by Don C. Brunell

Unless there are changes, Boeing and 250 other aerospace firms could leave Washington.

That is the grim conclusion one draws from an aerospace study conducted by Deloitte Consulting. Researchers found that our state is losing its competitive edge to lower cost states such as Kansas, Texas and the Carolinas. In fact, Deloitte reports that Washington was not even considered by aerospace companies in recent site selections.

In Washington, Boeing faces higher unemployment insurance costs, regulatory costs and labor strife — four strikes in recent years with 202 days of lost work.

The news couldn’t have come at a worse time. Our state’s unemployment rate shot up to 9.2 percent last month, higher than the national rate and nearly double what it was a year ago. A second study about the industry released this week suggests that, if Boeing leaves, things will get much worse.

According to a competitiveness brief by the Washington Research Council, each Boeing job supports nearly four additional jobs in the state. The company’s departure would mean a permanent reduction of 285,000 jobs. The loss of our aerospace industry will weaken housing demand and housing prices would fall by as much as 6.5 percent by 2030. Researchers say that, if Boeing leaves, statewide personal income would decline by nearly 9 percent.

The Deloitte study offered a series of recommendations for improving the business climate for aerospace, including reducing unemployment insurance, reforming workers’ compensation, improving labor relations and easing traffic congestion. Those improvements also benefit our state’s businesses along Main Street.

For example, the Deloitte study recommends reducing employers’ unemployment insurance costs to be more in line with competing states. State lawmakers reformed UI costs in 2003 to convince Boeing to assemble the 787 in Washington, but later reneged on many of those key reforms. Currently, Washington’s UI costs are among the highest in the nation. But instead of lowering them, some key lawmakers in Olympia are pushing bills backed by union leaders to increase unemployment benefits and allow workers who voluntarily quit their jobs to receive full benefits.

The study also recommends lowering workers’ compensation costs to bring them in line with other states, but this session, lawmakers in Olympia are doing just the opposite. They approved legislation backed by trial lawyers that greatly increases costs for employers, especially self-insured companies like Boeing.

For the past 100 years, workers’ compensation claims have been handled in an informal administrative process that doesn’t involve trial lawyers. The employer works with an employee’s doctors to manage the injured worker’s treatment and return to work. But the new law bans employers from speaking to injured workers’ doctors once an appeal is filed. As a result, employers — and often workers — will be forced to hire attorneys for the more formal and time-consuming process of taking depositions, and as the delays drag on, legal costs pile up until the lengthy appeal is resolved.

The Deloitte study also recommends improving relations between management and labor. Instead, unions still push a gag rule that restricts employers from speaking to workers about union organizing campaigns. In an aerospace industry wracked by strikes, this legislation shifts even more power to the unions.

Finally, the study urges the state to streamline traffic flow on major highways to reduce costs and delays for truckers carrying industrial equipment, consumer goods and produce. The state auditor estimates traffic congestion costs our state’s economy more than $3 billion a year.

In 2008, legislators passed a law setting targets for the number of miles people and businesses can drive each year. No one knows at this point how the law will be enforced, and that uncertainty adds to the concerns of employers deciding whether to locate — or stay — in Washington.

Gov. Gregoire moved quickly this week to implement one of the study’s recommendations by creating a state aerospace council. That group has its work cut out for it because judging from what is actually going on in Olympia aerospace may not only bypass our state but gradually relocate elsewhere just to compete.