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Boeing will nearly triple its footprint near Charleston International Airport with the acquisition of even more land than expected in a $49 million deal announced today.
The land purchase comes one day after the Chicago-based aerospace giant announced hundreds of new research jobs for the Charleston area, and analysts believe the land deal paves the way for Boeing to eventually move all 787 production to North Charleston.
Boeing declined to comment on the speculation.
"This expansion makes future growth in North Charleston possible," said Jack Jones, vice president and general manager of Boeing South Carolina. "While we expect to begin the permitting process immediately for this property, we have no specific plans for the land other than where we will locate the new paint facility."
The company will build a new 230,000-square-foot building to paint completed Dreamliners on about 20-plus acres near where South Carolina Research Authority now stands on International Boulevard. SCRA is moving to Summerville, and Boeing plans to dismantle two of the buildings later.
Construction on the new paint facility will begin mid-2014. It will generate less than 50 jobs when it's completed in 2016, but the number could change depending on how much automation is included, Boeing South Carolina spokeswoman Candy Eslinger said. Completed Dreamliners are now flown to Texas to be painted before being flown back to North Charleston for delivery to customers.
"We can make our delivery process even more efficient by painting airplanes here in South Carolina, creating more value and convenience for our customers," Jones said.
Boeing will also build a 10,000-square-foot fire station on its main campus behind the welcome center. It will be completed late next year. It will also add a second autoclave in 2016 to support aftbody composite fabrication. An autoclave is a pressure vessel used to process parts and materials which require exposure to elevated pressure and temperature.
"Our commmitment to South Carolina is visibly demonstrated every day as our growth and expansion continues," Jones said. "I don't expect that ending anytime soon."
In addition to the 267 acres the Chicago-based aerospace giant is acquiring beside its 264-acre, 787 Dreamliner assembly plant, Boeing will add another 201 acres with the purchase of the former Trailwood mobile home park and other acreage across from Glynn Terrace subdivision.
Boeing, through an arm of the state Commerce Department, is paying $13.8 million for the 267 acres Charleston County Aviation Authority is selling at the airport. The additional 201 acres is being bought from Truluck Properties for $35.2 million. Both land purchases are through a long-term lease with Palmetto Railways, a division of the Commerce Department. Boeing has the option to buy all 468 acres when the lease expires in 2027.
"The Aviation Authority is very pleased with the arrangement, and we look forward to continued success with Boeing and working with them in the future," Aviation Authority executive director Paul Campbell said.
The Aviation Authority has about 488 other acres available at the airport should Boeing decide to expand further in the future.
Wetlands
Though not part of Friday's announcement, Boeing will also undertake an extensive mitigation effort to address wetlands on the property along International Boulevard included in the 267-acre deal. About half of that acreage is considered wetlands. Other wetlands exist at the former mobile home park.
Boeing is buying property throughout the Lowcountry to replace wetlands it will fill near the airport. The replacement land will be placed in conservation easements, Eslinger confirmed.
A more detailed wetlands mitigation plan will be announced in January, she said.
Boeing growing
Aviation analysts said whatever Boeing intends to do with the property it is collecting, its presence in the Lowcountry is going to expand."The long-range plan at Boeing is to shift all 787 production to Charleston," said aviation analyst Saj Ahmad with StrategicAero Research in England. "You don't buy that much land and do nothing with it. It's only a matter of time before all 787s emerge from Charleston."
He said the "teething issues" affecting production on a revolutionary airplane will be worked out, and "Boeing will not allow its Charleston investment to be a one-trick pony."
Boeing is not expected to announce where the 787-10 will be built until next year, but Ahmad said it's a no-brainer that the biggest version of the Dreamliner will be constructed completely in North Charleston.
"The sheer size of the jet means that it won't fit in the current Dreamlifter," he said in an email, referring to the size of the 787-10's fuselage. "I see no logical business, economic or strategic benefit of it being anywhere other than in Charleston. There has to be a pretty big disaster production-wise for Boeing to look elsewhere. As it stands, the 787-10 is Charleston's to lose."
Aviation analyst Scott Hamilton of Leeham Co. in Washington state believes North Charleston is sitting pretty for 787-10 production and the local Boeing campus will one day rival the company's massive operation in Everett, Wash.
"That's going to be built down there," he said, referring to the 787-10 in South Carolina.
The production of other aircraft could follow in decades to come, he said.
"It's obvious Boeing plans to continue growing Charleston," Hamilton said. "Whether that happens sooner or later is dependent on what happens with the 777X. Over the next 10 or 15 years, Charleston is going to continue to grow. In the next 25 to 50 years, Charleston could be equal to or greater than the size of Everett."
Everett, Wash., is the hub of Boeing's commercial airline industry, including the original production site of the 787.
Hamilton believes the next new airplane, a replacement for the 757, will be built in Charleston when the current plane ends service by 2030."
Other aviation analysts hailed Boeing's acquisition of more land as good news for the Charleston area.
"It is only a great thing for South Carolina that Boeing is looking to take more land and increase the size of that campus," said aviation analyst Greg Raiff, CEO of New Hampshire-based aviation consultant firm, Private Jet Services.
"Strategically, it would be a wonderful thing for South Carolina if it were the only place in the world you built a 787," Raiff said.
Aviation analyst Richard Aboulafia of the Teal Group of Virginia agreed.
"It shows a commitment by Boeing, and that's great for Charleston," he said.
Boeing's 787 final assembly plant in North Charleston was built to accommodate future expansion, Eslinger said.
Aboulafia believes the 787-8, which is currently built in North Charleston and Everett, will eventually be phased out in favor of the new 787-9 and 787-10.
Boeing already makes parts for the 787-9 in North Charleston, but final assembly happens in Washington state, Eslinger said. The 787-10 has not started production, but it will be the largest airplane in the class with a seating capacity of 330 when it's first delivered in 2018.
"I don't think the 'dash 8' will survive the introduction of the 'dash 9' and 'dash 10,'" Aboulafia said. "It's more likely to get phased out."
777X
As for production of the 777X, Boeing's new twin-engine, more fuel-efficient 777 model, Boeing continues to wrangle with the Machinists union in the Pacific Northwest over its location.Union leadership rejected a proposed new contract offer from Boeing on Thursday, pouring water on Washington state's hopes of landing the lucrative deal that could generate 8,500 jobs in a $10 billion investment. Boeing maintains the offer has not been withdrawn, and it's in the union's hands to accept or reject.
The main sticking point with the International Association of Machinists is the loss of its traditional defined-benefit pension. Boeing wants to replace it with 401K-style defined-contribution savings plan.
The revised proposal presented Thursday also withdrew an earlier proposal to dramatically slow wage growth for new hires. The new offer would have kept in place the current rate at which employees rise to the top of the pay scale.
The offer comes after the union soundly rejected Boeing's first offer in November by a 2-to-1 margin.
That led Boeing to open bidding for the 777X to sites across the U.S. More than 54 sites in 22 states, including South Carolina, submitted proposals, the company said Thursday. Boeing is expected to start winnowing them down over the weekend.
Boeing announced in November some of the engineering work on the 777X will come to North Charleston as well as three other sites across the U.S.
Boeing hopes to start construction on the new 777X plant in November 2014 with airplane assembly in 2016 and the first flight by the end of the decade.
The company said it will make a decision on site selection early next year, but a new deal with the union would sideline other states' bids.
Regardless of what the unions do, Boeing is going. They've already stated their intent to spread manufacturing and engineering among many different states. They quietly announced the closing of 1200 R&D jobs (there's different levels of R&D at Boeing, the jobs that they're moving appear to be pure research types of jobs where it doesn't matter as much where they are) here in Puget Sound, and another 200-300 from SoCal, and moving them to Utah, Texas, Charleston, and St. Louis. And there's nothing stopping them from opening a second 777X line or any other line anywhere else. They're an international corporation now with no regional allegiance that Boeing had. When you had 12 aerospace companies in teh country you had to stay local and form deep alliances locally. Not anymore. There's 4 in the USA. 6 if you count the small fries. 8 if you count the Western Hemisphere. 10 maybe if you count globally.
It's a different world now. The PNW better get used to a much smaller footprint, even if Airbus came in and established an engineering center here.
This is basically following the McDonnell - Douglas management model to spread work among the states to get as many politicos under your wing as possible and claim you're supporting jobs throughout the union. Yes and no, in my opinion. In my opinion they're holding out their hat asking for money from as many states as possible and milking the taxpayers so they can give their corporate kickbacks ... er, I mean "dividends" ... to their shareholders ... er, I mean Stonecipher and the McDonnell family.
Ah well. That's what happens when you have non-engineers run a company. I expect Boeing to be bankrupt inside of 20-30 years the way the company is being run. Automotive industry version 2.0.
Boeing Co. said the machinists union in Washington has rejected a “best and final” contract proposal that would ensure the aerospace giant would build its next-generation 777X airliner in the state.
The announcement came after the third day of meetings between Boeing and the International Assn. of Machinists and Aerospace Workers District 751. The talks were the first between the two sides since the union overwhelmingly voted to reject a eight-year contract extension last month.
Since then, Boeing has opened a nationwide sweepstakes asking other states to submit incentive-laden proposals. The company said it received proposals from 22 states, many of which submitted multiple sites for consideration.
Washington is still in the running to build the twin-aisle jet, but it’s unclear whether Boeing will move forward without a deal with the machinists union. It represents more than 31,000 Boeing workers.
"We entered these discussions to address the concerns we were hearing from our employees," Ray Conner, chief executive of Boeing commercial airplanes, said in a statement. "We've listened to the union leadership and had an open dialogue in hopes of moving toward each other. Unfortunately the offer, which would have ensured this great airplane for the Puget Sound region, was immediately rejected by the union leadership."
The machinists union did not immediately comment.
Moving the assembly line out of the region would be staggering to the Seattle area, where Boeing was founded in 1916.
The 777 is one of Boeing's best-selling models. Versions of the plane have been built in Washington since the early 1990s, and the 777X is seen as vital to the company's fortunes in the long-haul market for decades to come.
Just last month, at the 2013 Dubai Airshow, Boeing said it had signed 777X contracts amounting to a record-setting $95 billion for 259 airplanes.
The proposed deal would have cut some pension and healthcare benefits, but guaranteed that the 777X program would stay in the Pacific Northwest.
Under the proposed contract, traditional pension plans for newly hired machinists would be converted to a 401(k) type of retirement program in which Boeing would contribute 10% the first year, 10% the second, 6% the third and 4% for each year up to the end of the contract.
Boeing said it sweetened the deal with additional lump-sum bonus of $5,000 on top of the $10,000 it had previously offered. Employees also would have received additional dental benefits, the company said.
The labor dispute in Seattle drew the attention of Southern California lawmakers, who are still reeling from Boeing's announcement in September that it would close the C-17 Globemaster III cargo jet plant in Long Beach in 2015.
On Tuesday, Gov. Jerry Brown's office of Business and Economic Development announced that it would submit a proposal to the company.
Boeing said a total of 54 sites are now being evaluated for the next stage of the process.
The Governor is going to be making several phone calls tonight to union leadership - which appears to feel very different about this latest proposal than the rank and file - and to Boeing executives.
If I were the union members, I'd be pissed. How do you vote out the union leaders/reps? They seem like an overly emotional, testosterone laden bunch of buffoons.
The Governor is going to be making several phone calls tonight to union leadership - which appears to feel very different about this latest proposal than the rank and file - and to Boeing executives.
If I were the union members, I'd be pissed. How do you vote out the union leaders/reps? They seem like an overly emotional, testosterone laden bunch of buffoons.
To be perfectly blunt ... the IAM rank and file are overly emotional and are spoiled from decades of forever rising incomes and pensions and benefits. Thus the elected leaders perfectly reflect the rank and file.
And to be honest, it doesn't take the sharpest knife in the drawer to become a machinist. I don't blame them for not thinking logically if they're not naturally inclined to do so.
What needs to happen is the state become right-to-work and not be forced to join the union, and the union needs to have a vote of no confidence, disband, and whoever wants to rejoin should be allowed to, the remainder can stay outside.
Well I don't think having the state turn to "right to work"..South Carolina is and it isn't always a good thing...but what is the latest on this debacle? We are moving to Seattle next year and hate to see this happening to such a great city.............
If Boeing totally left, which is highly unlikely, a study by the state basically concluded that Everett and the area would be come a dust bowl. Home prices in other areas like Seattle would experience a 5% drop in home values and the state overall would lose ~150,000 jobs.
Over time the picture would likely change as WA would court Airbus, suppliers, heck maybe even Bombardier and Comac if they chose to grow. And I guarantee you that ~30% of the engineers would rather quit or retire than move.
Boeing isn't so stupid as to totally move. Though I wouldn't put it past the Mc-D management to not know that and be lost in their ivory tower. After all, failing and losing to the competition is what McD management is best at.
More specifically on the Charleston thread titled "New Boeing developments", in view of the stalled Boeing labor negotiations, there is excitement over hoped-for misfortune & job losses in Washington State that would possibly lead to the moving of jobs to South Carolina.
Oh, please. They don't really want misfortune for others, they just need to support their own families.
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