To South Carolina, Boeing is a fresh start

Imagine if the Boeing Co. closed its Everett factory.

The economic devastation, on a slightly smaller scale, happened in Charleston, S.C., more than 15 years ago. That’s when the U.S. Navy took away about 22,000 jobs from the area.

“For 15 years, we’ve been rebuilding our economy,” said David Ginn, president of the Charleston Regional Development Alliance.

Last October, the region got a boost in the right direction when the Boeing Co. selected North Charleston as the site of its second 787 final assembly line. Over the next few years, the Boeing site is expected to bring 3,800 jobs. That’s hardly the 22,000 Navy jobs the region lost in 1993. But government and business leaders in South Carolina are focused on what Boeing will mean to the area down the line.

The rebuilding of the Charleston economy has come in small steps, as has the forging of the area’s relationship with the Boeing Co.

Over the past decade, South Carolina has seen several major economic wins, which include BMW’s manufacturing site in the northern part of the state, a Google server in Berkeley County and a Kevlar plant.

Those wins build on one another, said South Carolina Gov. Mark Sanford, during a ceremony at Boeing’s new site in late September.

When considering a new location, “the corporate community looks to the left and right; if nobody else is there, then they take a long pause,” he said.

But when BMW put a factory in South Carolina, the doors started opening. Having quick-acting government leaders has been essential in recruiting large companies like Boeing, he said.

Last year, Washingtonians saw the responsiveness of the South Carolina Legislature, which called a special session to pass incentives for Boeing estimated at $900 million.

“We’re known for keeping it simple,” said Steve Dykes, with Charleston County.

But the process of landing Boeing went back much further than last October, Ginn said. The area would have been on Boeing’s radar ever since the company won a government contract to service the C-17 aircraft for the Air Force base in Charleston, Ginn said.

And the greater Charleston area competed for the original 787 line, which the Washington Legislature won after waving $3.2 billion in incentives at Boeing. Charleston had many of the qualities that Boeing sought: a deepwater port, easy access to a major interstate, an international airport with space to grow.

“That instantly put us in the top five for consideration with Vought and Global Aeronautica,” Ginn said.

The two 787 suppliers picked North Charleston for aft fuselage fabrication and a fuselage assembly site, plants Boeing subsequently bought and took over.

Then came 2009 and Boeing’s search for a second 787 final assembly site. As a former contender for the first line and home to two major suppliers, South Carolina had an edge for the second line. Add in tax incentives, an eager government and an established training center at Trident Technical College, and the area had a lot in its favor.

A big challenge

During an interview last month, Jim Albaugh, president of Boeing Commercial Airplanes, described the company’s decision last October to locate a second 787 assembly line in South Carolina as “very difficult.”

With the company’s airplane-building legacy in the Puget Sound region, “What better place to build than here?” he said.

Despite that history, Boeing and its Machinists union failed to reach a labor agreement that Boeing officials said could have kept the second line in Everett. Looking back at the talks, Tom Wroblewski, president of the local Machinists union, sees Boeing’s move as a bargaining chip the company will use in future negotiations. Shortly before Boeing picked North Charleston, the workers there voted out the union.

“I certainly don’t have anything bad to say about the South Carolina worker,” Wroblewski said. “But it will take years, maybe decades” for Boeing Charleston to get up to speed.

Boeing’s Albaugh acknowledged the challenge in establishing a new work force in North Charleston.

“I think Boeing South Carolina is going to have its hands full getting up to rate,” he said.

Like the Machinists’ Wroblewski, Tom McCarty, who leads Boeing’s engineering union in the Puget Sound region, thinks the lack of generational knowledge will be an obstacle for North Charleston workers.

His other concern: “I just can’t believe, and I never have, that building a second line in South Carolina was the wisest use of money,” McCarty said. “How much would it cost to avoid a strike?”

Boeing’s new factory is estimated at $750 million, though tax incentives from the South Carolina Legislature will offset much of that over the long term.

In the fairly near term, Charleston’s tourism industry likely will get a bump from Boeing when the company begins delivering planes in early 2012 from its South Carolina site. From Boeing’s jet delivery center, 787 customers like Qantas, International Lease and Finance Corp. or Qatar Airways will show up with dignitaries to collect their new planes. Those visits inevitably mean stays in hotels, meals in restaurants and rental car reservations.

“We’ll be happy to support them,” Ginn said.

Long-term thinking

The fact that Boeing isn’t hiring exclusively from South Carolina doesn’t seem to bother government leaders. Boeing has brought in contract workers as well as transferred employees from other locations.

“It’s understandable that Boeing is bringing in their brain trust,” Dykes said. “We’re grounded in reality with the employment stats.”

Large corporations like BMW and Boeing look and plan long term. And South Carolina leaders are adjusting how they think to accommodate that.

“This opportunity cannot be looked at short term,” Dykes said. “They’ve got a 50-year-plus horizon.”

However, both Ginn and Dykes have pondered the possibility of attracting more Boeing suppliers as well as future Boeing work. Boeing is working with the Charleston Airport Authority to obtain the right to manage leases of large plots of land surrounding the airport. The company says it’s protecting its interests for the future.

“At some point, when the critical mass of production hits, suppliers might want to have a presence here,” Dykes said.

That doesn’t mean South Carolina hopes that Rolls-Royce will set up a site to build its Trent 1000 engines in Charleston. But some suppliers may need a distribution site, a warehouse or a service office, Dykes said.

“We’re trying to talk to suppliers and to understand,” he said.

But even if South Carolina never adds any more Boeing suppliers to its base, its leaders believe having Boeing there will signal to other large companies that the state is a solid bet for new business.

“From where I sit, I think (Boeing) is one of those major projects that comes along that’s a game changer,” Dykes said.

By the numbers

1.2 million: Square feet of usable space in Boeing’s 787 final assembly factory in Charleston.

3: Number of 787s that Boeing’s South Carolina site will assemble monthly.

4.3 million: Square footage of Boeing’s Everett factory.

240: Acreage of the Boeing site in North Charleston, S.C.

1,025: Acres of land encompassing Boeing’s Everett site.

$450 million: Estimate of incentives offered to Boeing by South Carolina. Recent South Carolina media reports put the figure at $900 million.

$750 million: Estimated value of Boeing’s final assembly factory in South Carolina.

3,800: Eventual work force at Boeing in North Charleston.

100,000: Number of aerospace workers in Washington in 2010.

659,191: Population of Charleston, S.C.

Sources: The Boeing Co.; Charleston Regional Development Alliance; state of Washington