South Carolina could be on hunt for Boeing

by Don C. Brunell
President, Association of
Washington Business

While parts for Boeings new 787 Dreamliner are manufactured around the world, Washington elected officials should keep a close eye on South Carolina.
Vought Aircraft and Global Aeronautica, located at the Charleston International Airport, now manufactures half the 787s fuselage and state officials want more. Once assembled, the aft section is loaded on an enlarged 747 called the Dreamlifter and flown directly to Everett. Those facilities are brand new with the latest technology. They are striking evidence of South Carolinas manufacturing surge initiative and state officials want more Boeing business.
South Carolina positioned itself to be part of the 787 project from the beginning. In 2003, when Boeing reviewed sites for the final assembly plant, South Carolina state leaders fought hard to win a big chunk of that business.
As Boeings historic home base, Washington had an advantage with facilities and a trained workforce in place; however, because of our higher taxes and business costs our state barely landed the final assembly plant.
Officials in both states understand that Boeing facilities attract not only large prime contractors like Vought Aircraft and Global Aeronautica, but also thousands of smaller subcontractors who provide family-wage jobs. Since airplane components can be manufactured or assembled anywhere in the world, Boeing suppliers do not have to be in Washington to work on the 787.
Washington state lawmakers should keep that in mind. Depending on their actions, South Carolina could look better than ever to companies with operations in our state.
For example, Washingtons unemployment insurance costs for employers are five times higher than South Carolina. According to the 2008 WashACE Redbook survey, South Carolinas UI rates average $154 per employee compared to Washingtons average of $803. In fact, Washington has the second highest UI rates in the nation and the employer pays the entire tax.
In 2003, then-Boeing commercial airplane President Alan Mulally told legislators Washington had the highest unemployment costs of anyplace Boeing does business. It was a message echoed by our states other employers.
As part of the states effort to win the 787 assembly plant, the Washington Legislature approved unemployment insurance reforms. But in 2005, lawmakers, under pressure from the unions, backtracked on those reforms. Next January, they may have to revise their most recent UI compromise because the U.S. Department of Labor ruled those changes dont comply with federal law.
If those changes result in higher unemployment costs to employers, Washington will be less competitive since employers absorb all UI charges. Costs matter today more than ever.
South Carolinas lower business taxes are another lure for Washington manufacturers. For example, South Carolina ranks 34th in the nation, with private employers paying 42 percent of state and local taxes. Washington ranks 8th highest, with our private employers paying 53 percent.
Finally, South Carolina is a right-to-work state. That means workers are not forced to join the union. As a result, union membership there is among the lowest in the nation. Washington ranks fifth highest.
If lawmakers pass the so-called union neutrality bill, it could force Boeing contractors to reconsider their decision to stay in Washington. That bill would severely limit employers ability to counter union organizing campaigns in the workplace.
If a company did not comply, it would have to repay the incentives authorized by the Legislature to entice those very companies to build manufacturing plants in our state. It makes South Carolina, which is investing heavily in training, research and providing attractive incentives, look even more attractive.
What does all of this mean?
Since the closure of the Charleston Naval Base, South Carolina has aggressively pursued growth, economic development and new jobs. Washington state leaders cannot be complacent. Just because Boeing and its suppliers are here today, doesnt mean they will be tomorrow.
They have too many other choices and too many states and foreign countries covet these family-wage jobs in todays highly competitive global economy. Remember, Boeing has the fleet of oversized 747s to haul large components of its aircraft from anywhere in the world.

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