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Published: Tuesday, April 9, 2013, 6:30 p.m.

Boeing's $1B South Carolina plan called unsurprising

A Boeing Co. pledge Tuesday to invest $1 billion and create 2,000 jobs in South Carolina prompted fanfare there but little alarm in Washington state.
South Carolina lawmakers floated a $120 million tax incentive on Tuesday, touting Boeing's "phase two" expansion in North Charleston. The money will "fund in part the core state infrastructure development to make these 2,000 new jobs and additional billion dollars in private investment possible," state Rep. Bobby Harrell said in a statement.
Boeing today employs about 6,000 in South Carolina, where it builds 787s -- though at a slower rate than at the main factory in Everett.
Jack Jones, general manager of Boeing South Carolina, described the incentive offered by South Carolina as "commensurate with our commitment."
The company has eight years to fulfill its end of the bargain, or Boeing would need to pay back part of the incentive, said Candy Eslinger, a Boeing spokeswoman in South Carolina. Eslinger said the company had been in discussions with South Carolina lawmakers for a few months.
Analyst Scott Hamilton of Issaquah-based Leeham Co. said the site expansion disclosed Tuesday is just part of Boeing's overall plan for the North Charleston site. That includes helping the company meet a stated target of building 10 787s monthly by year's end, as well as an oft-discussed goal of boosting 787 production even higher, he said. Over the next 10 to 20 years, though, Hamilton expects Boeing to build a new airplane in South Carolina, perhaps a replacement for the 737 MAX or 777X.
"Charleston is going to become another aerospace cluster," he said.
The news about Boeing's expansion in South Carolina didn't surprise lawmakers in Olympia, either.
"We've tried to do things before, and it tends to not affect their behavior," shrugged Rep. Hans Dunshee, D-Snohomish.
Many of the projects that Boeing will use to qualify for the South Carolina incentive have already been announced, spokeswoman Eslinger said. A $12.5 million deal for 320 neighboring acres that Boeing announced last year is part Boeing's $1 billion investment, as is an information technology "center of excellence" in North Charleston.
In February, Boeing revealed it would build an operations center for the fleet of 747 large cargo airplanes, called Dreamlifters, that ferry 787 assemblies around the world. Eslinger included the Dreamlifter center in the $1 billion investment commitment. Construction is under way on a similar center in Everett.
Chicago-based Boeing plans to add a facility in North Charleston to paint 787s assembled there, rather than fly Dreamliners to Texas for painting, as the company has been doing.
Another project included in the $1 billion plan is expansion to the company's aft body production line in North Charleston. Boeing officials first announced that last May during a company investors conference. Aside from a 787 final assembly line, Boeing workers in South Carolina also build aft fuselage sections and later join those with mid-body fuselage sections.
Eslinger said it's too early to provide specifics about the 2,000 jobs. However, state Sen. Hugh Leatherman told TheState.com that the jobs would likely be split between IT workers and engineers.
In Washington, there are still measures -- improving transportation and continuing to invest in education -- the state can take to keep as much work here as possible, analyst Hamilton said. Ultimately, though, Boeing wants to diversify its production base.
"From a business standpoint, it makes sense not to have all your eggs in one basket," he said.
Washington gave Boeing $3.2 billion in incentives in 2003 to secure 787 final assembly in Everett. Six years later, Boeing picked North Charleston for a second 787 final assembly line. South Carolina lawmakers offered $450 million in incentives then for the $750 million facility.
"The strength they have here is the quality of the workforce," said Dunshee, the Snohomish state representative. "We ought to pump money into our education system to keep supplying them with a quality workforce."
Lawmakers "are doing whatever we can" to address the workforce and transportation needs of the aerospace industry, said Rep. John McCoy, D-Tulalip.
Herald reporter Jerry Cornfield and The Associated Press contributed to this report. Michelle Dunlop: 425-339-3454; mdunlop@heraldnet.com.
Story tags » 777787EmployeesStateAerospace

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