Thoughts on the Boeing expansion?

dreamliner

This release from the state Senate GOP…

Boeing has been an incredibly [sic] partner for us as a state. Despite labor unions’ early attempt to interfere with their presence here, Boeing is already creating jobs for over a thousand South Carolinians, with a multiplier effect that touches every part of our state.

 

We overwhelming passed a bill this week that gives Boeing the tools they need to create another 2,000 jobs here. You read that right…ANOTHER 2,000 jobs, and nearly a $1 billion more in capital investment.

 

It’s a great day for South Carolina not only because of the impact these jobs will have in people’s lives, but also because it solidifies our state’s reputation as a go-to destination for world-class manufacturing…

… got me to thinking I should start a thread on this major new industrial investment by our state. This thing’s moving through the Legislature pretty quickly, so don’t type too slowly if you have something to say. A quick summary of the situation from The State:

The S.C. Senate gave final approval Thursday to $120 million in state bonds, two days after the aircraft maker said it would add 2,000 jobs and $1 billion in investment at its North Charleston Dreamliner 787 jet plant. Boeing must meet those employment and investment goals by 2020 as part of the incentive agreement.

Meanwhile, the state House agreed Thursday to fast-track the incentives bill and begin floor debate Tuesday, Speaker Bobby Harrell’s office said…

“We have made a commitment to Boeing and our state keeps its word, particularly when it comes to economic development,” said Harrell, R-Charleston. “This is a good investment for our entire state that will create exciting new opportunities for our citizens and provide our state with huge returns.”…

The 15-year, state-backed bonds would pay for a 320-acre site next to Boeing’s plant at Charleston International Airport and to prepare the property for expansion. The money would not pay for new buildings, state officials said. 

 

50 thoughts on “Thoughts on the Boeing expansion?

  1. Silence

    Yup, there’s no way to interpret the Boeing news as other than good news for SC. I generally disagree with providing economic incentives, but for this type of manufacturing operation I think the benefits will outweigh the costs.

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  2. bud

    It’s funny how conservatives get so worked up about government intervention when it’s something that benefits the poor, like the medicaid expansion. But when the government wants to throw taxpayers money at a rich company like Boeing it’s all good. Where are “Pork” and “Barrel” when you need them.

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    1. Silence

      I guess adding thousands of solid, skilled blue-collar manufacturing jobs doesn’t benefit the poor. Neither does the sales taxes, property taxes, and purchases of goods and services that the newly employed machinists and assmeblers will be making in the Charleston area. In no way does any of that help fund schools, healthcare, civic improvements….

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    2. Steven Davis II

      Well bud, when medicare/medicaid creates a return maybe conservatives will support it too. But it’s a handout, with little to nothing in return. It’s like throwing a fist full of dollars down the toilet and flushing hoping that at least one bill swirls but doesn’t go down the drain.

      Since when is job creating a bad investment? Maybe some of these welfare recipients will actually decide to wake up and realize that they can become a productive member of society instead of a leach.

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      1. Steve Gordy

        I’m sure my parents (who have been on Medicare for years) appreciate being told that they are unproductive leeches who are receiving a government giveaway.

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      2. Bart

        SDII,

        Sometimes your rhetoric is a little over the top and describing people on Medicare as welfare recipients and leaches is total bull____ especially for those of us who worked our a__es off for decades, paid our dues, do not abuse the system, and like me, still work and contribute by paying my taxes and living a very productive life after retirement age.

        This may shock you, doubt it, but with all of the premiums my wife and I pay for Medicare supplemental coverage, it amounts to about what I was paying when we were covered under a company policy.

        Next time, differentiate between Medicare and Medicaid. One is contributory, the other is not. Big difference.

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        1. Steven Davis II

          I’m not talking about those who worked and contributed to the system and you know that, I’m talking about those who have been on Medicare/Medicaid since the day they were born and have no intentions of getting off of it because it’s easier to leach off the government than to get a job, better themselves and become a productive member of society. In the animal world, these are the people the pride would have pushed out on their own to fend for themselves.

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  3. bud

    I generally disagree with providing economic incentives, but for this type of manufacturing operation I think the benefits will outweigh the costs.
    -Silence

    Where’s the “picking winners” outrage? I guess so long as the company meets some sort of litmus test for what makes a company “good” in the conservative playbook then let’s just throw buckets of money at them.

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      1. Steven Davis II

        From what I’m getting out of bud’s comments, he’d prefer that the state throw that money at the welfare recipients in the form of a one-time handout. Kind of a give the man a fish vs. teach a man to fish scenario.

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        1. Steve Gordy

          I haven’t noticed many companies falling over themselves to come to South Carolina (or any other state) without incentives so they can “teach a man to fish.” I guess the prospect of creating jobs that might add revenue to the bottom line isn’t enough incentive.

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          1. Steven Davis II

            I’m talking about giving money as in incentives to companies over just handing out money to those with their hands out looking for something for free.

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          2. Bart

            Steve,

            Almost every company making plans to expand will seek incentives from the local or state government in order to help with costs. If you stop for a moment and look at the efforts of cities whose downtown has gone to ruin and the amount of money and incentives offered to small or minority businesses to stay or locate in renovated spaces partially funded by the city, while it is on a much smaller level, the concept is the same.

            One local company as an example was given a huge break on fees for several years, land that had been dormant for years was given to the company based on incentives the company had to meet and the business owner was given another parcel of land to sweeten the deal if all conditions were met.

            The company now employs well over 150 people at the new location and everyone is pleased with the results. The mayor of the city where the company was located is a good friend and he did everything he could to keep the company from moving a major part of their operation to another location. However, the city council fought against offering any incentives for expansion and instead of keeping the production jobs already in place plus adding others, they lost every one of them to another county.

            The competetion to attract a new business or industry is about as intense as I have seen in decades. On the surface it may seem as if the “rich” are getting richer and corporations are given undeserved breaks through massive incentive packages but if you take it down to the street level and consider the number of people who will have a job, buy a new or used vehicle, maybe buy a home, and be able to purchase goods and services locally, the exponential expansion of the local economy again at the “street level” increases in direct proportion to the new jobs created.

            To read and listen to the bitching, moaning, and criticism about the packages offered to Boeing and other companies on an intellectual level that has absolutely nothing to do with the impact of a new job on the average citizen is no more productive or useful than debating if Lord Francis Bacon was the one who actually wrote the plays attributed to Shakespeare.

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    1. Silence

      In the civil aviation arena, the winners have already been picked. They are Boeing and EADS. The smaller winners are Embraer and Bombardier. Where they locate has nothing to do with picking winners. The losers are already long gone.

      Reply
  4. Mark Stewart

    If the state is going to purchase and develop the land in the entirity, it should have retained ownership of the property and leased its use to Boeing.

    It is the State’s responsibility to sheppard our resources for the long term. On day Boeing will be done with the property. The jobs will be gone. And so will the land.

    At least SC has had incredible success in attracting Boeing suppliers to the Palmetto State, no? (Irony alert.)

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    1. Silence

      Agreed that the State should have retained interest in the real estate, but who knows, that might have killed the deal or left taxpayers with a greater environmental liability. Who knows, though, but I tend to agree.
      Many of the plants operated by federal defense contractors are owned by the government still. Lockheed’s Atlanta plant comes to mind.

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    2. Steven Davis II

      “On day Boeing will be done with the property. The jobs will be gone. And so will the land.”

      Well aren’t you just a little ray of sunshine. I bet there are people in St. Louis, Mesa, and Seattle who said the same thing.

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  5. Mark Stewart

    On Boeing’s – or it’s successor’s – balance sheet.

    Whether we fund incentives to create jobs is one thing, it is quite another to purchase property with public funds and then simply turn over the improved asset in perpetuity to a private company.

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      1. Mark Stewart

        Eventually, Silence, eventually Boeing will exit stage left. Creative destruction… Of course, what we really have here is a global battle between two subsidized manufacturers – EADS and Boeng. One by nations, the other by states.

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        1. Silence

          OK, since I’m getting a nice dividend, I’m glad I can continue to hold BA. I bought it in 2009 at $40/share, so my yield on cost is about 4.8% on it. I’d hate to unload it! Not that I would have actually sold it, you know, I was just joking about them going under anytime soon.

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          1. Mark Stewart

            Of course you were. But it also happens that one day what seems like a “safe” investment implodes. There are always the warning signs, but it is more often hard to allow one’s mind to accept the emerging risk in the moment. How many people around Columbia held on to Wachovia’s stock until the bitter, bitter end? Just as one example…

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        2. Steven Davis II

          Do you have a timeline on when Boeing will close it’s doors? I and my family have a bunch of stock we’ll need to get rid of before then. I hear Microsoft, Apple, and General Electric will someday go out of business as well.

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  6. bud

    Silence, the concept of “winners” and “losers” is not a static one. Companies, even huge, successful ones eventually go out of business. If you’re going to be a free-market disciple you need to go all in and not just when it seems like a good idea. Mack truck was a big successful company at one time and the Winnsboro factory went belly up.

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    1. Silence

      bud – I am “all in” when it comes to being a free market disciple. That being said, if other states are offering economic incentives for new facilities, it’d be stupid not to play as long as the marginal benefit exceeds the marginal cost. Unfortunately this leads to a “race to the bottom” when it comes to attracting large projects. Sometimes the incentives are too high compared to the amount of economic development they attract. That is unfortunate.

      Mack Trucks are still in business, they are part of Volvo (the truck company, not the car company that Ford sold to the Chinese) and as far as I know they are still doing OK. It is unfortunate for us that the Winnsboro facility closed, though. I understand that those were well paid factory jobs.

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    2. Steven Davis II

      bud, there was a little more to Mack shutting it’s doors than just the owners taking their profits and running.

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  7. bud

    Just kidding Silence. Of course to me calling someone a Socialist is the ultimate compliment and hardly an ad hominem attack. Still, it is puzzling why the auto industry bailout is regarded as an unwelcome socialist intervention into the complex workings of the free-market yet a huge purchase of land for an airplane company is just a good, sound investimate in our state’s economy.

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    1. Mark Stewart

      Well one way is that federal investment is picking winners and losers (or winners likely to become losers) and state or local investing is more of a prepaid reduction in economic return (pay now to grow the pie later).

      Both are ultimately irrational. It makes more sense for government to invest in infrastructure and education and minimize regulatory impediments and let private investment make rational decisions about site selection.

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      1. Silence

        Mark – When you say “invest in infrastructure” what do you mean exactly? Roads, electric utilities, natural gas, water, sewer, fiber-optic cable, rail and port facilities are pretty ubiquitous near most major cities.
        Regarding education, I wouldn’t say that SC’s system is going to ever be a big draw, although I understand that our tech system is pretty good. Full disclosure, I used to be an adjunct at a local tech school.
        Also, for a client the size of Boeing, my guess is that any state/local regulatory impediment corrects itself quickly.

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        1. Mark Stewart

          So when Boeing expands again – for itself or on behalf of supplier(s) – into the remaining option lands and begins to conflict with either/both the airline terminal’s space needs and/or the Air Force’s growth needs, who is going to get squeezed?

          It’ll probably be fine, but it looks like it is going to get tight around the airfield.

          If the state gains a major Boeing plant but loses the Airbase, is it really a gain for the State (accounting for the economic development costs)?

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          1. Steven Davis II

            What Air Force growth? The military is looking at another round of base realignment. If Charleston is too small and no room for expansion they’ll just move them to a bigger base.

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          2. Mark Stewart

            That’s right, Steven. Gaining an expanded Boeing MAY mean the eventual loss of the Charleston Airbase. Or it may mean something different. Who knows? But it is a factor to consider – especially when SC is spending approx. $700 million to make nice with Boeing.

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          3. Steven Davis II

            So if the Charleston transport planes were relocated to say, Shaw AFB the world would come to an end? Never really understood why there was an AFB in Charleston anyway.

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    2. Silence

      @ bud – I knew you were just kidding! I do think that there’s a difference though between the auto bailout and the Boeing deal.
      My major issue with the GM/Chrysler bailout was that it contravened the traditional bankruptcy process. Essentially, shareholders were wiped out, as they should have been, but secured and other bondholders were screwed over for the benefit of the UAW.
      Anyways, as I said before, if other states were bidding for Boeing, we’d have to compete for the plant. I’m not saying it’s right, I’m just saying that’s how it works.

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  8. bud

    Silence, if I concede everything you just said about the auto bailout it still could be viewed as a desperate, but necessary, government intervention to save the nation’s entire economy from crumbling. Things were really bad and getting worse so another blow would have put us in a very dire situation. As for the Boeing deal, I see how it COULD benefit the state but it seems so very out of character for our general assembly to find it so easy to spend taxpayer money in something that seems to fall outside the traditional bounds of government functions. The person who should be most aghast at this action is Doug, the libertarian, not bud the semi-socialist.

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    1. Brad Warthen Post author

      Not directly. What you’re seeing are context-sensitive Google ads.

      I started running those last week. This is something I’ve been meaning to do for some time, and finally got around to it. The proximate cause was a conversation I had with Taegan Goddard, who does “Political Wire.” We were talking about making money from blogs, and he said that I was just leaving money on the table not doing Google ads.

      So now I am.

      I’ve been watching them appear with interest. I hadn’t seen the Boeing or BMW one, but I’ve seen an advert for immigration lawyers come up after I wrote about the Gang of 8’s bill. There have also been some local car dealers, and some SC political stuff.

      It’s very frustrating because I want so badly to click on the ads, out of curiosity. But that is strictly verboten — Google would ban me if I did it, even to check if they are working. Nor can I urge my readers to click on them, which is why I’ve been hesitant even to mention them. Google is very protective of the integrity of the analytics.

      But I’m sure people are wondering. I guess I should put up a post about them…

      I suppose I’ll find out whether it’s worth the trouble at the end of the month. I think that’s when they pay.

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      1. Silence

        Brad – I can assure you that the Boeing advertisement does in fact go to Boeing’s website http://www.boeing.com/advertising/space/ The BMW one is for the local BMW dealership in Columbia. I clicked on the Boeing one last night to see where it took me.
        I wasn’t as curious about the BMW one, as I am in the market for a new heavy lift rocket system, but not for a new 3 series BMW. Although, $309/month is an attractive lease offer for a new 328i sedan…

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  9. Mark Stewart

    Silence,

    Did you see the way the Boeing expansion area horseshoes around the aircraft hot cargo area?

    One use will have to give way to the other here…

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    1. Silence

      The existing plant is down by I-526, between the civilian airport and the Tanger Outlets, right? I don’t know where the expansion is going. Is it bounded by Michaux Pkwy, Porsche Blvd, Intl Blvd and the runway?

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      1. Mark Stewart

        The current growth is planned for in front of the airline terminal (boxing it in). The future expansion area is the horseshoe on the airbase side of the secondary runway.

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  10. Lynn T

    They really really need a proofreader at the Senate GOP:

    “We overwhelming passed a bill this week . . . “

    Reply

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