RENTON, Wash. - The Boeing Co.'s decision to open a second 787 production line in South Carolina is a wake-up call to Washington state that it needs to improve its business climate, say some local business leaders.

And one of those who's listening to them is Gov. Chris Gregoire, who says she is looking for ways to make the state more business-friendly.

Meanwhile, the Boeing Co. itself pointed fingers at the International Association of Machinists, saying the union demanded new planes be built here, offered only an eight-year no-strike guarantee and wanted a gold pass to organize everyone and everything in the company.

The union says it made a contract extension offer and Boeing didn't respond.

Whoever was to blame, many people are now wondering - could this opening of a new out-of-state Boeing production line be the start of something bad?

The Washington Roundtable, which counts dozens of business CEOs among its members, says the state's tax system hurts business.

Just over half of the state's revenue comes from business - much more than in other states. And our unemployment and workmens compensation taxes are among the highest in the nation.

"We've got to improve," says John Stanton of the Washington Roundtable. "TThe issue is not that this is a bad state. The issue is - to be competitive over time we have to view Boeing's decision as a wake-up call to change some things."

Gov. Gregoire doesn't disagree with that assessment.

"The competition in aerospace is tough," she says. "Today a competitor might be Airbus. Tomorrow it is going to be China and many other nations. So we really have got our work cut out for us."

Boeing has promised the governor it will keep building planes here. But experts worry Boeing is talking about traditional planes made out of aluminum. When Boeing replaces metal with composite materials for new versions of the 737 and 777, it might find factories here not exactly what they need.

The governor says she will fight to keep those jobs.

"If you want to continue to produce the best airplanes in the globe, you'd better have the highest skilled work force to be found anywhere," Gregoire says. "That's what Washington state has to offer the Boeing Co."

Meanwhile, others wonder if granting tax breaks to Boeing will increase the taxes on other business and kill the state's hope for the future.

"We've got a lot of new companies coming along, and when you give tax breaks to a dinosaur you are killing off a lot of those little mammals that are going to grow up," says Tim Raetzloff of the Snohomish County Stock Index.

The governor told KOMO News she is working with business and labor to come up with a new Workmen's Compensation plan. She says there's good progress and she hopes to have something ready for the next Legislature.

Gregoire also says she asked business to come up with a new tax system to replace the B&O tax. She agrees the task now is making the state's economic growth climate as strong as possible.