Boeing Expands Operations In South Carolina

A well deserved victory celebration goes to the workers at Boeing Co.'s 787 Dreamliner factory who on September 10 voted 199-68 to decertify representation by the International Association of Machinists.

Today the seeds of desertification bore fruit as Boeing picks Charleston for new 787 line.

Boeing's board has voted unanimously to build a second 787 final assembly plant in Charleston.

"We're taking prudent steps to protect the interests of our customers as we introduce the 787-9 and ramp up overall production to 10 twin-aisle 787 jets per month," said Jim Albaugh, president and CEO of Boeing Commercial Airplanes, in a prepared statement.

South Carolina offered the company $170 million in upfront grants for startup costs, plus multiple tax breaks that would be worth tens of millions of dollars more.

The legislation assumes the company will invest $750 million and create 3,800 new jobs in South Carolina within seven years � if it doesn't create that many jobs, it doesn't get any of the money.

Local economist Dick Conway, who has studied Boeing's impact on the regional economy for decades, estimates that each Boeing job generates spending that supports 1.7 other local jobs � one of the highest "multipliers" of any private-sector employer.

10-Year No-Strike Provision At Heart Of Issue

What killed the deal for Washington was refusal of the union to agree to a no-strike provision sought by Boeing as noted in Boeing talks fall apart; S.C. likely to get 787 line.

Discussions between the Machinists union and Boeing over the second 787 production line for Everett are effectively dead, according to a person familiar with the negotiations.

Last week, company negotiators asked for a "best and final offer" from the International Association of Machinists (IAM). The company wasn't satisfied with the union proposal and talks stalled.

U.S. Sen. Patty Murray, D-Wash., intervened over the weekend, talking to each side separately and acting as a go-between, her office confirmed. Gov. Chris Gregoire and Aaron Reardon, Snohomish County executive, also made calls to both sides and tried to encourage compromise.

It's not known exactly how far the union had moved in its offer to the company since last week, when it sought an extended series of predetermined wage increases as part of a no-strike agreement.

Whatever the union offered it was too-little too late.

By the time the union was willing to negotiate, South Carolina upped the ante with $170 million in upfront grants for startup costs plus multiple tax breaks that would be worth tens of millions of dollars more. In return Boeing needs to invest $750 million and create 3,800 new jobs.

The article notes "That surprisingly large number suggests that if Charleston does win the second 787 line, Boeing will expand there quickly and add substantial work beyond the 787."

For another take at why the Washington talks failed, please consider Boeing, Union Urged to Meet in �Last-Ditch� 787 Talks.

Boeing Co. and its machinists union have been asked to meet in U.S. Senator Patty Murray�s office today in a �last-ditch attempt� at reaching an agreement to keep 787 Dreamliner assembly jobs in Washington state.

Murray, a Washington Democrat, �believes the union has put a very good offer on the table, and Boeing shouldn�t pass up on this opportunity,� Alex Glass, a spokeswoman for the senator, said in a telephone interview.

Boeing is considering building a new 787 Dreamliner assembly plant in South Carolina in what would be the first time the world�s second-biggest commercial-jet builder has set up a new factory outside its historic Seattle manufacturing hub. The company hasn�t yet been able to reach the no-strike agreement it�s seeking with the union, whose four walkouts in the past 20 years have delayed plane deliveries and cost billions.

Chief Executive Officer Jim McNerney said on an Oct. 21 conference call that the upfront costs and inefficiencies of building a plant in South Carolina, adjacent to a Dreamliner parts factory the company bought in July, would be overcome by additional strikes at Puget Sound sites.

A new plant in Charleston, added to the one Boeing just bought that makes sections of the Dreamliner�s fuselage, would give Boeing its first assembly center outside Seattle and could siphon more jobs away from Washington as Boeing considers other new aircraft models.

Facing 4 walkouts and $billions worth of delays in Washington vs. moving operations to non-union shop where workers are happy to be employed, Boeing made the rational choice. Boeing would be wise to move as much production as it can to South Carolina.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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