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Boeing supplier Orion takes economic potential to Auburn
Orion Industries will move to a new location in Auburn next year after nearly 20 years in Federal Way.
Federal Way's loss is Auburn's gain. As a top supplier of parts for Boeing aircraft, Orion's economic future brims with promise.
Boeing set a record for year-to-date deliveries and net orders for the 737 Next Generation Aircraft. That model's replacement, the 737 MAX, will be built in Renton. Boeing predicts the world's total airline fleet will double from 20,000 to 40,000 by 2031, with Asia as the biggest market.
Orion employs 265 workers and reports 20 percent growth for the past 10 years. The non-profit manufacturing company specializes in job training and placement for people with disabilities.
Orion, which also operates a call center, has outgrown its Federal Way facilities on 9th Avenue South.
Orion wanted to build a 100,000-square-foot location in an area zoned light industrial, all within walking distance of the Federal Way Transit Center. More than half of Orion's employees rely on public transit. The idea was to eliminate a bus transfer that added 30 minutes of travel in each direction.
"Transportation is the largest barrier to employment," said John Theisen, president and CEO.
Orion approached Federal Way's department of economic development more than a year ago to discuss alternative sites near the transit center. Four possible sites were reviewed in an attempt to meet the company's criteria for size, zoning and location. In the end, Auburn arranged a better deal for a new home.
"Our preference was to remain in Federal Way," Theisen said. "I don't know if there was anything else that could have been done."
Orion's future home is expected to open in November 2013. The facility will be built on 6.5 acres of undeveloped property in Auburn on 15th Street NW, bordered by the Auburn Airport and a Metro Park and Ride.
Theisen said the new facility will help Orion take on more work statements, train more people and create more jobs in the region.
Orion was named one of Boeing’s 16 top aerospace suppliers, and was Supplier of the Year in 2011. Theisen expects Orion's growth to continue alongside a healthy commercial aerospace industry in the region, noting the optimism that surrounds production of the 737 MAX.
The future 737 MAX is approaching 1,000 firm orders worth billions of dollars. In 2011, Jakarta-based Lion Air ordered 230 airplanes at a list price of $21.7 billion. One of South America's largest airlines, GOL Linhas Aereas Inteligentes, announced a firm order in October to purchase 60 of the 737 MAX planes. The contract is worth $6 billion.
Local economic impact
From an economic development perspective, Orion's expansion is a win for the region.
"All of the Boeing suppliers need to pick up the pace and expand with them," said Bill Thomas, economic development planner for the City of Auburn. "We're all kind of in this together."
One economic benefit is having 300 more workers who eat, drink and spend money at Auburn retail establishments. Thomas said the city has created other incentives to drive the market, such as lower permit fees, tax rebates and programs for small businesses.
"It lets everybody know that Auburn is open for business," Thomas said. "Our mayor and city council are boldly changing regulations and creating opportunities."
Thomas said Auburn aggressively pursued Orion to make the deal, which involved a complex land transaction. King County sold a surplus portion of the Auburn Park-and-Ride lot to the city, which then sold that land to Orion. Through the deal, Orion deeded some of the property bordering the airport to the city for expansion.
King County Councilman Pete von Reichbauer praised the land sale, which required an ordinance through a vote from the council.
“This is a win-win for the county, the city of Auburn, and local job-producing businesses,” von Reichbauer said in a news release. “Our primary responsibility is to create an environment that encourages jobs in South King County, and this ordinance shows how public and private businesses can work together to create jobs in our community.”
In the past, Orion has received Community Development Block Grant (CDBG) funds from Federal Way. The grants focus on job creation and economic development. In 2012, Federal Way awarded $17,974 to Orion, which initially requested between $190,000 to $549,900.
Patrick Doherty, director of economic development for Federal Way, said the city tried to keep Orion and find a suitable property within walking distance of the Federal Way Transit Center. Doherty said the city presented four options, and was willing to rezone property in the city center to make it work. Communications with Orion died down before the company eventually announced its move to Auburn.
It would have been difficult for Federal Way's city center to meet the needs of a manufacturing business like Orion, Doherty said. One factor is the higher cost of real estate in the city center. In addition, a large manufacturing zone clashes with the city center's goals for retail, office and residential development.
On the contrary, the Auburn site is located on the outskirts of town near public transit and an airport. The site is situated on flat land that's more conducive to industrial zoning.
In fact, manufacturing jobs represent the smallest component of Federal Way's economy, Doherty said. Federal Way is better suited to attracting office jobs, such as kidney company DaVita, which will bring 350 jobs from Tacoma. Such professional jobs pay higher salaries than manufacturing jobs and result in higher purchasing power for those employees, Doherty noted.
While the arrival of new businesses will offset the loss of Orion, Federal Way is losing a valuable partner.
"We're going to miss them, that's for sure," Doherty said. "They're part of the community."