Scott Hamilton chuckled when he heard the news Tuesday that Boeing has agreed to invest another $1 billion in, and hire another 2,000 people for, its South Carolina factories.
By the numbers
8,500Range, in nautical miles, of the extended 787-9 850Worldwide orders; retail value: $185 billion290Maximum passenger capacity58Number of buyers50Number of grounded in-service 787s because of smoldering batteries4Number of 787s assembled in and delivered from Boeing South CarolinaSource: Boeing.com
What about the airframer’s serious commitment to growth in North Charleston struck the longtime aviation analyst as funny? Just the timing.
Boeing’s archrival Airbus broke ground Monday on its new plane-making factory in the Southeast, and Hamilton saw Boeing’s announcement as just the latest in the back-and-forth between the duopolists, not to mention between Boeing East and West.
“You think the timing on all of this is a coincidence?” said Hamilton, whose Leeham Co. consulting firm is based near Boeing’s historic headquarters around Puget Sound in Washington state.
Besides the Airbus A320 factory groundbreaking in Mobile, Ala., Boeing’s big announcement also coincided with the first SpeedNews Aerospace Manufacturing Conference in downtown Charleston.
That allowed Gov. Nikki Haley to sell her state to 180 industry people from 120 organizations or companies from 25 states and eight countries.
She said Boeing’s growth is “a lot to celebrate” and a vote of confidence in South Carolina, emphasizing the state’s workforce training programs and lack of union organization.
Today, many of those supplier representatives will take tours of Boeing’s interiors factory and others, such as Jonathan Zucker company’s new TIGHITCO facility. Zucker was among many who happily greeted Boeing’s latest expansion plans.
“It reassures us that we made the right decision” to build a composites factory not far from the Boeing campus in North Charleston, Zucker said.
In conjunction with the filing of a $120 million infrastructure bond bill, Haley and other state officials readily forecast what Boeing might do over the eight-year term of the deal.
There was talk of 1,000 jobs related to Boeing’s recently announced information technology reorganization plan, and of building a local paint facility so Boeing doesn’t have to fly all its North Charleston-made 787s to Texas to get their color schemes.
But speaking at the SpeedNews conference Tuesday, Boeing’s top local executive wouldn’t commit to much of anything beyond the 1 billion and 2,000 figures.
“We don’t know the mix yet exactly,” Boeing South Carolina Vice President and General Manager Jack Jones said of the jobs.
As for whether the planned investments will involve the 320 acres Boeing recently agreed to buy from the Charleston County Aviation Authority, Jones said Boeing will make “absolutely no commitment on what we’re going to do with the additional 300 acres.”
It’s about “flexibility,” Jones said, adding that there is “no grand strategy at this point.”
Hamilton, who has followed Boeing for years, was skeptical.
“You don’t make this kind of investment without having a grand strategy,” he said. “It’s all part of a grand strategy, probably over a generation, to build up Charleston.”
The company entered the local picture when it bought up the Vought Aircraft and Global Aeronautica factories over the course of 2008 and 2009, and has since built a massive final-assembly building, an interiors factory and a delivery center, all for the 787 Dreamliner.
Late last year the company bought a set of nearby office buildings, and it agreed in March to buy the 320 acres across International Boulevard for $12.5 million. Then, late last month, Boeing announced that it would be concentrating half of its 7,900-member IT division in just three places, including North Charleston.
It was in that context that Boeing was apparently negotiating its latest incentives package.
S.C. Commerce Secretary Bobby Hitt described the deal as the result of a long-term process, explaining that big companies, such as BMW and Boeing, “make directional decisions and then keep filling it in as they go along.” He said the specific discussions intensified over the past three or four weeks.
Under its 2009 incentives package, Boeing committed to invest $750 million and create 3,800 jobs in exchange for a deal that according to a Post and Courier analysis was worth at least $900 million in infrastructure money, workforce training and land and tax breaks.
Asked about the state’s return on that investment Tuesday, Haley responded by saying Boeing launched the aerospace industry in South Carolina. “You can’t put a price on that,” she said.
Hitt and Jones said the latest incentive money will be used for infrastructure, such as acquiring land, preparing sites for development and road work.
Hamilton and Saj Ahmad, a London-based analyst with strategicaeroresearch.com, believe there will eventually be more than the 787 and its stretch derivatives built in South Carolina.
“The 787 is just the start of Boeing’s ever-growing footprint in the state and it will provide welcome competition for Washington when it comes to new airplane development,” Ahmad wrote in an email Tuesday.
Jones wasn’t ready to make that leap when asked whether the North Charleston site would remain focused exclusively on 787 production. “For the near future, yes,” he said.
The timing of the growth is also notable because just last month Boeing said it would cut more than 2,000 of its blue- collar union machinists this year.
Jones said there’s “absolutely not” any redistribution of work going on. He said the recently announced cuts in the Puget Sound are part of a “very natural cycle” whereby the rework related to the ramp-up of the new 787 and 747-8 programs is winding down.
But the fact that Boeing’s Washington state workforce is unionized whereas South Carolina’s is not — the root of a prominent National Labor Relations Board case — was indirectly mentioned Tuesday by Jones and Haley.
“We don’t have unions in South Carolina. We’ll never have unions in South Carolina,” Haley said, claiming that her heels are for kicking as much as they are for style.
Approaching three months since the Federal Aviation Administration grounded the 787 because of a mysterious battery problem, there are five jets on the Boeing South Carolina flight line and another five inside the factory, Jones said.
The final assembly operation will be producing at a rate of two 787s per month in “less than a month and a half,” he said. It is on track to be making three per month in the fall, with the plan for North Charleston and Everett, Wash., to be making 10 together by the end of 2013.
As for whether North Charleston is shaping up to be a true East Coast counterweight to Boeing’s West Coast wide-body production headquarters, Jones seemed to hedge.
“You’ll never mirror Everett,” he said, before implying that Boeing South Carolina is keen to wean itself off dependence on its older sibling.
“We’re trying to be as self-sufficient as we can,” he said.
Reach Brendan Kearney at 937-5906 and follow him on Twitter at @kearney_ brendan.
Together at the SpeedNews Aerospace conference Tuesday were Jack Jones (from left), vice president and general manager of Boeing South Carolina; Gov. Nikki Haley, Secretary of Commerce Bobby Hitt and Boeing South Carolina chief counsel Mark Fava.×
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