Aircraft maker Boeing has relocated its headquarters from Chicago, 21 years after landing here in what has been hailed as a coup for the local economy.
Boeing said Thursday it plans to move its headquarters to Arlington, Virginia, near the nation’s capital. He said the new site would also serve as a research center.
“We are excited to build on our foundation here in Northern Virginia. 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, ”said Boeing CEO Dave Calhoun. The Wall Street Journal was the first to report the move.
Boeing said it would maintain a significant presence at its location in Chicago and the surrounding area, but did not provide details. “We appreciate our ongoing relationship in Chicago and across Illinois. “We look forward to maintaining a strong presence in the city and state,” Calhoun said.
Calhoun thanked Virginia Gov. Glenn Youngkin and U.S. Sen. Mark Warner, D.C., for their support. Details of local incentives were not immediately known.
Boeing has about 500 employees in Chicago at the headquarters of 100 N. Riverside Plaza, but the number of people present there dropped dramatically during the pandemic.
The move brings executives closer to federal regulators and Defense Department officials, who are critical to Boeing’s aviation and defense business.
The headquarters is only a small part of Boeing’s operations, with its main aircraft production still based in Seattle. But it was an important symbol of Chicago’s lure to business. Subsequently, other corporations moved their headquarters to the city.
When Boeing moved here in 2001, its executives cited the Chicago location as helping to establish a more global identity. However, many analysts were puzzled by the strategy. The executives involved in this decision have long since left the company.
About $ 61 million in state and local incentives were included in this move, in which Chicago won the race against Dallas and Denver. These incentives have largely expired.
With its results under pressure from the pandemic and problems related to its 737 Max, an aircraft whose design was involved in two fatal crashes, Boeing in the fall of 2020 announced large-scale plans to reduce costs. He promised to inspect each building and rent it out, but then executives declined to talk about the future in Chicago.
Paul O’Connor, a marketing consultant who led the local Boeing campaign as CEO of World Business Chicago in 2001, said the decision tarnishes the city’s image as an attraction to big business, especially against the headlines of crime jumps. “They were the gilded hoodie of a global city,” O’Connor said Thursday, assuming the news brought him a “bite” of sadness.
“They were a great corporate citizen. I think Chicago will miss them, “O’Connor said. He said city officials should ask the company in a quit interview what factors led it to leave.
O’Connor said that in 2001, Chicago saved time for Boeing executives. They could visit Wall Street or Washington and still return home that evening due to the constant direct flights. “I think there were different criteria for success when they first came here,” he said.
Mayor Lori Lightfoot issued a statement to Boeing in which he mentioned the company only briefly. She stressed that 173 corporations have moved or expanded here in the last year, 67 of which have done so since early 2022. “We have a steady stream of major corporate relocations and expansions and expect more announcements in the coming months,” she said. “What remains true is that Chicago is a major hub for global corporations that recognize our diverse workforce, expansive infrastructure and thriving economy.
Last week, Boeing said it lost $ 1.2 billion in the first quarter, down 8 percent in revenue from a year earlier. Detected by higher costs, supply problems and manufacturing shortcomings, the company was late in meeting demand for its new 787 passenger aircraft. Under its contract to build Air Force One aircraft, the president also needed $ 660 million.
Ald Center. Brendan Reilly, 42, said Boeing’s decision was disappointing, but not surprising. Riley noted that in 2001, the city gave Boeing a grant to finance a $ 40 million tax increase as part of an incentive package.
“This agreement has just expired in late 2021. It is clear that Boeing has managed to use the expiration of its financial incentives in Illinois to secure a sweeter deal than Arlington, Virginia,” Riley wrote in an email to the Chicago Sun. -Times. “It’s disappointing to lose a Boeing. But if I were from Arlington, I would make sure that this is a very long-term deal, because as soon as these deadlines expire, the company will use this for another stream of taxpayer incentives.
Ald Center. Brian Hopkins (2nd) called Boeing’s impending departure a “psychological blow” to Chicago’s “confidence as an international corporate headquarters”. The blow is being felt sharply, especially as the city suffers from high crime and job vacancies on the main retail site on Michigan Avenue, Hopkins said.
He added that “legitimate questions remain” about whether Chicago “got its money” from the lucrative stimulus package that lured Boeing here.
Leaving the company also hurts the downtown office market, which is still shaken by the impact of COVID-19. Boeing owns the 100 N. Riverside Plaza and its exit could leave it half empty, said Michael Silver, chairman of Vestian Global Workplace Solutions.
“We’re not done flushing the office market,” Silver said. The downtown market is heading for a record 30% of vacancies, and many large consumers want to reduce their space by up to 50% due to the proliferation of hybrid work schedules from home, he said.
When Boeing’s financial problems worsened in 2020, transportation analyst Joseph Schwitterman, a professor at DePaul University, said the company’s Chicago business had not grown in the way some accelerators had imagined years ago. “They have taken root in the city, but their soul is still in Seattle,” he said. “They’ve always had the aura of a company with two headquarters.”
He then said that financial pressures and management problems raised by the 737 Max could force Boeing to cut or relocate the plant. “Political dramas are creating pressure to tighten the organizational hierarchy for greater accountability,” Schwitterman said.
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