Washington worries as Boeing pours $1B into S.C.
Boeing announces plans for a $1 billion expansion and 2,000 new jobs in South Carolina as that state’s Legislature prepared an incentive check for $120 million.
Seattle Times aerospace reporter
Boeing Commercial Airplanes: East vs. West
Production: Final assembly in Renton of 737s and in Everett of 747s, 767s, 777s and 787s. Parts fabrication in Auburn and Frederickson, including 777 and 787 vertical tails.
Engineering: Manufacturing support, new airplane development, customer support.
Production: Fabrication and assembly of 787 aft fuselages. Assembly of 787 mid-body sections. Final assembly of 787s.
Engineering: Manufacturing support.
Boeing’s plan to invest an additional $1.1 billion and hire 2,000 more employees in South Carolina by 2020 — and receive an incentive check for $120 million in return — rang alarm bells in Washington state Tuesday.
But the company can add that many jobs in Charleston with its already announced shift of information-technology work from here, and with the expected increases in 787 production.
The number does not suggest that Boeing’s next big jet project, the 777X, will go outside this region.
However, the assembly of future airplanes beyond the 777X — which should begin passenger service around 2020 — is definitely up for grabs.
Boeing’s substantial new investment in South Carolina, where the workforce is nonunion, follows its agreement last month to pay $12.5 million for 320 acres of land adjacent to its existing site. It has first rights of refusal on nearly 500 more acres.
“A lot of people are reading into that that it means we’re going to bring other programs on down,” Boeing South Carolina site manager Jack Jones told The Associated Press on Tuesday. “There’s no commitment to that. What it does open up is flexibility.”
In 2003, Washington gave Boeing more than $3 billion in tax breaks over two decades to land the Dreamliner assembly plant, but state aerospace director Alex Pietsch says nothing like that is in the cards now.
“$120 million is a lot of money,” Pietsch said . “I don’t think you are going to see a $120 million check come anytime soon.”
Pietsch said the state will continue to invest in areas that affect Boeing, including workforce training, transportation infrastructure and education.
Jones said South Carolina’s financial inducement is appropriate.
“The incentive the state is offering is commensurate with our commitment,” he told AP.
Larry Grooms, chairman of the South Carolina Senate’s transportation committee, said the bill to raise the $120 million in bonds “is on the fast track for passage.”
Boeing officials aren’t ruling out building future planes in South Carolina.
“It’s too early for us to say,” said Boeing South Carolina spokeswoman Candy Eslinger. “I cannot lay out a grand plan. We just won’t speculate about what’s coming in two, three or five years.”
Boeing said an unspecified number of the jobs it’s adding in South Carolina is earmarked for a new information-technology support center. It’s one of two — the other is in St. Louis — to be established outside the Puget Sound region.
South Carolina legislators have been told as many as 1,000 of the new jobs in South Carolina will be in IT.
A number of IT positions here and also in Southern California will be lost, but Boeing said it’s too early to say how many.
The rest of the near-term South Carolina expansion plan reflects Boeing’s bullish faith in its 787 program.
“Hands full with 787”
Despite the technical troubles with lithium-ion batteries that have grounded the jets for 12 weeks, Boeing hopes the planes could be flying by late this month and the program can then proceed as planned.
The next new model, the 787-9, is to fly this summer. The larger, follow-on 787-10 model is expected to launch later this year.
Eslinger said Boeing intends to add a large operations center in North Charleston for its fleet of four converted 747 Dreamlifter cargo planes that ferry large pieces of the 787 around the world.
It will also expand the paint facility where the jet’s aft- and mid-fuselage sections are coated with primer.
Asked by a Charleston Post & Courier reporter if North Charleston might become another Everett, Boeing’s Jones replied: “You’ll never mirror Everett.”
But he went on to say Boeing plans to make the South Carolina complex “as self-sufficient as we can.”
Prodded to say more about the potential for building future airplanes there, Jones was noncommittal. He said the manufacturing site will exclusively build the 787 “for the near future.”
A manufacturing engineer at the North Charleston complex, who asked not to be identified because he spoke without company permission, said employees in South Carolina — who work exclusively with the 787’s composite-plastic airframe structure — are not expecting to get 777X work.
The Everett-built 777 has a conventional aluminum airframe, although Boeing plans to add a composite plastic wing for the 777X.
“Only if they were going to go all-composite would they come here,” the engineer said. “Nobody is expecting that.”
He added, “We’ll have our hands full with the 787-9 and hopefully in the near future the -10.”
The rosy employment news for North Charleston comes after a hiring freeze was introduced there as the year began, and hundreds of contract employees were let go.
Eslinger said that reduction was planned as 787 assembly work stabilized, and parallels the recent news that about 800 union production workers in the Puget Sound region will be laid off by year end.
The manufacturing engineer said hundreds of very experienced contractors left, particularly in the area of quality inspection.
Because of that, as the first 787-9 sections come together there has been some shortage of qualified personnel to cope with the extra work, he said.
The South Carolina complex builds all the 787 aft fuselages and mid-body sections. It is producing about six or seven per month and will increase to 10 a month by year end.
The site also has one final-assembly line, which by summer will shift up to producing two 787s per month.
Boeing’s Eslinger said the company remains fully committed to both its East and West Coast assembly sites. She cited the ramp-up in production of current jets, the pending introduction of the 787-9, development of the 737 MAX and the 767 tanker, as well as the likely launches of the 787-10 and 777X.
“There’s a lot of work to be done across Boeing,” Eslinger said.
Washington aerospace director Pietsch said the news out of South Carolina is “a reminder we need to do what we can to remain competitive.”
Last week, the state Senate cut funding for Pietsch’s aerospace office from the proposed budget, though it could be restored during legislative negotiations.
Pietsch said the state hopes “in the near future” to roll out its plan to keep 777X production here.
And even as Boeing’s local head count begins to dip this year, he believes the state’s aerospace-job prospects remain strong.
“We could have reached an equilibrium point with regard to total employment at Boeing,” Pietsch said. “But there’s still plenty of growth to be had throughout the supply chain and other employers within the aerospace sector. And there’ll be continued demand for new employees at Boeing as aging retirees leave the company.”
Dominic Gates: (206) 464-2963 or firstname.lastname@example.org