Wednesday March 21, 7:26 pm Eastern Time

Denver, Dallas and Chicago begin battle for Boeing


    By Michael Kahn
    SAN FRANCISCO, March 21 (Reuters) - The battle for Boeing is
on.
    The aerospace giant's shock announcement on Wednesday that it
plans to move its world headquarters out of Seattle after 85 years to either Denver, Chicago or Dallas/Fort Worth set off a frenzy in the three cities where officials are drooling over the cachet Boeing Co. (NYSE:BA - news) will bring to its new home -- and the 500 jobs that go with it.

The aircraft manufacturer is expected to make a final decision by early summer and have a new headquarters up and running by fall as it seeks to be more central to all its operating units, customers and the financial community. Its huge manufacturing plants will remain in the Seattle area.

Until the lucky winner is announced, however, expect a sort-of dog-and-pony show as the candidate cities fight to woo Boeing with tax breaks and other concessions, said Miyun Cho, executive vice president and managing director of Strategic Growth Advisors, a real estate advisory firm which consults on government incentives to business.

``By making this announcement Boeing is inviting Denver, Dallas and Chicago to bid on their business,'' Cho said. ``How much do you want these jobs is what they are asking.''

Badly, it seems.

Dallas Mayor Ron Kirk promised to ``aggressively pursue'' the manufacturer, while Denver officials touted its city's affordable housing and quality of life near the Rocky Mountains as reason it should be home to the new Boeing headquarters.

And Chicago? How about two major airports, cultural diversity and the headquarters of Boeing customer UAL Corp.'s United Airlines (NYSE:UAL - news), the world's No. 1 carrier.

``I'm here today to say publicly to Boeing chairman Phil Condit and the entire Boeing family that Chicago is the best city to call home,'' Chicago Mayor Richard Daley told a news conference.

It is not uncommon for corporations to play cities off each other in order to try to win tax breaks and deals on land or other concessions when building new plants or moving a business unit, Cho said.

DEMOGRAPHICS, WAGE RATES, REAL ESTATE PRICES A FACTOR

But actually packing up and moving the world headquarters of a huge firm like Boeing is another matter entirely, she added.

``You are talking about a major international company moving its headquarters,'' Cho said. ``It's not very common for a company like Boeing to move.''

She added Boeing is probably looking at each city's demographics, wage rates, number of educated workers and cost of doing business as well as how much they will have to pay for real estate.

Denver officials said it was not a surprise their city would be one of the three Boeing would consider because of its healthy growth rate, quality of life, strong economy and affordable housing. The six county Denver metropolitan area has 2.4 million people.

The 6-year-old Denver International airport doesn't hurt either and may be key in swaying the aerospace firm's executives because of all the international business Boeing does, analysts said.

``I think obviously a decision (by Boeing) to relocate part of its operations here is a wise decision. What other answer would you expect from me,'' said Mayor Wellington Webb. ``No one takes us lightly anymore, whether we win or lose they know they've been in a fight,'' he added.

But Denver may face some stiff competition from Dallas/Fort Worth, an area that sprawls across the North Texas plains with a population of about 4.8 million and is home to two Boeing customers, AMR Corp's (NYSE:AMR - news) American Airlines and Southwest Airlines (NYSE:LUV - news).

The area also has had past success in winning corporate relocation competitions because of a pro-business climate and low costs, said Albert Neimi, dean of Southern Methodist University's Cox School of Business.

Those included telephone company GTE in 1998, oil giant Exxon in 1996 and retailer J.C. Penney in 1988. Penney and Exxon left the New York City area while GTE moved from Stamford, Conn.

``In terms of geography, Dallas-Fort Worth is at the dead center of the NAFTA region of the U.S., Mexico and Canada,'' Neimi said.

But while two cities will lose out, Cho said, Boeing is a guaranteed winner.

That's because by coming out with a list of three cities that already meet its basic requirements, the manufacturer can basically sit back and see which one most sweetens the pot, she added.

She said a final decision will be based on a simple question: ``What are they going to give us to come?''




[Chicago ATC News]