Boeing Is Latest Defense Giant to Move its Headquarters Close to the Pentagon

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Boeing headquarters during U.S. Army Week-Philadelphia 2019
Brig. Gen. Jami Shawley, commander of U.S. Army Reserve Aviation Command, and a group of soldiers visited the Boeing headquarters during U.S. Army Week-Philadelphia 2019 on Dec. 11, 2019. (Sgt. 1st Class Gregory Williams/U.S. Army photo)

Boeing will move its global headquarters to Arlington, Virginia, a stone’s throw from the Pentagon, the defense contractor announced on Thursday in a statement. 

After more than 20 years at its current home in Chicago, the aerospace and defense firm will also build a new research and technology center in Northern Virginia.

The defense giant follows other top military contractors who over the last three decades have assembled nearer to the nation’s capital to accelerate their chances of securing major Pentagon deals.

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"We are excited to build on our foundation here in Northern Virginia,” Boeing President and CEO Dave Calhoun said in a press release. “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 said it will continue to maintain a presence in Chicago and the surrounding region, but not everyone was happy about its decision to head to the Washington, D.C., metro area.

“Boeing’s decision to leave Illinois is incredibly disappointing,” Illinois’ two senators said in a joint statement.

Boeing is not, however, the first major defense company to move its corporate office in order to be closer to the Pentagon. Lockheed Martin found its home in Bethesda, Maryland, when the Lockheed Corporation merged with Martin Marietta in 1995. General Dynamics moved to Northern Virginia in 1991. Most recently, Northrop Grumman opened its headquarters in Falls Church, Virginia, in 2011.

While Boeing has some office space in Arlington already, the headquarters move has reportedly long been in the works and got some direct help recently from Virginia Sen. Mark Warner and Gov. Glenn Youngkin.

“The decision to call Virginia home shows that the Commonwealth is the premier location for aerospace companies. I look forward to working with Boeing to attract even more talent to Virginia, especially given its reputation for engineering excellence,” Youngkin said in a statement on Thursday.

The trend for major industry players to be physically close to Defense Department officials is built on the same idea that has pushed defense contractors to spend millions on D.C. lobbying firms -- lucrative procurement contracts are easier to secure when federal decision makers are within reach.

A Pentagon report released in February highlighted the state of competition in the defense industry and its consolidation since 1990 from roughly 51 main aerospace and defense contractors to now five. The report encouraged more competition within the defense industry, providing recommendations to increase opportunities for small business participation.

In the short term, however, the industry will continue to be dominated by a handful of rival defense firms. 

Boeing has been searching for ways to boost its financial standing against its competitors as it continues to grapple with the challenges posed to the airline industry by the COVID-19 pandemic. Despite being one of the largest defense contractors by revenue, in the first quarter of this year, Boeing reported a $1.2 billion loss. It is also dealing with the aftermath of losses from an Air Force One jet deal.

Aside from providing troops with satellites and strategic missiles, Boeing is a leader in the commercial aircraft industry. With the corporate move in place, the company will soon likely be competing against other companies, like Amazon, which is building its second headquarters in Arlington, to hire talent across Northern Virginia.

Details on the transition, including incentives offered by the commonwealth of Virginia, have not yet been released.

-- Jonathan Lehrfeld is a fellow at Military.com. Follow him on Twitter @lehrfeld_media.

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