Boeing S.C. wants to buy nearly 1,100 acres in N. Charleston
The so-called Boeing effect is going to get bigger — a lot bigger.
Nine months after Charleston County Aviation Authority Chairman Chip Limehouse leaked in a public meeting that Boeing was eyeing more airport property for expansion, the aerospace giant took steps Thursday to potentially triple the size of its footprint in North Charleston, laying claims to more than 800 additional acres around its 787 plant.
The authority, which owns Charleston International Airport, voted unanimously Thursday to begin the process of selling Boeing Co. 320 acres along International Boulevard across from its existing plane-making operation. No price has been set.
The airport board also voted to offer the Chicago-based airplane manufacturer the first right of refusal on 488 acres straddling Michaux Parkway at Dorchester Road and abutting the Air Force base, as well as the option to purchase the 265 acres under its existing manufacturing campus.
“This is a major Christmas present for the Lowcountry,” said Limehouse, who is also a state lawmaker and is considering a run for Congress. “We've tied our hat to the rocket ship Boeing.”
Boeing did not disclose any concrete plans for the property.
Before it could build, the airport board must obtain an appraisal to compare with Boeing's and eventually settle on a price. Then, any development plans must clear environmental and regulatory hurdles.
“I think the best thing we can say right now is anticipated, possible future growth,” Boeing South Carolina chief counsel Mark Fava said. “We don't 'land-bank,' and I think our past practices will show that.”
Nevertheless, Thursday's announcement set off speculation among company observers and analysts about Boeing's long-term strategy.
Some believe the company will bring other commercial airplane production lines to North Charleston, while others emphasized the leverage the holdings would give Boeing in negotiations with its powerful unions in Washington and governments in other states.
“We believe Boeing is preparing to eventually locate new airplane programs in Charleston rather than Washington State,” Scott Hamilton of Issaquah, Wash.-based aviation consulting firm Leeham Co. wrote in an email Thursday.
Hamilton and others, like London-based analyst Saj Ahmad, said he would “not be at all surprised” to see the double-stretch Dreamliner, the 787-10, assembled in North Charleston.
Hamilton also floated the possibility of the 777X or the eventual successor to the 737 MAX being made in South Carolina in the coming decades.
“This is entirely our assessment; we can't say we know anything about this,” Hamilton said. “But the old adage is that if it looks like a duck and walks like a duck, then it's a duck. And this sure quacks to us.”
On the other hand, aerospace analyst Richard Aboulafia said “there's a very good chance they're going to expand, but nothing is guaranteed.”
“Basically, why not have that option?” Aboulafia said, adding that he doesn't think anything will spring up there in the next few years. “It also sends a message to anyone you might be negotiating with elsewhere that you're serious about keeping your options open.”
Aboulafia, vice president of The Teal Group, a Virginia-based consultancy, downplayed the idea of a major shift in manufacturing to South Carolina, and doesn't think it has specifically to do with Boeing's ongoing negotiations with the Society of Professional Engineering Employees in Aerospace in Washington state.
“It's unlikely that this facility will be used to stand up a corps of engineers like they have back in Washington,” Aboulafia said. “I think it's more of a broader message.”
“It shows their production line diversification efforts seem to be paying off,” he added.
The news of the land deal was welcomed in Columbia.
“It's proof positive that South Carolina is a place where businesses flourish,” Gov. Nikki Haley's spokesman Rob Godfrey wrote in an email.
A spokesman for Washington Gov. Christine Gregoire declined to say whether the deal is cause for concern there.
“Boeing has a bright future in Washington, adding more than 13,000 employees in our state in the last year to reach a new high-water mark of more than 87,000 workers,” Jason Kelly, Gregoire's spokesman, wrote in an email, emphasizing the governor's investment in aerospace education.
“We are focused on maintaining Washington's position as a world leader in commercial airplane production.”
Fava said Boeing broached the possibility of acquiring more of the Aviation Authority land in a closed-door meeting “many months ago,” declining to be more specific.
“It begins with a discussion and then it goes into deeper discussions and then you've got to go through due diligence,” said Rick Muttart, Boeing South Carolina's director of site services. “It's a process that you've got to go through.”
The approval came a week after Boeing closed on the purchase of three neighboring office buildings totaling 178,000 square feet from the South Carolina Research Authority.
The final OK came Thursday after about an hour-long, closed-door meeting. South Carolina Speaker of the House Bobby Harrell and state Sens. Larry Grooms and Paul Campbell attended the meeting along with Boeing officials, including the company's top in-house lawyer, former federal judge J. Michael Luttig.
Airport board proxy member and Charleston County Council Vice Chairman Elliott Summey, sitting in for his father, North Charleston Mayor Keith Summey, made the motion for the deal.
“I think it's encouraging they believe in our community as much as we believe in them,” the younger Summey said. “This says more about our workforce than our politicians.”
Charleston Mayor Joe Riley, who also sits on the airport board, called the development “wonderful news” for the region.
The undeveloped property Boeing set its sights on contains about 20 percent wetlands and is home to the airport's radar facility, Summey said. The Federal Aviation Administration also must sign off on the deal after considering Charleston International's future expansion needs and whether the sale price is fair.
“Then, at the end of the day, if the parties say that's not the price we're willing to offer it at, or that's not the price we're willing to purchase it at, we at least know what the price is,” Fava said.
But it seems unlikely they won't be able to strike a deal.
Boeing received more than $900 million in state and local government incentives to build a 787 final-assembly factory here, according to a Post and Courier analysis. The massive factory opened in summer 2011, delivered its first locally made plane in October and its second on Thursday, both to Air India.
Limehouse said the proceeds of the land sale would go to the $200 million redevelopment and expansion of the airport's 27-year-old passenger terminal.
More than 6,000 Boeing employees and contractors work at Boeing's local operations, which include a year-old interiors fabrication plant off Ladson Road. The company leases the land under its existing operations from the Aviation Authority. That lease expires in 2041, but Boeing wants to purchase its existing property by 2025, said Fava.
If Boeing acquires all the land it is seeking, it will amass nearly 1,100 of the 1,300 acres Charleston County Aviation Authority currently owns at Charleston International.
“It's an exciting milestone in the development of Charleston International Airport,” Airport Director Sue Stevens said. “After two and a half years of talks, I feel like 10 pounds has been lifted off my shoulders.”
Reach Warren L. Wise at 937-5524 or twitter.com/warrenlancewise and Brendan Kearney at 937-5906 or twitter.com/kearney_ brendan