WSJ News Exclusive | Boeing Plans to Move Headquarters to Arlington, Va., From Chicago

Northern Virginia is already home to many of the largest U.S. military contractors, and the local property and labor market has been fueled further by

Amazon.com Inc.’s

decision to locate one of its secondary headquarters there.

Boeing has for months been in talks with the office of Virginia Gov.

Glenn Youngkin,

who has been working to woo the plane maker and other businesses to the commonwealth, according to a state official. While details of Boeing’s agreement with the state aren’t final, they aren’t expected to involve significant financial enticements but may include workforce-related incentives, the official said.

The aerospace company also said Thursday that it would establish a research and technology hub in Northern Virginia. The new facility would focus on areas including cybersecurity, autonomous operations and systems engineering.

Many of Boeing’s senior executives have increasingly been working out of its Washington, D.C.-area offices or remotely in recent years. Boeing in 2017 said it would move its defense unit’s headquarters to Arlington from St. Louis to be nearer lawmakers and Pentagon procurement officials, with government affairs and other staff also working from the office complex opened in 2014.

Boeing was attracted to Northern Virginia in large part because of its engineering talent pool, as well as the proximity to its biggest customer—the U.S. government—and various suppliers and business groups with presences in the nation’s capital, according to a person familiar with the company’s discussions.

Sen.

Mark Warner

(D., Va.) said he had been lobbying Boeing’s senior leadership for over a year to move its headquarters to Virginia. He also said the state’s diverse pipeline of engineering talent has grown with major companies moving to Virginia, and noted Boeing already has an outsize presence in Washington. “This is not like a company that needs to move to the region to raise its visibility,” Sen. Warner said in an interview.

The Federal Aviation Administration, based in Washington, has increased scrutiny of Boeing since two of the company’s 737 MAX jets crashed in 2018 and 2019. The air-safety regulator prevented the company from returning the MAX jets to service for nearly two years. More recently, the FAA has withheld approvals needed to resume 787 Dreamliner deliveries that have been halted because of production problems.

Boeing has also dealt with problems tied to various defense and space programs in recent years. Military contracts accounted for more than half of Boeing’s $62.3 billion sales last year.

Boeing shares closed down 4.1% at $150.47 on Thursday and have fallen sharply this year. The stock is up around 23% over the past two years, compared with a 58% rise in the industrial components of the S&P 500 index over the same period.

Lawmakers and unions have previously criticized Boeing for the remoteness of its Chicago base from its jetliner operations in the Seattle area. “This will further distance the company from its engineering and manufacturing workforce,” said a spokesman for the Society of Professional Engineering Employees in Aerospace, the union representing Boeing engineers.

Illinois’s two Democratic senators also criticized the move.

“Boeing’s decision to leave Illinois is incredibly disappointing—every level of government in our state has worked to make Chicago and Illinois the perfect home for Boeing’s headquarters for the past 20 years,” said Sens.

Dick Durbin

and

Tammy Duckworth

in a joint statement.

The company’s decision to move its corporate headquarters to Chicago from Seattle in 2001 was symbolic of its desire at the time to be seen as more than just a maker of commercial jets. Boeing acquired rival McDonnell Douglas in 1997, adding military jets and other military equipment to its portfolio.

Chicago beat out competition from Dallas and Denver, aided by a package of city and state incentives and tax breaks. Boeing’s incentives for moving to Chicago had been expected to end last year, people familiar with the matter said. The person familiar with the company’s recent discussions said tax rates and incentives weren’t a driver of the move to Virginia.

Chicago Mayor

Lori Lightfoot

noted Boeing will maintain a presence in the city, which she said has a pipeline of major corporate relocations and expansions. Illinois Gov.

J.B. Pritzker

said the company had indicated the local business climate wasn’t a deciding factor in its planned move. Boeing is expanding production of a new Navy drone in downstate Illinois, he said.

The move to Chicago created geographic distance between the company’s top corporate leaders and its commercial-jet hub in the Puget Sound region. Since then, the company has shifted all of its 787 Dreamliner production to a factory in North Charleston, S.C., while situating its recently formed services arm in Plano, Texas.

Boeing moved only some of its senior corporate and finance staff to Chicago, and the pandemic has further shrunk the ranks working in its 36-story tower there, which is adorned with the company’s logo. The person familiar with the company’s recent discussions said the move wouldn’t result in job cuts or forced relocations. Almost 56,000 Boeing employees work in Washington state, the hub of Boeing’s commercial jetliner business, and the company employed a total of 142,000 globally as of Dec. 31, 2021.

Write to Andrew Tangel at Andrew.Tangel@wsj.com and Doug Cameron at doug.cameron@wsj.com