Boeing Looks South

In a blow to Washington state, the Boeing Co. announced Wednesday that it has chosen North Charleston, South Carolina, as the location for the second production line for the 787 Dreamliner program.

"Establishing a second 787 assembly line in Charleston will expand our production capability to meet the market demand for the airplane," said Jim Albaugh, president and CEO of Boeing Commercial Airplanes division, in a statement.

The decision marks a strategic shift for Chicago-based Boeing, which for years has assembled many of its passenger jets at Puget Sound area factories in Washington state.

In recent days, Washington Governor Chris Gregoire and members of the state’s congressional delegation, including Senator Patty Murray, tried to resurrect negotiations between Boeing and the Machinists Union that had broken off. In the talks, Boeing wanted the union to adopt a long-term no-strike clause in exchange for assembling the second assembly line in Everett, Washington, according to published reports. The negotiations ultimately broke down.

Boeing's move cast a shadow over the Puget Sound region, which is home to 80,000 aerospace workers, including suppliers and subcontractors.

“This is obviously a very disappointing day for all Washingtonians,” Gregoire said in a statement.

In a special session, South Carolina legislators this week approved an economic incentive package tailored to Boeing’s jet-assembly plans. The package reportedly includes $170 million in low-interest bonds as well as tax breaks for a company that creates at least 3,800 jobs and invests at least $750 million within seven years.

State Senator Mike Hewitt said that the Washington legislature should have held a special session of its own.

"Why isn’t the Washington legislature in special session right now enacting reasonable workers’ compensation reform and looking at other ideas to attract and retain these jobs?” he said in a statement.

But in a press conference held shortly after the announcement, Gregoire said Boeing officials told her that there was nothing she or the state legislature could have done to affect the decision.

Murray called it a "shortsighted decision" by Boeing.

“Washington state has fought for Boeing from day one. The dedication and quality of product Washington state provides is not something you can build overnight," Murray said in a statement. "The passion and history of grandparents passing knowledge, know-how, and skills to the next generation is not something that can be reflected on balance sheets."

“What the company has neglected to account for is the quality and well-trained workforce that they already have in Everett," Murray said.

"This decision will have an adverse impact on many loyal and dedicated workers, suppliers, and subcontractors here in Puget Sound," said Everett Mayor Ray Stephanson. "The effect of today’s decision will be widely felt in families, schools, local small businesses, and community services."

Albaugh of Boeing said the decision "allows us to continue building on the synergies we have established in South Carolina with Boeing Charleston and Global Aeronautica." He said the company will continue to use its Everett facility for "transitional surge capability" for the 787-9, the first derivative model of the 787, until the second production line in South Carolina is up and running.

Albaugh said, "We remain committed to Puget Sound."

"Boeing has betrayed our loyalty once again, walking away from our discussions just like they walked away from Seattle eight years ago to move to Chicago," said Tom Wroblewski, president of local district 751 of the International Association of Machinists. He added: "It's now clear that Boeing was only using our talks as a smoke screen and as a bargaining chip to extort a bigger tax handout from South Carolina."

South Carolina officials cheered Boeing's decision.

“For the people of Charleston, this is a once-in-a-lifetime event," said Republican Senator Lindsey Graham.

---

The Puget Sound Business Journal covers the Seattle area's business news.