Where Asia's Boom Is Good News

Eric Ellis, Seattle

01/29/1997

From Silicon Valley to Seattle, the West Coast's resurgent technology and aircraft industries are revving up America's economic renaissance. Eric Ellis reports from America's boom towns in the final part of a series on the US economy.

IT'S easy to see who's paying the bills in thriving Seattle and the US Pacific North-West.

A drive along East Marginal Way, lined by one of the Boeing Company's massive facilities and past the busy Port of Seattle, reveals tens of thousands of containers in various stages of emptiness.

Loaded and unloaded, they bear the logos of Hanjul of South Korea, OOCL from Hong Kong, Taiwan's Evergreen, China's COSCO and Japan's OSK and NYK. It's said around Seattle, the economically energetic home of Boeing and Microsoft, that the best thing to come out of the ground-breaking Nixon-Kissinger peace overture to Mao Zedong in 1972 was neither peace nor ping-pong exchanges.

It was jobs. And Boeing is planning to add 15,000 of them, 15 per cent of its total workforce, to keep up with the demand for new planes from Asian customers that will almost double production of its commercial product range.

"Boeing's foreign policy is as sophisticated as the State Department's," says Dick Conway, author of a major study into Boeing's impact on the Pacific North-West.

"If you want to know when Bill Clinton will go to China, don't ask the State Department, ask Boeing."

The Seattle region's connections with Asia's often rigid regimes, in particular China, are all the more intriguing given the strong liberal tradition in the city and in Washington.

Washington State's new Governor, Gary Locke, may be the first Chinese-American governor of a US State but he is a libertarian Democrat to the left of the Clinton White House, albeit one whom Boeing describes as "pragmatic".

Indeed, on the day the AFR visited Boeing, the Seattle Post-Intelligencer carried a front-page report about the rough justice meted out to dissident Wang Dan in Beijing.

Nevertheless, Larry Clarkson, Boeing Senior vice-president for strategic planning, who hosted Chinese President Jiang Zemin during the first APEC meeting in 1993, held in Seattle, argues that "unilateral sanctions (against China) haven't worked".

Clarkson says Boeing's long-held position on China is that isolating it could lead to a "Cold War environment".

Clarkson's is not the sort of corporate tour d'horizon one expects even from a businessman, but it underlines how closely Boeing, and the Seattle region, is tied to Asia's fortunes.

With good reason. The Asia boom means that Boeing booms as well and will probably continue to after its $US13.3 billion ($17.3 billion) takeover of fellow West Coast denizen, McDonnell Douglas.

But that is only part of what Clarkson feels is out there, across the Pacific, for Boeing.

China plans to spend more than $US100 billion modernising its fleet over the next 15 years and, if current patterns hold, $US70-80 billion of it will be spent at Boeing. For the new long-haul 777 model, Asian carriers have accounted for half the orders.

Since last November Asian carriers have signed up for $US22 billion of new planes - and has done this against a backdrop of simmering political tensions between the US and Asia, and in particular China.

Few major cities are economically dominated in the way Seattle is influenced by Boeing and Microsoft.

The catchphrase until the mid-1980s was that when Boeing sneezed, Seattle's city grandees said "excuse me".

That is still partly the case, except since then the civic handkerchief has started fluttering in the direction of Redmond, where the Microsoft 'corporate campus' has spawned several hundred millionaires and half-a-dozen billionaires.

Dick Conway, a regional economist who has been commissioned by both Boeing and Microsoft to write independent impact studies on how the companies affect the city and the economy of the Pacific North-West, says: "We all know these two companies are important, but it's astounding, and perhaps even a little worrying, to discover how much."

Conway's study shows that for every one Boeing job, two more are generated in Seattle and the Pacific North-West. One of six workers are dependent on Boeing and since 1983, a third of the jobs growth in the region has been aerospace-related.

But then along came Microsoft.

According to Conway, from 1990-95 Microsoft added 5,000 jobs to the local economy "but the multiplier effect is much higher than Boeing's". For every new Microsoft job another four are created, partly because Boeing's average $US50-60,000 annual salary is more than doubled by Microsoft's $US125,000 annual average.

Don Smith, business editor at the Seattle Post-Intelligencer, also forecasts another media and information centre being formed in Seattle, a byproduct of Microsoft's new TV news joint venture with NBC. He believes Seattle will rival Atlanta, the home of Ted Turner's CNN, but with a technological Internet spin to it.

And of course, there is coffee. Seattle is home to the famous Starbucks chain, which has turned notoriously weak American coffee into a phenomenon.

'That's a cottage industry - but I think they want to be in Asia, too," says Smith.