Though Spokane isnt in the running to land Boeing Co.s planned 7E7 manufacturing plant, some aircraft-parts companies here stand to benefit if the big aerospace manufacturer opens the plant elsewhere in the state.


Boeing is conducting a nationwide search for a location for an assembly plant where it will make its new wide-bodied 7E7 airplane, dubbed the Dreamliner, and several states are offering tax breaks and other incentives with hopes of landing the facilityand the hundreds of jobs it would provide. Washington state is among the manufacturers suitors, with two cities in the stateMoses Lake and Everettvying to be the home of the plant.


If one of those two cities were chosen, aircraft-parts makers in Spokane, of which there are a handful, and elsewhere in the state would benefit from recently enacted tax incentives that would be triggered, business sources say. Such incentives also could help lure more aerospace parts makers to Spokane and other parts of the state, they say.


If we can turn that into jobs with really good wages, that will help, says Rich Hadley, president and CEO of the Spokane Regional Chamber of Commerce.


Kriss Sjoblom, vice president of research for the Washington Research Council, a Seattle-based think tank, says that although House Bill 2294 commonly is referred to as the Boeing tax incentive bill or the bill for Boeing, most of the perks that the bill offers would apply to any company that makes commercial airplanes or airliner components ifand only ifBoeing builds the 7E7 in the state.


Those tax breaks include a 12.5 percent reduction in the B&O tax rate for makers of commercial airplanes and their components, beginning Oct. 1, 2005, swelling to a 40 percent reduction on July 1, 2007, extending until July 1, 2024, an analysis prepared by Sjoblom says.


Other incentives applying to makers of airplanes and parts include a credit against B&O taxes equal to 1.5 percent of preproduction development expenditures towards new products, product lines, aircraft models, or model derivatives. There are numerous other breaks as well.


By having these credits apply more broadly, a supplier who is considering (opening) a plant will find that the tax breaks apply and that theres good reason to be in Washington, Sjoblom says. Even Boeings established operations in the state could benefit from the tax incentives, he says.


Triumph Group Inc., a Wayne, Pa.-based aircraft-component designer and manufacturer that bought Boeings Spokane aircraft parts plant earlier this year, is perhaps the most obvious Spokane-area operation that could benefit from such tax incentives.


Though Richard Ill, Triumph Groups Pennsylvania-based president and CEO, says the company hasnt looked at the incentives the various states are offering Boeing and which incentives might apply to its own operations, it is following the site-selection process closely.


While Triumph isnt advocating one site over another, Ill says, In our case, it would be very advantageous to have it in Washington for some of the products we supply.


Triumphs Spokane plant, which operates as Triumph Composite Systems Inc., might have opportunities to secure additional business from Boeing if the aircraft maker builds its new aircraft manufacturing plant in Washington, or for that matter near one of its other 40 operations elsewhere in the country.


Boeing works with established suppliers to help them move up the food chain, Ill says, meaning that the airplane maker encourages those suppliers to make or assemble several components into one larger piece, rather than making a single component.


Triumphs Spokane plant employs about 400 people and makes air ducts for aircraft heating and cooling systems, cockpit drip shields, and floor panels for Boeing aircraft.


Altek Inc., a Liberty Lake contract manufacturer, makes parts for Boeing aircraft as a subcontractor for Boeing subcontractors located in the Seattle area.


Rick Taylor, Alteks sales and marketing manager, says the company is hoping that Boeing builds its 7E7 plant in Washington state, east of the Cascade Mountains. If Boeing does so, he says, Altek will pursue a stronger relationship with the Chicago-based aircraft maker as a first-tier supplier. Taylor says Altek, which currently employs 180 people, would need to add some staff members to handle the extensive quality-control measures and documentation that Boeing requires from its first-tier suppliers, but the added business opportunities would outweigh the additional costs.


Taylor, who says he worked for a first-tier Boeing supplier in a previous job, says, I like the work. Its good work.


Currently, as a second-tier supplier to Boeing, Altek makes various electronic sensors as well as support struts and support ribs for wings.


Sjoblom says companies like Altek that make parts for multiple industries would be able to use the tax incentives in the bill for Boeing, but only in the portion of their businesses that serves the aerospace industry.


The Spokane facility of B.F. Goodrich also is said to make parts for Boeing, but a spokesman for that operation couldnt be reached for comment.


The Spokane Regional chamber has begun a search here for companies that serve the aerospace industry and could benefit from the potential tax incentives, says the chambers Hadley.


He says that if Boeing puts its 7E7 plant in Washington state and the tax incentives go into effect, the Spokane area could use those incentives to recruit more aerospace-component makers.


Also, Hadley says, a maintenance and parts depot for the planned new U.S. Air Force KC-767 air tanker, which would be deployed at Fairchild Air Force Base here, could be built off base and operated by a private company. Such a facility would benefit from the tax incentives too, he says.


The good news is there are some real opportunities coalescing around the aerospace industry, Hadley says.


It must be remembered, however, that all of the tax incentives are contingent on Boeing choosing Washington state as the location where it will build its 7E7 Dreamliner, and Boeing doesnt expect to announce selection of a site until the end of this year.


Boeing isnt disclosing the list of states that are making a play for the 7E7 plant, nor is the company commenting on specific proposals that are being made to land the plant, says Everett, Wash.-based Boeing spokeswoman Mary Hanson.


She says, however, that a list of criteria, including transportation issues, environmental considerations, and community support, are being considered in addition to the cost of doing business.


While a state may submit a solution that has the best financial package, thats not the only criteria, Hanson says. Were looking at the big view, because this is a business we expect to be in for a very long time.


The incentives in the Boeing bill also include a credit against B&O taxes for investments in design-and-engineering computer hardware and software made between Jan. 1, 1995, and the effective date of House Bill 2294. The credit, 8.44 percent of the purchase price, equals the sales tax that would be paid on the items and is capped at $10 million a year and $20 million total for any one company, Sjobloms analysis says. After the bills effective date, a computer hardware and software sales and use tax exemption takes hold.


The bill also allows manufacturers of super-efficient aircraft and aircraft components to deduct from their B&O taxes the amount of the property taxes they pay. Sjoblom says that break is structured to provide property tax relief without hurting local governments. Property tax mostly goes to local government coffers, while B&O goes to the state, he says.


Other breaks would apply to facilities built in public port districts.


In addition, a construction sales and use tax exemption on labor, materials, and fixtures incorporated in buildings constructed for the manufacture of super-efficient aircraft applies only to the aircraft manufacturerand not aircraft-parts makers.


Sjobloms analysis says that the number of jobs at stake with the 7E7 decision in the year 2015 will range from 73,300 to 151,900.