State relied on power of tax breaks, incentives

South Carolina has diversified its approach to economic development in recent years, spending hundreds of millions of dollars to leverage university research into high-tech entrepreneurship and pushing to develop existing industry clusters.

But last week's announcement that The Boeing Co. will assemble its 787 Dreamliner jet in North Charleston shows the state's traditional approach to job creation -- using tax breaks and other incentives to recruit branch manufacturing -- can still carry a punch.

The plant is South Carolina's biggest win in the economic development game since the late Gov. Carroll Campbell recruited a BMW factory to the Upstate in 1992.

Campbell likewise employed traditional recruiting and incentives, an approach sometimes called "buffalo hunting" or "elephant hunting."

Gov. Mark Sanford in the past has criticized the use of tax breaks to lure companies as favoring new and big businesses over longtime and small ones.

To recruit Boeing, however, Sanford's Commerce Department worked closely with the General Assembly to craft a package of perks that has not as yet been publicly disclosed in its entirety but which lawmakers say is worth $450 million.

House Speaker Bobby Harrell of Charleston said the approach used to land Boeing harks back to the one Campbell used to recruit BMW.

"This is a case study in how it ought to be done," Harrell said. "The Commerce Department was very involved, and key legislators were brought in early in the process to make sure we could get through the General Assembly what was needed to bring the company here."

Harrell and other key lawmakers have never shared Sanford's libertarian reservations about using incentives when the result is a net gain for taxpayers.

"If we want to bring jobs to our people, we've got to be competitive with the sister states," said state Sen. Hugh Leatherman, a key player in the Boeing negotiations as chairman of the Finance Committee. "If we don't, we sit here and watch the jobs go to other states. I frankly am not willing to do that."

The Boeing announcement also shows there is still much to gain by courting the manufacturing sector.

"Manufacturing is not dead in this country," said Jeanette Goldsmith, a site consultant with the McCallum Sweeney firm of Greenville who helped Boeing pick Everett, Wash., for its first Dreamliner plant.

While there are likely fewer manufacturing jobs to recruit than in the past, "manufacturing is still a very critical component of South Carolina's economy and the country's economy," Goldsmith said.

Goldsmith said Boeing might bring additional production to South Carolina related to the next generation of its 737 airliner or an Air Force tanker plane it hopes to build. For that reason, state officials should cultivate their relationship with Boeing and identify sites in the Charleston area where the company could put plants.

"There's a lot more work coming," Goldsmith said.

Boeing's announcement also shows that South Carolina continues to benefit from its status as a so-called "right-to-work" state with one of the nation's lowest unionization rates.

Hal Johnson, president of the Upstate Alliance, the regional economic development organization with headquarters in Greenville, said South Carolinians believe labor and management "need to communicate with each other, and we don't need a third party to do it for us."