News Column

Boeing Expansion Could Turn SC Into 'Aerospace Hub'

April 11, 2013
Boeing

Boeing's new $1 billion investment could nearly double employment at its North Charleston Dreamliner jet-manufacturing plant and help South Carolina land more aircraft suppliers, state leaders said Tuesday.

"Our state could become the aerospace hub," said state Senate Finance chairman Hugh Leatherman, R-Florence.

Boeing plans to add 2,000 jobs by 2020. That would bring Boeing's employment to 8,000 workers at its Lowcountry facility.

Noting that Boeing has exceeded its S.C. employment expectations since launching the plant in 2009, Leatherman said he thinks Boeing will add another 2,000 jobs, raising its total workforce at North Charleston to 10,000. That still would be well short of the 86,000 workers that Boeing employs at its Washington state manufacturing hub.

Hours after the deal was announced, the state Senate Finance Committee, which Leatherman heads, agreed to borrow $120 million in bonds to aid Boeing with its expansion. The incentive deal now heads to the Senate floor. Boeing received $450 million in incentives more than three years ago for its initial $750 million investment in the state.

Leatherman asked for quick passage of the bonds "to let Boeing know we appreciate their being here."

An incentives bill also was introduced Tuesday in the S.C. House.

If approved, the money will go to buy a 320-acre site that neighbors Boeing's plant at Charleston International Airport and prepare that site for construction, state Commerce Department Secretary Bobby Hitt told senators. The bonds would not pay for any buildings, Hitt said.

The state would own the site until the bonds are repaid in 15 years. The state could give Boeing the property or lease it to the company if performance goals -- $1 billion in new investment and 2,000 additional jobs -- are met within eight years, Hitt said.

In 2009, Boeing said it would hire 3,600 workers in North Charleston, surpassing that goal in 2012 -- four years ahead of the state's deadline, said company spokeswoman Candy Eslinger. The company already has invested $1 billion in North Charleston, she said.

"South Carolina has been a great partner for Boeing," Eslinger said.

Boeing will add workers to its North Charleston facility that builds aft-bodies of 787s and paints the aircraft, and at a new operations center to transport pieces of the aircraft to the Seattle area, where Boeing operates another plant that also assembles 787s, Eslinger said. North Charleston also will become a site where Boeing consolidates information technology work.

The expansion should help the state attract more aircraft suppliers, including some that also might do business with an Airbus plant that is opening in Alabama in 2015, Hitt said. "The action today increases the heartbeat of the suppliers looking to come to South Carolina," he said.

BMW, which has its only U.S. plant in Greer, was the largest economic-development project landed by the state before Boeing, and it has lured about 40 direct suppliers to the state, Hitt added.

The talks

Boeing had been discussing expanding in South Carolina for a few months, but talks became serious about three weeks ago, state leaders said. Company executives met with Leatherman, Hitt, House Speaker Bobby Harrell, R-Charleston, and Gov. Nikki Haley to hammer out details.

Leatherman said company and state officials met constantly, even getting together -- with Boeing's chief counsel -- on Good Friday. An agreement was reached late Thursday night, he said.

Hitt, a former BMW executive, said the deal reminded him of that German automaker's second S.C. investment. That deal, more than a decade ago, doubled BMW's employment to 4,000 and led to the creation of an auto-research facility with Clemson University. BMW now employs 7,000 workers and has invested $5.8 billion in the state, company officials said.

Harrell said the new incentives package offered Boeing amounts to about 10 percent of the company's planned investment, "a pretty good deal for the state." Local governments are expected to give the aircraft maker tax breaks as well, he said.

"I do anticipate the cheering will seriously outweigh any opposition that we may have" to the cost of the incentives, Harrell said.

One Senate Finance Committee member -- Sen. Kevin Bryant, R-Anderson -- voted against the incentives, saying he could not add $120 million to the state's debt. State Sen. Tom Davis, R-Beaufort, voted "present," saying he wanted more time to study the incentives bill.

House Ways and Means chairman Brian White, R-Anderson, said he does not have a problem with more incentives for Boeing. "They have proven that they will live up to their obligations ahead of time."

More planes?

With the expansion, Leatherman said Boeing will boost its North Charleston production of 787 jets to eight a month. The facility, which built its first 787s a year ago, now produces one 787 a month, a number that soon will increase to two. The goal is to build three jets a month in North Charleston, Eslinger said, adding Boeing is not ready to discuss an increase beyond that number.

Boeing has orders for 840 of the new jets. Made with composite materials, the jets have proven popular with airlines because they are lighter and more fuel-efficient than other commercial aircraft.

Boeing has not talked about adding production of another type of jet in South Carolina, officials said.

About 1,000 of the new jobs added in North Charleston will be engineers; the other 1,000 will be made up of production and information technology workers, state officials said. The jobs will pay $65,000 a year on average, Hitt said.

Boeing has an option to buy another 765 acres near its North Charleston plant. Combined with the 320 acres that are part of the bond deal announced Tuesday, the North Charleston facility would be about the same size as the company's manufacturing operations in the Seattle area, Eslinger said.

"If you could prove you have the workforce and can do the job, more (jobs) would be coming," U.S. Sen. Tim Scott, R-North Charleston, who helped with previous Boeing deals, said Tuesday. "The announcement says 'Phase 2,' so maybe there could be a Phase 3. They did not say this is the final phase."

The 787 took three years longer than projected to get off the ground because of production problems. Since mid-January, the aircraft has been grounded because of a problem with smoldering lithium-ion batteries. The company conducted a final test of a new battery design last week. None of the 787s that reported battery problems were built in South Carolina.



Source: (c)2013 The State (Columbia, S.C.). Distributed by MCT Information Services.


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