Lobbying Muscle and Green Agenda Blinded Boeing to Reality

Boeing 787 DreamlinerWith the revelation that All Nippon Airways replaced defective lithium ion batteries 10 times, Japan Air Lines replaced “quite a few,” and United Airlines replaced “multiple batteries,” in the months preceding the smoke emergency that grounded their Dreamliners, is there anything that can be said about the technology that can overcome its now-horrible reputation?

Boeing has worked on the 787 for 10 years or so, with an ample amount of time to determine what kind of battery technology would be functional with the “super-efficient” jet with “exceptional environmental performance.” Had the Chicago-based manufacturer –and its airline customers – concerned themselves more with achievable plans that built on proven fossil-fuel designs and economic sensibility rather than appeasement of environmental activists, and the accompanying millions of dollars in government subsidies for such, they might not be burning through millions of dollars in costs and lost productivity due to idle airplanes right now. That’s in addition to the public image hit they are taking.

There are those who will pooh-pooh the idea that Boeing overreached in its pursuit of “green” technology, and will argue that the aviation industry always seeks to lower its costs (like any business), especially the biggest ones: labor and fuel. This is true, but when it comes to what powers their aircraft, in a true free market not distorted by government giveaways, businesses such as Boeing would certainly err closer to the tried-and-true rather than the experimental. But because of those massive deformations in the marketplace, behemoth Boeing is in the business of political ingratiation as much as it is in the business of making aviation and aeronautical equipment.

Corporations, including Boeing and the major U.S. airlines, are under more pressure than ever to adopt “sustainability” practices that include efforts to reduce carbon dioxide, despite the fact that has little to do with effects on global climate. “Green” investors such as Walden Asset Management and Calvert Investments buy stock in the companies and then exercise influence as activist shareholders, joining outside environmental pressure groups to sway company decision makers without regard to whether their agenda aligns with profitability goals for the overall stock ownership.

In the case of Boeing, such initiatives are an even larger magnet for government relations minions to chase politicians and cabinet agencies to get pieces of the subsidy pie. The company is already “lobbied up” to gain contracts and protect interests in obvious places like the Department of Transportation and the Department of Defense, so a regulatory push to promote “green” technologies is just another opportunity to influence the decision making in Boeing’s favor.

Boeing is renowned for its ability to get what it wants in Washington. At the Center for Responsive Politics Boeing ranks as a “heavy hitter,” which means it is among “the 140 biggest overall donors to federal elections since the 1990 election cycle.” So donations from its political action committee and employees are significant. For the 2012 campaign cycle, Boeing staffers and entities gave more than $3.1 million in contributions, ranking it 82nd overall among giving from corporate entities (according to CRP’s compilation of federal data).

Boeing’s lobbying acumen is even stronger, spending over $15 million in 2012, placing the company 12th for such expenditures, according to CRP. More than $16 million was spent the previous year. Overall Boeing has spent nearly $172 million on lobbying since 1998, exceeding $10 million for the first time in 2007, and never spending less than $15 million in any individual year since then.

What does Boeing lobby for? Everything. A review of its federal disclosure form for the 4th quarter of 2009 – President Obama’s first year in office – shows the company lobbied on the issues of aerospace, aviation, budget and appropriations, defense, environment, financial institutions, foreign relations, health care, homeland security, intelligence, labor, tariffs, taxation, trade, and education. Boeing shows intense interest in nearly every appropriations bill, tax change, foreign relationship and regulatory issue that affects its bottom line.

State and local governments are not left untapped either. In 2001 former CEO Phil Condit announced Boeing would relocate its headquarters from Seattle, where it was founded in 1916, and put it up for grabs – ultimately in an auction between Chicago, Dallas and Denver. The Windy City and the State of Illinois wound up the winners with a handsome bid of $63 million in incentives, far exceeding its competitors.

In fact, Boeing is such a master at tapping the public purse that they teach others how it’s done. In 2004 former vice president of state and local government relations Robin Stone, at a meeting of the State Government Affairs Council, co-taught dozens of corporations’ government relations executives how to extract incentives and tax breaks in a presentation titled, “Turn Your State Government Relations Department from a Money Pit into a Cash Cow.” The cash-cow workshop advised government relations executives from some of the largest U.S. corporations, including Walmart, Proctor & Gamble, Bank of America, and Microsoft, to “provide government with justification…[a] quid pro quo” for granting incentives.

The man who made the co-presentation with Stone, Michael Press of Ernst & Young (which helped Boeing vet the cities in the headquarters search), said the purpose of the talk was to instruct corporate lobbyists to not view their government-relations departments as a necessary administrative cost center, “but rather as a source of value.” But one North Carolina lawmaker knew what was meant.

“Cash cow? You got that right,” said N.C. Rep. Paul Stam, a Republican. “They look at [government] as just turning on the spigots.”

So as masters of the government manipulation game, Boeing views the demonization of fossil fuels (and commensurate regulations that have driven up their costs) and the promotion of “green” technologies not as challenges, but as opportunities. The lobbyists get their marching orders and go to work. Thus we see on Boeing’s federal disclosure forms that they intervene on measures such as the “FAA Reauthorization Act,” “Export-Import Bank Issues,” the “American Clean Energy and Security Act,” the “Clean Energy Jobs and American Power Act,” the “Renewable Energy Production Tax Credit Expansion,” “Amend the Internal Revenue Code of 1986 on Alternative Simplified Research Credit,” “Temporary Bonus Research Credit for Energy-related Research,” “American Recovery and Reinvestment Act of 2009” (the stimulus), and “Trade related aspects of climate change.” And that is just a small fraction of Boeing’s lobbying interests.

So it’s no surprise that the European Union asked the World Trade Organization in October for permission to raise $12 billion in tariffs on U.S. goods and services (Wall Street Journal, subscription-only), due to damage it says is a result from subsidies to Boeing (a similar case is being pushed by the U.S. against EU-based Airbus). The WTO determined that at least $5.3 billion in both state and federal subsidies were awarded to Boeing between 1989 and 2006.

It is impossible to isolate out, or calculate, any subsidies that went specifically for the Dreamliner, especially on the federal level. But the State of Washington and some of its local governments dished out $3.2 billion-plus to prevent Boeing from taking 787 (called 7E7 at the time) production elsewhere, most likely where non-union labor costs would be lower. In 2010 Boeing did set up a second assembly plant in a right-to-work state, South Carolina, that won the company an estimated $900 million in state incentives.

As NLPC reported earlier this month, the much-delayed 787 has been promoted as “a super-efficient airplane.” It was designed in response to airlines’ demands for an energy-saving aircraft, that provides “unmatched fuel efficiency, resulting in exceptional environmental performance,” and as the London Telegraph explained it, represented “the promise of greener flying.”

Now the Dreamliner is idle and a lot of blame is being thrown at a battery that wasn’t prepared to handle the tasks it was assigned to do. Unfortunately billions of dollars coerced from taxpayers, in an atmosphere that represented something far from a free market, were used to drown out common sense and distorted the simple customer-vendor relationship.

Paul Chesser is an associate fellow for the National Legal and Policy Center and publishes CarolinaPlottHound.com, an aggregator of North Carolina news.