Donald P. "Rusty" Reed, Vice President, Business Development, South Carolina Power Team (June/July 10)
Editors Note: This article is Contributed Content, authored and paid for by the South Carolina Power Team. The story of Boeing's investment in Charleston, South Carolina, provides insight into the factors important to the location decision of aerospace firms.
The U.S. aerospace Industry has deep ties to the southeastern United States. The first manned flight took place in Kitty Hawk, North Carolina in 1903, and the first manned space flight launched from Cape Canaveral, Florida on a rocket made in Huntsville, Alabama. Many would contend that the latest major milestone for the southeastern aerospace industry came in October of 2009 when Boeing chose a site adjacent to the Charleston International Airport for a second assembly line for its new 787 Dreamliner. The project is expected to produce at least $750 million in direct investment and create at least 3,800 direct jobs, while millions more in investment and thousands more jobs are expected from the suppliers that Boeing will need to locate in the area.
The Labor Factor
More positive news followed in the next few months when Boeing announced that it would replicate production of all the components needed to produce the new aircraft so the new assembly line could operate independently of the current supply chain. In an article in The Seattle Times on December 8, 2009, Boeing spokesman Jim Proulx stated that "repeated labor disruptions have affected our performance.(the second assembly line) has to be able to go on regardless of what's happening over here." Jim Albaugh, CEO of Boeing Commercial Airlines, went further in saying that in choosing South Carolina over Washington State "the overriding factor was.that we couldn't afford to have a work stoppage every three years.and continue the rate of escalation of wages." One estimate has Boeing saving around $4 billion in wages and benefits at the Charleston facility over 20 years when compared to the package that Washington employees receive.
These quotations highlight the major reason that most observers believe led Boeing to select South Carolina as its first assembly plant outside the state of Washington - labor. South Carolina's low unionization rate and skilled manufacturing work force and worker training programs are powerful attractions for domestic and international manufacturers. Unlike Washington, South Carolina is a right-to-work state, meaning employees can't be forced to join a union as a condition of employment.
BMW has operated its only North American facility in South Carolina for two decades, and Michelin also has their North American headquarters in the state. CNBC's "Top States for Business 2009" ranked South Carolina sixth in the nation for the quality of its work force. As of mid-April, the state- funded readySC™ worker training program at Trident Technical College had graduated 1,700 workers for the existing Boeing fuselage assembly plant, and another 1,300 applicants had qualified for the eight-week training program. The state expects to spend up to $33 million over the next 15 years on the program to train workers for the Boeing plant.
Aerospace & Aviation Related Companies In South Carolina - 2010