North Charleston will be home to a new Boeing 787 jet assembly plant, ending a hotly sought-after deal that thrusts the state into the front lines of aircraft manufacturing.
North Charleston won the fiercely fought battle for a Boeing 787 aircraft assembly plant Wednesday, thrusting South Carolina onto the world stage of aircraft manufacturing.
The Boeing Co. will build the new line at its Charleston International Airport property instead of Everett, Wash., the nation’s aviation nerve center and longtime home of the company’s commercial airplane business.
The decision was announced after state lawmakers wrapped up a two-day special session in which they approved a rich basket of financial incentives for Boeing valued at $450 million by state Sen. Hugh Leatherman, a Florence Republican who heads the Senate Finance Committee.
The aerospace giant would have to create at least 3,800 jobs and invest more than $750 million within seven years to take advantage of the various inducements.
Tim Coyle, vice president of Boeing Charleston, said the company plans to break ground on the 584,000-square-foot expansion near its existing factory within the next few weeks. Work on the first locally made 787 Dreamliner is expected to begin in 2011.
Boeing had said previously that its stormy relationship with the International Association of Machinists was a key factor in its decision to look beyond its highly unionized operation in Washington. Last year, the union staged a damaging eight-week strike in the Seattle area that compounded the delays that have been dogging the 787 program for two years.
The company began taking a hard look at building the second line for its newest jet in North Charleston in August, meaning that the Dreamliner plant went from a dream to a reality in less than three months, said Senate President Pro Tem Glenn McConnell, R-Charleston.
It wasn’t South Carolina’s low unionization rate, the incentive deal or any other single factor that sold Boeing, McConnell and Leatherman said. Coyle agreed, saying Boeing considered the business environment, logistics and the infrastructure in North Charleston and Everett.
“Being able to deliver on schedule, the company decided two sites were better than one,” Coyle said.
Leatherman said he expects the company to exceed its job and capital investment projections, not fall short.
Gov. Mark Sanford said he will sign the incentive legislation.
The deal comes at a time when unemployment is near a record high in South Carolina, with manufacturing particularly hit hard by the recession.
Boeing also could give a big kick to a small but promising industry for South Carolina, with many officials likening the prize to the BMW car plant that opened in the Upstate 15 years ago.
“Just as the similarly monumental BMW investment catalyzed a now extensive automotive presence across South Carolina more than 15 years ago, we believe Boeing landing decisively in North Charleston will spur on an already growing aerospace hub in our state,” Sanford said in a statement.
North Charleston Mayor Keith Summey called the Boeing deal wonderful.
“It’s the reversal of the shipyard closing,” Summey said, referring to the gradual shutdown of the Charleston Naval Base and Shipyard in the 1990s.
Doug Woodward, director of research and an economics professor at the University of South Carolina’s Moore School of Business, said the Boeing expansion will have a huge impact on the state by raising its global profile.
“Boeing is one of those rarefied companies which everyone knows and recognizes as a leader in the field, and to have that in South Carolina is an intangible benefit aside from jobs and income generated,” Woodward said. “It will help sell our state to other companies ... and I think it will put Charleston on a lot of people’s lists of the hottest places to be in 2010.”
The launch of the cutting-edge 787 — Boeing’s first new jet in more than a decade — is being closely watched within the aviation world. Unlike most large commercial airplanes, which are made from aluminum, about half of the Dreamliner’s structural components are a mix of epoxies and strong lightweight composite materials, such as graphite and carbon, to cut fuel consumption
Also, the major sections of the plane are being made by suppliers around the world and then flown to the Seattle area on giant cargo jets for final assembly. When the new line opens, some of those parts will be put together off International Boulevard.
Boeing needs a second production line for its long-delayed but fast-selling Dreamliner jet to ensure production gets back on track and to minimize penalties incurred from late deliveries.
After six delays in two years, the first test flight for the lightweight, all-composite jet is expected before the end of 2009. The first deliveries are expected in late 2010.
To date, 55 airlines have placed orders for 840 of the wide-body aircraft totaling $140 billion, “making this the most successful launch of a new commercial airplane in Boeing’s history,” according to the company.
One reason Washington state did not win the line was an impasse between Boeing and the machinists union, which represents thousands of the manufacturer’s production workers in Everett. As the company evaluated where to build a second new production line, it sought a 10-year no-strike guarantee from the union. But those talks collapsed and efforts to revive them Wednesday were too late.
Production workers at Boeing’s local plant recently severed their ties with the union, which likely tilted the 787 line in South Carolina’s favor.
Boeing already makes rear fuselages for the Dreamliner in North Charleston, a factory it acquired over the summer from Vought Aircraft Industries Inc. in a deal valued at $1 billion. Boeing also owns half of a neighboring 787 supplier, Global Aeronautica, that works on mid-fuselage sections.
“Establishing a second 787 assembly line in Charleston will expand our production capability to meet the market demand for the airplane,” said Jim Albaugh, president and chief executive of Boeing Commercial Airplanes. “This decision allows us to continue building on the synergies we have established in South Carolina with Boeing Charleston and Global Aeronautica.”
The idea of losing the 787 line to South Carolina triggered panic in the Seattle area, where officials are still stinging from Boeing’s decision to move its corporate headquarters to Chicago in 2001. The concern in the Pacific Northwest now is that the company will be more likely to move more manufacturing jobs beyond Washington as it develops new planes or replaces existing jets.
State Rep. Chip Limehouse, R-Charleston, vowed Wednesday that South Carolina will be ready when that time comes.
“There will be potential for other aircraft to be built here.” Limehouse said.
Allyson Bird, Glenn Smith and Warren Wise contributed to this report.
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