(The Center Square) – Missouri and St. Louis County are combining to give Boeing $192.7 million to assist with a potential $1.8 billion expansion next to St. Louis International Airport.
Missouri will provide $37.7 million in incentives to assist Boeing with the possible expansion. In September, the St. Louis County Council approved $155 million in tax breaks for the company.
The U.S. Department of Defense is expected to select and fund a project for its next generation of air defense in 2024.
Matthew Akers, a research analyst for Wells Fargo, said tax incentives for military contractors typically result in long-term commitments.
“Those types of things are fairly common when these big defense contractors are looking for places to put their business because they know it provides a lot of jobs,” Akers said in an interview with The Center Square. “And the politicians in those areas want those jobs to be in their districts. … The economic benefits are not guaranteed, but I would say the revenue and the kind of orders behind the work is pretty solid. The things they’re building are multi-year or multi-decade programs. There’s going to be a lot of work for a long time.”
Missouri’s Development and Finance Board, created by statute in 1982 to operate within the Department of Economic Development, announced on Monday approval of three incentives.
The Business Use Incentives for Large-Scale Development program, which provides low-interest loans by issuing tax-exempt revenue bonds, will provide Boeing with $8.8 million. The funds can be for acquisition, construction and equipping of manufacturing facilities and equipment.
The Missouri Works Deal Closing Fund, which provides access to capital through withholdings or tax credits for facility expansion and job creation, will provide $20.4 million. Missouri One Start, the state’s workforce recruitment and training division, will provide $8.5 million for resources to train and improve the skills of new and existing employees. The expansion is estimated to create more than 500 new jobs.
The City of St. Louis is considering the amount of rent it will charge Boeing to lease approximately 160 acres at the airport, which is owned and operated by the city.
Boeing merged with St. Louis-based McDonnell Douglas in 1997 for a $13 billion stock swap to become a stronger military aircraft company. It gave Boeing an 80-year legacy in the region. The manufacturing facility employs 16,000.
“We are incredibly pleased to be expanding both our team and the state-of-the-art technology as we build towards the future of advanced manufacturing in the state of Missouri,” Steve Nordlund, vice president and general manager of the Boeing Air Dominance division, said in a statement from the Department of Economic Development.
In August, the Navy announced Boeing, Lockheed Martin and Northrop Grumman will be competing for contracts, according to an Aviation Week report. Boeing and Lockheed Martin will be competing for U.S. Air Force’s Next Generation Air Dominance platform.
“We know over the next several years there will be strong demand for their products,” Akers said. “Given all the geopolitical events going on in the world, it doesn’t seem like there’s going to be any big cuts to defense spending on the horizon.”