Boeing Company said Thursday that it will move its headquarters from Chicago to the Washington, D.C. area, where company executives would be closer to key federal government officials.
The company said it will use its campus in Arlington, Virginia, as its new headquarters, and it plans to develop a research and technology hub in the area.
“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 CEO David Calhoun said.
The move marks a win for Virginia’s Republican Gov. Glenn Youngkin, who campaigned last year on a promise to bring new businesses and jobs to the state.
“The decision to call Virginia home shows that the Commonwealth is the premier location for aerospace companies,” Youngkin said in a statement. “I look forward to working with Boeing to attract even more talent to Virginia, especially given its reputation for engineering excellence.”
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.
A spokeswoman for the state’s economic development agency said the project will not receive any state incentives. A spokeswoman for the county’s economic development office did not immediately respond to questions about whether Boeing had been offered local incentives.
Boeing is a major defense contractor, and the move will put executives close to Pentagon leaders. Rival defense contractors including General Dynamics, Lockheed Martin and Northrop Grumman are already based in the D.C. area.
Company executives would also be near the Federal Aviation Administration, which certifies Boeing passenger and cargo planes.
Boeing’s relationship with the FAA has been strained since deadly crashes of its best-selling plane, the 737 Max, in 2018 and 2019. The FAA took nearly two years — far longer than Boeing expected — to approve design changes and allow the plane back in the air. Certification of new Boeing planes will take longer, too.
The company has suffered financial setbacks in building a refueling tanker for the Air Force. And it has been hurt by the pandemic, which undercut travel and demand for new planes. Boeing lost $1.2 billion in this year’s first quarter.
Boeing’s roots are in the Seattle area, and it has assembly plants in Washington state and South Carolina. The company moved its headquarters to Chicago in 2001 after an unusually public search that also considered Dallas and Denver.
“The further the company headquarters moved away from Seattle, the more discouraged I am,” former Renton factory senior manager Ed Pierson told KIRO 7. Pierson testified in Congress about production problems before the two Max crashes and said executives need to be in touch with what is happening in the factories. “Throughout the entire time we were having trouble building the Max before the crashes, we never saw the leadership, they never came in,” Pierson said.
Cai von Rumohr, an aerospace analyst for Cowen, said there were advantages for Boeing moving its headquarters to the Washington, D.C. area — or back to Seattle, where leaders again would be closer to the company’s important commercial operations.
“Chicago does nothing for them,” von Rumohr said.
“This looks and smells and feels like getting closer to the Pentagon,” said aviation industry consultant Scott Hamilton of the Leeham Company.
He said a headquarters shift will not immediately affect workers near the Puget Sound.
But with 787 production already moved from Everett to South Carolina, and the company selling local properties, Hamilton said there are big questions about where Boeing’s next airplane will be built.
“I certainly have my doubts it will be here in the expensive state of Washington and the even more expensive Puget Sound region,” Hamilton said.
Hamilton predicts Boeing will stay in Renton as long as it builds 737s and will then eventually consolidate local operations to Everett.
Hamilton said when union contracts expire in 2024, the company could again demand labor concessions and tax breaks to consider building a new plane in Washington.
Boeing had 142,000 employees at the end of 2021, including 12% based outside the United States, according to a regulatory filing. The filing did not say how many work in Chicago.
Richard Aboulafia, an analyst with consultant AeroDynamic Advisory, said Boeing’s Chicago work force “is minimal,” making the move easier.
Rep. Peter DeFazio, chairman of the House Transportation Committee, which investigated Boeing and the FAA after the Max crashes, criticized Boeing’s move to be closer to federal policy makers.
“Boeing should focus on making safe airplanes, not lobbying federal regulators and Congress,” he said.
Meanwhile, many of Virginia’s elected officials celebrated the news.
Democratic state Senate Majority Leader Dick Saslaw called it “one hell of a catch.”
Democratic U.S. Sen. Tim Kaine, a member of the Senate Armed Services Committee, said Boeing’s decision was a testament to Virginia’s skilled workforce and strong national security community.
U.S. Sen. Mark Warner, also a Virginia Democrat and a former entrepreneur and investor, indicated the deal had been in the works for quite some time.
“For well over a year, I’ve been making my case to Boeing senior leadership that Virginia would be a great place for its headquarters, and late last year, I was happy to learn that my efforts were successful,” he said in a statement.
The company’s statement thanked both Youngkin and Warner.
Boeing will be following in the footsteps of Amazon, which decided to put a second headquarters in Arlington. Last month, local officials approved Amazon’s plans to erect a 350-foot helix-shaped building.
Boeing’s decision was first reported by The Wall Street Journal.