SMARTCAP RESEARCH – MARCH 2024 NEWSLETTER

SMARTCAP RESEARCH – MARCH 2024 NEWSLETTER

Posted by Laura Holloway

BOEING EXPANDS WASHINGTON WORKFORCE BY 10%, BOLSTERS ENGINEERING AMID INDUSTRY CHALLENGES

Boeing-1

Boeing Co. has increased its Washington workforce by nearly 10%, marking significant growth in its manufacturing hub. Despite the challenges from the pandemic and the 737 Max crashes, Boeing has managed to boost its overall employee count to over 170,000, including the addition of 10,000 engineers in the last year. The company emphasizes investment in engineering and manufacturing roles, with a notable improvement in attrition and offer acceptance rates. Although facing a production cap by the FAA, Boeing aims for future growth, aligning its workforce training to enhance production efficiency and quality. The broader aerospace labor market remains tight, especially for Boeing's suppliers, signaling ongoing industry challenges.

Commentary from Spencer Esau, SMARTCAP's Acquisitions Manager

Despite the parade of negative publicity over the last few years, Boeing has demonstrated remarkable resilience. Cutting through the noise, Boeing is pursuing material strategic growth in Washington State by increasing its local workforce by nearly 10% in 2023. Boeing is scaling up despite the headwinds, which is good news for the Puget Sound industrial market. With more than 5,700 new employees added in Washington, the company's efforts focus on reinforcing its manufacturing and engineering capacity, aligning with its ambitious goal of hiring 10,000 engineers. Last week the Chair of the US Federal Trade Commission said that Boeing is “too big to fail”, underscoring the unique position they hold within the domestic economy.

PFIZER Cancels $350m everett plant post-seagen buy, shifts focus to north carolina

Pfizer

Pfizer Inc. has halted its $350 million project for a manufacturing plant in Everett, a major shift post its $43 billion acquisition of SeaGen. The facility's closure, aimed initially to enhance manufacturing, will lead to 120 layoffs. Pfizer claims this decision aligns with broader business strategies, not employee performance. The move raises concerns about Pfizer's long-term goals and the economic impact on Everett. Despite Pfizer CEO's previous emphasis on SeaGen's value, the manufacturing will now shift to North Carolina, suggesting a strategic consolidation. SeaGen had a promising portfolio and significant financial engagements, including a major deal with Merck and substantial growth in revenue, positioning it as a key biotech player in the Puget Sound area.

Commentary from Brian Burmester, SMARTCAP's Director of Acquisitions

This move by Pfizer was a surprise to the market. The halted construction project is a state of the art facility originally intended to produce oncology medicines and act as an expansion to SeaGen’s main campus in Bothell / Canyon Park, WA. Adding to the further unknowns, SeaGen has an apparent long-term lease associated with the project that requires the building to be completed. Though speculation, it’s likely they’ll find a use for the property as selling to a competitor is unlikely.

Regarding the Everett industrial market, the impact of this news will be minimal as the building is designed to accommodate the unique needs of a Biotech company. If the building remains vacant, it will not be a competitive building to the Northend SMARTCAP industrial portfolio.

ionq unveils major bothell expansion, boosts quantum computing r&d and job creation

ionq

Quantum computing leader IonQ Inc. is expanding its presence in Seattle with a new 105,000-square-foot facility in Bothell, accelerating its growth strategy. Since its February opening, IonQ has expanded from two to three floors, driven by the area's exceptional talent pool. The company, eyeing significant hiring plans, aims to create thousands of jobs in the coming years. This Bothell site, IonQ's first in the region, will focus on R&D, manufacturing, and primary production engineering for quantum computers. With a $1 billion investment plan for the Pacific Northwest, IonQ is committed to substantial local development, including a new data center. The location, previously an AT&T data center, offers ideal infrastructure for IonQ's pioneering work in quantum computing—a field that promises to address challenges beyond the reach of conventional supercomputers. IonQ serves major clients like Hyundai, Airbus, and GE and collaborates with the U.S. Air Force Research Lab, highlighting its industry impact and innovative approach.

Commentary from Dominic Vinti, SMARTCAP's Sr. Acquisitions Analyst

IonQ continues to commit the Puget Sound. After leasing the first 2 floors of their new Bothell facility totaling 65k SF, they announced they would be taking the final floor and bringing their total to 105k SF. The building will be used for the research, development, and manufacturing of quantum computers. Margaret Arakawa, IonQ's Chief Marketing Officer, stated "The talent pool here is mind-blowing, and it's perfect for us."

IonQ plans to bring their headcounts into the thousands and invest a billion dollars in the region. This is more good news for the region as another tech-oriented company is laying down roots. With Seattle's strong tech base and high quality of life, continued growth from IonQ and likeminded companies should continue into the future.

seattle's 'one seattle plan': a vision for denser, diverse housing in the next 20 years

housing

Seattle Mayor Bruce Harrell has introduced the "One Seattle Plan," aiming to reshape the city's housing landscape over the next two decades. This plan aligns with Washington State's Middle Housing Bill (HB 1110), which mandates increased housing density. Key provisions include allowing a minimum of four units on residential lots, six units near major transit stops, and options for affordable housing. The plan proposes new zoning categories, including Regional and Urban Centers, Neighborhood Centers, Urban Neighborhoods, and Manufacturing and Industrial Centers, to support diverse urban growth and housing options, exemplified by transforming Ballard into a Regional Center.

Commentary from Dominic Vinti, SMARTCAP's Sr. Acquisitions Analyst

Mayor Bruce Harrel recently revealed his "One Seattle" Plan, which is an overhaul of Seattle's comprehensive plan. The update to the plan is to attack future housing needs for Seattle over the next 20 years. It aims to add the missing "middle housing" and expanding density with proximity to light rail and rapid transit routes. One Seattle has four "key moves" at the heart of the plan. The four moves are Housing Affordability, Equity and Opportunity, Community and Neighborhoods, & Climate and Sustainability.

One Seattle is a step to ease zoning and density laws so the city can keep pace with projected housing demand. Seattle is one of the country's fastest growing cities and is currently in the midst of a housing crunch. Axios projects that Seattle will have a shortage of 140k units over the next 20 years. One Seattle is aiming to take that projection head on. It will encourage duplexes, triplexes, and quadplexes where single family homes with ADU's were only allowed. By adding density in areas with access to community amenities and mass transit, it will help Seattle narrow the housing shortage gap. If the new comprehensive plan can unlock and add a new diverse set of housing, this will help ease the affordability issue currently facing our region.

TAGS: Musings

SMARTCAP RESEARCH – MARCH 2024 NEWSLETTER