Boeing Subsidiary To Stay In Small Wash. Town

Insitu Inc. had been considering proposals from other states, but a number of tax credits kept its production in the Columbia River Gorge.

YAKIMA, Wash. (AP) — A Boeing Co. subsidiary that designs and builds aerial drones announced plans Wednesday to expand and centralize its operations in southwest Washington.

Insitu Inc. had been considering proposals from other states to move its operations, but the company said in a statement that it will build a 70,000-square-foot production facility and a 30,000-square-foot engine testing building in Bingen, Wash.

Once those facilities are occupied, the small town in the picturesque Columbia River Gorge that has been home to Insitu for years will be the sole location for all of the company's production operations.

The company employs about 800 people in the area straddling Washington and Oregon.

"Insitu has achieved extraordinary growth due in no small part to its agility," President and CEO Steve Morrow said. "A more mature, efficient production operation in the Columbia River Gorge area will enable us to be even more responsive and affordable in meeting growing customer needs, ultimately allowing us to be more competitive and positioning Insitu well for future growth."

Washington Gov. Chris Gregoire said the company's decision to grow in the state didn't come easily, because Washington faced competition from other locations, including neighboring Oregon.

"The fact that this company plans to expand and create new jobs is fantastic news for the entire state of Washington, and a testament of our commitment to ensuring business success," Gregoire said in a statement.

The company's decision to stay in Washington came despite failed efforts by some Washington officials to extend a lower tax rate enjoyed by commercial aircraft manufacturers and suppliers to military and noncommercial aviation.

Commercial airline industry suppliers pay a 40 percent lower rate on business and occupation taxes. No bill was ever introduced in the Legislature, but the proposal had been discussed the past couple of years.

However, Insitu does receive a standard sales tax exemption on machinery and equipment directly used for manufacturing, said Mike Gowrylow, spokesman for the Washington Department of Revenue. Because the company is in a distressed area with high unemployment, Klickitat County, the costs of building and equipping its facilities also are exempt from sales tax.

In addition, the company enjoys a broad statewide credit on business and occupation taxes if it hires new employees and increases the employment base by at least 15 percent. The credit ranges from $2,000 to $4,000 depending on the employee's salary, Gowrylow said.

In 2009, Insitu was awarded a five-year government contract valued at as much as $250 million to operate and maintain drones for U.S. intelligence, surveillance and reconnaissance. The particular drone, the ScanEagle, can fly above 16,000 feet and loiter nearly invisibly and inaudibly for more than 24 hours.

The drones carry cameras that allow operators on the ground to track stationary and moving targets. They already have been used since 2004 to support the U.S. military in Iraq and Afghanistan, as well as aboard ships.

Insitu also received a $30 million contract from the Canadian government in 2009 for military support services in Afghanistan.

Insitu was founded as an entrepreneurial startup in 1994. Chicago-based Boeing has partnered with the company since 2002 on the ScanEagle program, which has more than 500,000 combat flight hours with the U.S. Department of Defense and other international customers. Boeing acquired the company in 2008.

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