confidence the Puget Sound can count on that being here.”
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