Nine cities contend for Douglas Aircraft's MD-12.

Nearly 11 months after Douglas Aircraft Co. stunned Southern California by announcing it would not build its next big commercial aircraft here, a national bidding war has broken out among nine cities vying to land the multibillion-dollar MD-12 plant.

Meanwhile, questions are surfacing about whether local and state officials seriously campaigned to convince the Long Beach-based company to assemble its next-generation commercial jetliner here.

Whatever city is selected as the final assembly site for the aircraft -- a task the company says will cost between $4 billion and $5 billion to design and produce -- will be forced to pay a steep price. The value of incentive packages put together by the competing cities has, in some cases, reached the $1 billion mark.

For Los Angeles' dwindling aerospace business, which has lost 75,000 jobs in six years, Douglas' decision to locate the MD-12 facility outside its West Coast base was a serious blow because it is expected to produce 7,000 jobs.

With the aerospace industry buffeted by defense budget cuts and long-term opportunities looming in commercial aviation, "Douglas' move to expand outside California was a real setback" for the region, said analyst Wolfgang Demisch of UBS Securities.

Adding to the pain is the fact that few new airplane manufacturing plants have been erected anywhere in the last decade and Los Angeles now has only two ongoing aircraft projects: Douglas' troubled C-17 cargo military plane and Northrop Corp.'s B-2 bomber project.

Though Douglas denies it, some officials assert a bidding war has begun and the company is raising the stakes. In recent months, Douglas has expanded the MD-12 candidates from four cities to nine.

Two Texas cities being eyed by Douglas -- Houston and Fort Worth -- have put together incentive packages valued at about $1 billion each, including state assistance for new road construction. Most competing packages range from $300 million to $600 million.

While declining comment on specifics of bids, Douglas has said the criteria for picking a site include labor wages and living costs, environmental regulations and available land and transportation systems.

Another factor is whether states have so-called "right-to-work" laws that make it harder to organize factory workers, according to Local 148 of the United Aerospace and Auto Workers, and the union that represents 17,000 Douglas workers in Long Beach and Torrance.

According to Floyd Sparks, Local 148 official, seven of the eight states under consideration have right-to-work laws, though Douglas spokesman John Thom said those laws will not be a consideration in picking a site.

Douglas, a subsidiary of America's biggest defense contractor, St. Louis-based McDonnell Douglas Corp., also denied it has upped the ante for the project and created a nationwide runoff among competing communities.

Yet, there's disagreement on that point.

"It certainly looks and sounds a lot like a bidding war, which is unfortunate," said Dale Sible, director of economic development in Shreveport, La., one of the MD-12 contenders. "But here in Shreveport I can tell you that we are not willing to sell our soul for this project, even though it is a big one."

Added Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., "Douglas is definitely playing hardball. It's like a poker game where you have to up the ante to win the prize."

So serious is Douglas about the subsidies it could reap from the winner, it sent out requests-for-proposals to economic research outfits to gauge what each state is offering and the impact the plant would have on the community. The city that prevails is expected to have $500 million pumped into its economy yearly through wages, supplier contracts and other ripple effects.

Houston may have put the most on the table in responding to Douglas' request that the city build the facility -- believed to cost $1 billion to $2 billion -- in addition to proffering tax breaks and worker training.

"Douglas is asking for the moon and we are asking for the stars and somewhere in between a deal may be struck," said John Brock, president of the Houston Partnership for Economic Development. "But we haven't sensed there is a bidding war. Douglas has conducted this operation in a very upfront manner."

The original list of finalists, announced last summer, included Salt Lake City, Utah, Kansas City, Mo., Shreveport, La., and Tulsa, Okla. Since then, Houston and Fort Worth in Texas, Belleville, Ill., Mesa, Ariz., and Mobile, Ala., have been added to the list.

Asked if she thought the MD-12 plant has sparked a bidding war, California's Department of Commerce Director Julie Wright told the Business Journal last week, "That's probably a fair statement, although the company owes its shareholders the best deal it can cut."

Wright said before Douglas dropped the bombshell last June that California was not being considered as a site, state officials had submitted a plan for an MD-12 final assembly facility in Southern California. Since then, no attempt to get the company to reverse its decision has been launched because of budget cutbacks and political gridlock in reforming the state's perceived hostile-business climate.

"It doesn't make sense to mount a major effort unless we know we have a real chance of being considered," Wright said. "We'd bid again but their frustration level (with California) is too high."

However, California Treasurer Kathleen Brown held informal talks with Douglas in January, hinting the state could float industrial development or pollution-control bonds for the MD-12 plant, according to Brown spokesman Michael Reese.

And despite reports Long Beach felt trying to change Douglas' mind was a futile effort, the city this year offered to make land and enterprise-zone funds available for the plant, according to City Manager James Hankla. At the same time, he noted, Long Beach will have a hard time rivaling the competing cities because they have the political clout and financial backing of state governments.

Sparks, the union representative, said Douglas balked at the offer of development bonds.

Thom, however, said he knew of no offer of development bonds to build an assembly plant here and that California was given equal consideration as a site.

"But the criteria we have in mind for this goes far beyond what Southern California or California has to offer at this point," he said.

Douglas does not have a timetable for selecting a site for the MD-12, which is tied to the controversial deal to sell a 40 percent stake in Douglas' commercial aircraft business to a Taiwanese firm -- an agreement viewed by industry analysts as vital to the company's future commercial prospects.