Boeing will soon fly out of Chicago towards Arlington, Virginia.
In this article, I will help you understand how and why Boeing will move its headquarters from Chicago to the Virginia area, where company executives would be closer to key federal government officials.
So let’s dig deeper into this latest move from Boeing. First, let’s take a look at this company.
What is Boeing?
We know Boeing as the maker of planes.
But Being is more than that.
Boeing develops, manufactures, and services commercial airplanes, defense products, and space systems.
This aerospace conglomerate has three divisions: Commercial Airplanes; Defense, Space & Security; and Boeing Global Services.
Supporting these units is Boeing Capital Corporation, a global provider of financing solutions.
Commercial Airplanes
Boeing is one of the major manufacturers of commercial jetliners and air freighters worldwide.
It has serviced many different airlines through its 737, 747, 767, 777 and 787 airplanes, the Boeing Business Jet range, the Boeing 787-10 Dreamliner, the 737 MAX, and the 777X.
Defense, Space & Security
Defense, Space & Security is a division focused on delivering topnotch solutions for the design, production, modification, service and support of commercial derivatives, military rotorcraft, satellites, human space exploration and autonomous systems.
It includes KC-46 aerial refueling aircraft, based on the Boeing 767 commercial airplane; AH-64 Apache helicopter; the 702 family of satellites; CST-100 Starliner spacecraft; and the autonomous Echo Voyager.
Boeing Global Services
With its dominance in the market of commercial and defense aviation, Boeing Global Services delivers innovative, comprehensive, and cost-competitive service solutions for commercial, defense, and space customers. It enables any commercial aircraft to operate at high efficiency.
Boeing Capital Corporation
Boeing Capital Corporation (BCC) provides financing solutions for Boeing customers.
It helps them get the financing needed to buy and take delivery of Boeing products through the expertise of a seasoned group of financial professionals.
Boeing was not originally a Chicago company. Its home was Seattle from its founding in 1916 to 2001.
At its peak, it was renowned for making the best and safest planes.
But starting in the 2000s, Boeing has been under fire for their commercial planes - the 737, 747, 767, 777, 787, 787-10 Dreamliner, the 737 MAX, and the 777X.
The crashes of the 737 Max Jets that killed hundreds of passengers and crew led to groundings all over the world and costing Boeing around 20 billion dollars.
In 2001, Boeing moved its headquarters to Chicago following its 1997 merger with St. Louis-based rival McDonnell Douglas - a decision that angered rank-and-file mechanics and engineers.
According to a regulatory filing, Boeing had 142,000 employees at the end of 2021, including 12% based outside the United States.
So why is Boeing moving out of Chicago?
Why is Boeing moving out of Chicago?
“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,” Boeing President and Chief Executive Officer Dave Calhoun said.
One important factor behind this decision is last year’s expiration of a package of tax breaks and other incentives worth more than $60 million that Chicago, Cook County, and Illinois awarded the company when it relocated to 100 North Riverside Plaza, just west of the Chicago River from the Loop.
Boeing purchased the 36-story, 770,300-square-foot tower from the Florida State Pension fund for $200 million in 2005, four years after relocating there on a 15-year lease, according to a report from the Chicago Tribune at the time. At that time, the enterprise filled more than a third of the structure.
The other reasons why Boeing will move out of Chicago are the proximity of Arlington, Virginia to critical customers and rivals, their planned research and development hub, minimal Chicago workforce, and the support from Virginia’s government.
A. Proximity of Arlington, Virginia to its customers, rivals, and stakeholders
Arlington, Virginia offers unique proximity to Boeing’s customer base, rivals, and state regulators.
For one, Boeing will be closer to Pentagon, the Department of Defense, and the Federal Aviation Administration.
Then it will also compete more effectively with rival defense contractors such as General Dynamics, Lockheed Martin, and Northrop Grumman.
Ever since the previous CEO Dennis Muilenburg was fired in 2019 after the tragic crashes of two 737 Max Jets that killed 346 people, Boeing are focusing on repairing its relationship with the U.S. Federal Aviation Administration and lawmakers.
Boeing’s move to Virginia is merely a business decision, most industry analysts say.
Boeing confirmed that Illinois' business climate was not a deciding factor in its decision to move its headquarters.
In fact, it has always been this way in Boeing’s history.
The company moved its headquarters to Chicago in 2001 partly to be close to its biggest client, Chicago-based United Airlines.
Now with all the controversy of its commercial airplanes’ fatal crashes, most of Boeing’s profitable business is with the military.
So moving to Arlington, Virginia makes the most economic sense for them.
Boeing is profiting from the high demand for new military hardware and space equipment.
It has new jets, a tanker aircraft, and replacing the old AWACS radar plane, and NASA equipment in the pipeline.
And do you know the most important detail of Boeing’s recent move?
Boeing executives have spent less time in Chicago and more time on the East Coast.
Reuters reported that Boeing’s downtown Chicago high-rise was “a ghost town.”
B. Plans to build a “research and technology hub” on the Arlington campus
Second, Boeing plans to make its Arlington's Crystal City campus a hub for research and technology.
They will focus on advancing software and systems engineering, autonomous operations, quantum sciences, and cyber security here.
The company will hire engineering and technical talent in the area.
C. Minimal workforce in Chicago
Third, Boeing has a minimal workforce in Chicago.
Most of the company’s operational staff is in Washington, and Crain’s reported that Boeing only has about 400 employees working in Chicago.
This working situation is mostly because of the company’s virtual and adaptable solutions that have allowed it to reduce the amount of physical office space that it requires.
Despite moving its headquarters, Boeing assures that it would maintain a significant presence in Chicago.
D. Support of Virginia elected officials
The final reason why Boeing is moving to Virginia is the strong support from the community’s elected officials.
Virginia's Republican Gov. Glenn Youngkin campaigned last year on a promise to bring new jobs to the state.
Youngkin retired in 2020 as co-CEO of private equity giant the Carlyle Group.
He was personally involved in discussions about the move and had a prior business relationship with Calhoun, who also was an executive in the investment industry, according to a person familiar with the matter who was not authorized to discuss the negotiations publicly.
Democratic U.S. Sen. Tim Kaine, a member of the Senate Armed Services Committee, said Boeing's choice was a credit to Virginia's professional workforce and robust national security community.
Democratic state Senate Majority Leader Dick Saslaw called it "one heck of a catch."
Conclusion
Boeing assures that it will continue to support Chicago, despite moving its headquarters. Significant operations still take place there because Chicago is strategically important to Boeing's U.S. and global operations. The company has adapted to hybrid ways of working in the midst of the global pandemic to engage with its people, its customers, and other stakeholders. And Boeing and its employees have invested nearly $50 million in support of Chicagoland communities in recent years.
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