South Carolina fit Boeing’s long-term plan to cut costs

On the wall above my desk is a framed copy of the Dec. 17, 2003, front page of The Herald with a huge headline proclaiming EVERETT WINS!

It was our coverage of the day that the Boeing Co., after receiving $3.2 billion in tax incentives from the state of Washington, picked Everett to assemble its first new jet in a decade, then called the 7E7.

After Boeing on Wednesday chose its newly purchased facility in North Charleston, S.C., over Everett for a second 787 line, some newsroom wag printed out the word LOSES in big type and taped it over WINS on my framed front page.

I’m leaving it up, at least for a while. It’s a reminder that sometimes you win and sometimes you lose and that either way, you can never rest on your laurels.

Whenever an event happens like Everett’s loss, people are quick to place blame. And there’s certainly been a lot of finger-pointing going on in Washington state these days.

Republicans lawmakers blame the Democrats in the Legislature and the governor, also a Democrat. The state isn’t competitive, they say. We’re not doing enough.

Others blame the Machinists union, which was in talks with company officials aimed at convincing Boeing that they could get the production assurances they needed.

I’ve also heard a lot of talk about how Boeing will add more political clout for itself by sending more work down South.

Everybody has a theory.

My idea is a little more simple.

I think all that the workers in South Carolina had to do was scrap their union and agree to do the job for $14 an hour, and they had a done deal. Boeing wanted to go to South Carolina. It didn’t need a lot of convincing.

And South Carolina offered quite a bit, since the union workers in Everett make an average wage of about $28 an hour.

Union officials point out that the people making $14 an hour don’t offer the skills that their members do, and I’m sure that’s the truth. But they can learn those skills. And I believe that they fit Boeing’s long-term plan.

What’s that?

I believe Boeing wants to make good jets in a variety of locations around the world using simple, low-cost procedures that to the largest extent possible take skilled workers out of the equation.

The company isn’t handing out copies of this plan or even admitting to it, but I think it doesn’t take a brainiac to figure it out. All you have to do is to look at what Boeing, and for that matter most major corporations, have been doing in recent years. They’re all looking for locations around the world that can make them a low-cost producer — if not the lowest-cost producer — of their product.

Boeing’s first move was to shift its corporate headquarters from Seattle to Chicago, separating it from its production center for commercial aircraft and most of its workers.

Then it started increasing the number of parts made in different locations around the world. Then it developed a new plane, the 787, that didn’t need so many assemblers.

Instead of aluminum segments fastened with rivets, the 787 uses composite materials so that whole sections of the plane could be assembled virtually anywhere by snapping them together like Legos.

Then Boeing bought a factory in an area of the country where unions aren’t strong, so it that it can start snapping its planes together without having to worry about work stoppages.

This isn’t some sinister plan, as some people suggest. Whether we like it or not, it’s the way capitalism works. As some people like to say, especially at times when they’ve done something that really tees you off, “It’s just business.”

What we’re seeing at work here is really just the beginning. We didn’t lose the second line because a politician made the wrong choice. We lost it because it’s part of Boeing’s long-term plan.

That’s not to say that we can’t slow down the loss of our aerospace business and even add new business to the region. But there will be a cost for that, either in tax incentives, training, making the area more livable or in union agreements that lower the company’s overall expenses.

Forget the $3.2 billion we committed in 2003. It’s gone.

Boeing’s next decision will be made based on what we’re offering now.

Don’t blame the Machinists or the politicians or even Boeing itself.

As a region, it’s up for us to decide how important our aerospace jobs are and what we’re willing to do today to keep them here. If it’s not enough, Boeing will continue on the plan and go elsewhere.

As much as it tees us off, it’s just business.

Mike Benbow: 425-339-3459; benbow@heraldnet.com.