Boeing’s S.C. Incentives Package Worth $170M

NORTH CHARLESTON, S.C. (AP) -- A $750 million Boeing 787 assembly plant is expected to bring thousands of badly needed jobs to South Carolina's ailing economy and, officials hope, a closer look at the state by other industrial prospects.

"There will be corporations that will chose to make South Carolina home that I suspect would not have were it not for this investment," Gov. Mark Sanford said Friday after signing the incentive package that clears the way for the largest single industrial investment in South Carolina history.

Boeing announced Wednesday it would open a second assembly line for its new 787 with nonunion workers in South Carolina, not in Everett, Wash., where it has built planes for generations.

"They made a difficult but ultimately wise decision," Sanford said. "That was not a decision against any worker in the Northwest. It was simply a decision about the larger strategic question of 'Do you put all your eggs in one basket?'"

He was joined by about two dozen lawmakers in a building near Charleston International Airport where the roar of jet engines could be heard in the distance.

In July, Boeing bought a factory in North Charleston that makes 787 fuselage parts and the company also owns a stake in a second fuselage plant here.

Boeing expects to create new 3,800 jobs in seven years at the assembly plant. Construction, which begins later this year, is expected to employ 2,000 -- welcome news in a state with an 11.6 percent unemployment rate, the sixth highest in the nation.

Officials have compared the announcement to the state's other prize industrial catch: the BMW manufacturing plant opened in upstate South Carolina 15 years ago.

When BMW decided in 1992 to build in Spartanburg County, it promised to create 2,000 jobs and invest $500 million. The company estimates its investments through last June at $6.3 billion -- including $2.1 billion through suppliers. It now employs 5,000.

Unlike BMW, there won't be a lot of aeronautics suppliers coming to North Charleston, said aerospace analyst Richard Aboulafia of the Teal Group.

"The 787 is meant to have very little manufacturing activity at the top end," he said. "That reduces the importance of the final location to suppliers. The idea is these major subassemblies come flying in and get assembled."

But the Boeing decision is expected to help in other industrial recruiting.

"This is a major company everybody knows. It will help attract other attention," said University of South Carolina economics professor Doug Woodward. "This is tremendous news, historic."

"The spinoff, instead of talking about the multiplier in jobs, I think is going to be in the industries that now take a serious look at South Carolina because Boeing did," said state Senate President Pro Tem Glenn McConnell.

"The message to the international global business community is South Carolina is open for business," said State House Speaker Bobby Harrell. "We want you to come here and we want the jobs here. We will negotiate. We will beat other states and we will fix this economy. "

The Boeing incentive includes up to $170 million in low-interest loans for construction, plus sales tax exemptions for computers, material and fuel used in test flights. It allows Boeing to pay very little corporate income tax for 10 years, by tying those taxes to in-state aircraft sales.

BMW got $130 million in incentives -- $200 million in today's dollars -- including tax incentives, road improvements and job training.

Associated Press Writer Seanna Adcox in Columbia contributed to this story.

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subsidizing big business 10/30/2009 4:26:00 PM When a caregiving Republican Governor spends tax payer $$ do intrigue big Corporate moves, then the pages here are empty - no call of sociualism and corporate welfare around -the right wing readers of these pages are incredible bigot. one could also say, Rebulican policies are out there to help destroy Unions, well why not (it's known how close the GOP is to workers interests) - but it's still tax-payer $$ - which otherwise are so holy for the pretenders of fiscal responsibility from the GOP fraction ... Got you!
Re: Subsidizing Big Business 10/30/2009 5:39:00 PM I would hope more governors, regardless of party affiliation, would follow Sanford's lead and provide incentives for corporations to locate in their states. Aside from creating good paying sustainable jobs, they are creating a fairly sizable tax base while reducing the demand on government programs and services. Unlike the subsidies given to Chrysler and GM to prop up the union rank and file, the low interest loans to Boeing will most likely be payed back. As far as tax subsidies go, I wish that no corporations, regardless of size, would have to pay taxes. The amount of jobs created due to tax cuts would far outstrip the number of jobs created by Obama's or any other government stimulus package. Unless you want the U.S. to be an island in the international sea of commerce, the unions are going to be scaled back. The U.S. can not compete globally if our labor costs are double those of India and China. As far as corporate profits are concerned, who do you think are getting those profits? Stockholders, which include you and me and the vast majority of U.S. union and non-union workers. Finally, instead of referring to the readers of this column as bigots, maybe an explanation as to why the S.C incentive plan is a bad idea would be more appropriate.
nothing new here.... 10/30/2009 6:13:00 PM States have been offering large tax breaks for decades to get corporations to open facilities in their states. Yes, its tax payer $$ and states and tax payers are typically better off in the long run because these companies come to their state. The decision by Boeing had more to do with union issues than tax breaks. Unions were created to improve working environments, ensure fair wages for the job being performed, and to prevent mis-treatment from employers. Can anyone really say this is the purpose of Unions today? Companies have to ensure their employees are treated fairly and paid a fair wage or they simply will not stay there. No employees..no product/service..no business. Unions today are tied too closely to politics and the Union leaders just want more and more and more without thinking about what it does to the companies. They Union leaders would rather see someone get laid off than take a hit to their personal agenda. So...way to go SC and to the Boeing employees in WA I would suggest you take a hard look at your Union and decide if its in your best interest.
OK, here is the reply (to "subsidzing")... 10/30/2009 7:26:00 PM from an Ultra Right Wing (fiscal) conservative. Not to be confused with a Republican. This is a load of crap! The tax payers of S.C. are getting screwed again. You have to ask yourself why Boeing needs to be bribed to move a plant there. Someone needs to go to jail and be the cell-mate of Gov. Sanford. These tax "incentives" need to stop. I'm getting damned tired of giving money to GM (was a stock holder), Chrysler, etc. just to see them back over and over again at the pig trough.
subsidizing big business... 10/30/2009 11:46:00 PM Huh? Do you have any clue what you just said? Cause I don't. But you should try putting two and two together to get four! The Southern states (especially the ones with Republican Governors such as South Carolina, Mississippi, Louisiana, and others) are grabbing jobs away from the Midwest, Northwest, and Northeast. 5000 jobs at a BMW plant? Thousands more at a Boeing plant? Are you kidding me? What about Pratt & Whitney (bye-bye Connecticut!)? True, they won't pay as well as the jobs in those other areas did for years and years. But those days are over for now. Southerners will be working, while those of us in the North are out in the cold, wishing for what we lost. It seems to me the GOP Governors are doing a great service for their constituents, who will soon be the "workers" you seem to want to speak for.
subsidizing big business partII 11/3/2009 4:37:00 PM Now that at least some do subscribe to the idea of government helping business, tell my why that is different from the federal government's actions on the bail out - it's rewarding CEOs to shuffle around jobs, getting money for making people poor and enriching themselves - by the way 'low interest loans' does not mean that the 170 MM$ are getting paid back at all SIR. You are banking on the Reagan ideology - less government is better when it suits your arguments, but you like government when it helps your consituency - military industry, insurance business, agriculture, and so on, whereas when it is for blue color workers orsoldiers and the like - it's not necessary to protect and help them along - well bigots, as certain religions breed them since centuries - thanks I understand you very well!
reply to nothingnew and re to sub 11/6/2009 12:40:00 PM Dear nothingnew, I suggest you might want to educate your self on how unions are helping workers today, weather it is watching out so workers get paid for time workered, or keeping rights earned over the years, Yes there are still abuses by over zealous and poorly trained managers, and some major employers like walmart. Here in washington state walmart was telling employees to use state medical coverage system for the poor to get coverage for thier workers, and other abuses seen often. The boeing decsion to move 787 was more over a short sighted funding of the program and when that caused problems Boeing ignored that and blamed everyone but the CEO and Board of directors that made the stupid decsion in the first place. so to answer your question yes my union does protect me from abuses you list and sadly companies don't operate in dream world you describe, it would be nice if they would. But they don't. So I want and support my union. For Re subsidizing big business, I disagree with your idea, We have seen corperations use tax breaks to get states and countried compete in a race to the bottom on wages and taxes and job creation. I would add They do do the opposite on CEO pay , That grows and grows and out strips what reast of world ( Japan, Europe, etc ) do on ceo pay there. Trickle down economics don't work, Rich just get richer and it is not money they "trickle" down on the middleand working class.
SUBSIDY 11/6/2009 1:08:00 PM The workers who get a job from this Republican move won;t give a damn if you call it a subsity or not. They just want to work. When the Democrats get unenployment up to 20% maybe you (and your unemployed buddies) will understand: a job is a job.

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