Charleston Regional Business Journal - Nov. 9, 2009 - Boeing arrives

BOEING

November 9 - 22, 2009 • www.charlestonbusiness.com

Health Care Reform: No easy answers The insurance industry wants to make wellness a focus of reform, in this third installment of a special series on health care. Page 28

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Assembling a new economy

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Speaking of SPAWAR The mysterious facilitator of government contracts on the Naval Weapons Station provides a vital economic function.

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INSIDE Upfront..............................2 Special Report: Boeing....4 In Focus: Advanced Security & Defense........35 List: Defense Contractors....................37 List: Minority-Owned Businesses ....................39

At Work...........................41 Economics Column..........42 People in the News..........43 Business Digest...............44 Leads..............................45 Calendar..........................46 Viewpoint.........................47

2009 Philanthropy Inside: Your guide to the nonprofit and philanthropic organizations that make the Lowcountry a special place to work, live and give.

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Nov. 9 - 22, 2009

Quotes on Boeing “I think this decision is one of the most important economic development announcements we’ve had in South Carolina history.”

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– Hugh Leatherman, chairman of the S.C. Senate Finance Committee

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special report

Boeing chooses LOWCOUNTRY for

expansion

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n 2005, when the Angelou Economics Report for Charleston listed aerospace as an area of potential growth, Vought had just announced it would build a high-end aerospace manufacturing plant near the Charleston International Airport. As the work force and economy have responded to the challenge of serving that industry, what might have seemed like a stretch for Charleston years ago makes sense today.

With the addition of thousands of construction and manufacturing jobs on the horizon,

Boeing gives North Charleston, the Charleston region and South Carolina a moment of economic prowess that brought together political foes, economists and behind-the-scenes players in a concerted effort to land one of the most sought-after companies in the world.

The Charleston Regional Business Journal followed the story of Boeing for months, from its purchase of the Vought Aircraft Industries plant in July to the final announcement that

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North Charleston would be the location for the second 787 final assembly line.

The following special report continues to explore the economic, social, political and business-oriented impact the Boeing Co. promises for our community and state.

Inside Boeing buzz likely to pay off sooner and later..............................................................Page 6 For a moment, Boeing brought accord in Columbia......................................................Page 8 Wave of economic optimism ripples across state......................................................Page 12 Line worker had ‘significant’ impact on Boeing decision............................................Page 15 Building aircraft in Seattle takes 1 million lights and a little ‘magic’...........................Page 20 Facts about Boeing in Everett, Wash..........................................................................Page 21 Data analysis: Boeing merging into Lowcountry traffic..............................................Page 24 ReadySC mobilizes for aerospace training surge.......................................................Page 26 Viewpoint: The power of banding together.................................................................Page 47

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“Today’s announcement declares to the global business community that South Carolina is back in the game and open for business.”

– Bobby Harrell, Speaker of the S.C. House

“This is exciting news, and it shows that South Carolina continues to be one of the best places in the world to do business.”

– U.S. Sen. Jim DeMint, R-S.C.

“It would be BMW on steroids.”

– U.S. Sen. Lindsey Graham, R-S.C., speaking in a conference call before the final decision was announced

“This is a great day for the people and the businesses of South Carolina.”

– Jim Newsome, executive director, S.C. State Ports Authority

“This is the most important economic development project in our state’s history.”

– Leighton Lord, board chairman of Nexsen Pruet, which assisted Boeing in negotiating an incentive package

“This is a transformational day for South Carolina. We now launch ourselves into the aerospace industry in the 21st century.”

– Glenn McConnell, President Pro Tem of the S.C. Senate

“Yippee!”

– Mike Carter, local businessman, president and CEO of eGroup

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Nov. 9 - 22, 2009

special report: Boeing chooses Lowcountry for expansion

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special report: Boeing chooses Lowcountry for expansion

Nov. 9 - 22, 2009

Boeing buzz likely to pay off sooner and later Construction jobs, above-average wages among benefits Boeing will bring well into next decade

By Molly Parker, Mike Fitts and Ashley Fletcher Frampton

Grubb & Ellis | WRS Welcomes Boeing and their suppliers to Charleston, SC

The creative economy in our region welcomes Boeing and its innovative people.

I

n this tough economy, even the smallest economic achievements have been blasted through the megaphone as recession-weary businesspeople look to latch on to a sliver of hope.

So when Boeing chose Charleston for its second Dreamliner assembly line, the standard megaphone just wouldn’t do.

Suddenly, it seemed that no statement was overstatement.

“This is a life-changing event,” said Garry Neeves, vice president of business development for Regal Logistics, a thirdparty logistics provider that recently set up shop in Charleston.

Glenn McConnell, S.C. Senate president pro tempore and a Charleston Republican, called the announcement “transformational.”

But what, exactly, will be transformed?

And how many parallels can be drawn between this announcement and the state’s landmark economic development boon of the 1990s, the decision by German automaker BMW to locate a manufacturing facility in the Upstate?

Long term, short term

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Business and political leaders say Boeing’s plans for thousands of jobs will mean new demand for housing, increased income in circulation, additional suppliers in the area and a vote of confidence that could make other CEOs take notice of what the Lowcountry has to offer.

Some of that impact will be longterm.

More immediately, measurable changes include the expected infusion of construction jobs. Boeing is expected to break ground on the plant this month.

“That means Christmas to a lot of families,” Commerce Secretary Joe Taylor said.

Taylor alluded to other short-term impacts the Boeing buzz could give the local economy.

“Do you think the confidence, Mr. Mayor, is a little bit higher today?” Taylor asked Charleston Mayor Joe Riley — rhetorically — at a recent news conference.

“I bet the real estate market in Charleston got a jolt,” he said.

Local real estate experts agree that the news is great for their industry, but some are looking long-term for the “jolt.”

Boeing employees work on fuselage sections of the Dreamliner at the company’s plant near the Charleston International Airport. Boeing plans to build its new facility nearby. (Photo/Leslie Halpern)

“I don’t really see it coming for another year or two, when they finish building the plant and moving people here,” said Gettys Glaze, president of the Multiple Listing Service for the Charleston Trident Association of Realtors.

Glaze said the plan for thousands of new jobs is exciting and positive for his industry, but he added that the local market is still plagued by high inventory, low demand and unrealistic pricing. New jobs will help boost demand in the next few years, but the news isn’t an instant fix.

“The expectation of it turning around

Nov. 9 - 22, 2009

our market here in a year is unfounded,” Glaze said.

Patty Scarafile, CEO of Carolina One Real Estate, agreed, saying that people tend to buy homes when they feel secure about their jobs. But the bulk of the promised new jobs aren’t coming until the plant is built, which Boeing officials expect to be sometime in 2011.

Scarafile said construction jobs could help the local economy and real estate market sooner.

Another short-term win is the general optimism that the Boeing buzz has created locally.

“Consumer confidence plays a large part in decisions that people make,” Scarafile said, whether they are buying new homes or purchasing Christmas gifts.

Glaze said he hopes the optimism ringing through the community doesn’t exacerbate the problem of sellers listing their homes for the amount they need as opposed to what the market will bear.

“What I hope does not happen is it creates a false expectation for sellers out there,” he said.

Although it might be another year or more before Boeing begins hiring large numbers of workers, some executives are already seeking new homes in Charleston, Scarafile said. Carolina One is working with a third-party relocation company that is helping those employees.

“Actually, we’ve begun to see a few of the executives already exploring housing

special report: Boeing chooses Lowcountry for expansion

opportunities in Charleston,” she said.

“But we’re talking about single digits, not large numbers of moves at this point.”

The local commercial real estate market could also get a boost from Boeing’s plans, said Thomas Buist, senior vice president for industrial services at Grubb & Ellis WRS. He pointed out that the news came within weeks of TBC Corp.’s announcement of plans for a 1.1 millionsquare-foot tire distribution facility in Jedburg.

“We anticipate increased demand not only from suppliers but because these wins show we are competitive and a great state to do business in,” Buist said.

Ed Guiltinan, vice president of marketing and regional director for the Rockefeller Group Development Corp., one of the developers of the TBC Corp. facility, said Boeing’s plans will “dramatically increase Charleston’s recognition on a national basis as an industrial market.”

Guiltinan expects to see demand from Boeing suppliers for industrial and office space, starting soon and ramping up over time.

BMW as a benchmark

Many have said the Boeing announcement blows right past BMW’s investment in the Upstate in the 1990s, the move often cited as the standard for economic development in South Carolina.

“It would be BMW on steroids,” U.S. Sen. Lindsey Graham, R-S.C., said of the

Boeing investment before the final decision was announced.

But although Boeing might be another game-changer for the state, the game could play out differently, said Doug Woodward, an economist at the University of South Carolina.

Woodward performed a study for Boeing about the company’s potential impact, the details of which it has not cleared for release. Woodward also has studied the breadth of BMW’s economic benefit to the state.

They’re both huge investments in South Carolina, he said. But the aviation business is markedly different from auto manufacturing, and growth likely will take shape differently.

BMW required some of its suppliers to relocate to the state, which is not part of Boeing’s plan. It has been building an international supplier network for the Dreamliner for several years.

There should be some new businesses that follow Boeing into the state, as well as some expanded work for existing manufacturers such as the tiremaker Michelin, Woodward said, but it’s not likely to be such a surge as BMW brought.

“We do have a large manufacturing base who could move what they do in this direction,” Woodward said.

Boeing could drive growth by locating additional aircraft assembly projects in North Charleston in years to come. “That has huge potential,” Woodward said.

www.charlestonbusiness.com 7

That potential is raising concern in Washington state over the move to South Carolina, he said. He noted that BMW has changed the vehicles that it has made in Greer while greatly increasing its overall investment in the state.

Since the first vehicles rolled off BMW’s assembly line in 1994, the plant has expanded from 1 million square feet to 4 million square feet. The number of employees has soared from 600 when the plant opened to about 5,000 today. Five models have been built in the plant, and annual production will grow to about 200,000 vehicles a year when a current $750 million expansion is completed.

Charleston-specific gains

Most of the benefits of Boeing, including new jobs that will pay considerably more than the state average, will be felt in the Charleston area, Woodward said.

Charleston’s economy will become more diverse, he said. Several of the area’s largest economic engines, such as tourism and real estate, are tied tightly to the business cycle. Aviation tends to ignore the ups and downs of the economy, and that will provide stability.

“It will add to the strength of Charleston,” he said.

But Woodward pointed out that the Charleston area aviation cluster’s future is tied to the success of the Dreamliner.

“Ultimately, it’s up to the demand for the airplane,” he said. cr bj

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special report: Boeing chooses Lowcountry for expansion

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For a moment, Boeing brought accord in Columbia

By Mike Fitts

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Nov. 9 - 22, 2009

erman, in particular. But he pointedly praised Leatherman’s leadership in the effort, noting that Taylor had also .C. lawmakers spent an afternoon praised the hard work of the Senate in Columbia preparing for a major Finance Committee chairman in securnew investment in the state, not ing the deal. And in a turnaround from knowing for sure whether the unspo- past complaints about Leatherman and ken target of their the Legislature, Sanford even went so far efforts — Boeing as to declare the chairman’s work good Executive — would really stewardship of tax dollars. summary bring the new 787 For his part, Leatherman said, “LegisPast combatants assembly line here lators from every part of the state pulled in the Statehouse instead of putting together for the good of this state.” made sure to it at its traditional Taylor himself had received an ovaemphasize how they Washington man- tion from the S.C. Senate after being came together as a ufacturing base. recognized in the gallery. That’s a far cry team to help land The S.C. House from the pointed criticism he has taken 787 assembly line. stood “at ease” from legislators. for hours on Oct. Leatherman had been one of Taylor’s 28 while lawmakers awaited the official most pointed and public critics. But in word. Despite the passage of the invest- an interview after the Boeing announcement incentives bill, it was not a sure ment, his tone was markedly different. thing that Boeing would pick North “Joe Taylor, the Commerce secretary, put Charleston, Senate President Pro Tem- his heart and soul in this,” Leatherman pore Glenn McConnell said. said. “He’s done a superb job.”

“This morning, there was no deciThe governor said that the cooperasion,” the Charleston Republican said tion in the Boeing pursuit shouldn’t be that day. considered surprising, even given that Shortly before 5 p.m., key state lead- talk of impeachment is still making the ers got the official good rounds in Columbia. news from a Boeing In fact, a resolution for “Legislators from representative who was impeachment was ruled in a back office at the out of order during the Statehouse; there also every part of the state same session that prowas a phone connecduced the incentives tion with Boeing lead- pulled together for the legislation. ership. Right at 5 p.m., “There’s a history in good of this state.” South both houses went into Carolina on ecosimultaneous session to nomic development of Sen. Hugh Leatherman joyfully announce the Senate Finance Committee chairman people coming togethgood news. er,” Sanford said. The It prompted a most “very, very significant” unusual scene for Columbia during Gov. benefits of winning the Boeing project Mark Sanford’s administration: Legisla- pushed all disputes immediately to the tive and executive branch leaders work- background, he said. ing hard to praise each other for their Powerful infrastructure teamwork in the effort to land Boeing.

The successful result shows that South Disputes pushed aside Carolina’s power structure can funcSanford made a point of publicly con- tion well when it sees the need, said gratulating McConnell and Sen. Hugh Leighton Lord, an attorney for Nexsen Leatherman, R-Florence, with whom he Pruet, which represented Boeing in the often has been at loggerheads, outside incentive negotiations. The state badly the Senate chamber after the announce- needed such an economic win, and leadment. He cited “incredible” teamwork ers came together to get it, he said. between the lawmakers and the staff of “I think they all realized that, and they the S.C. Commerce Department, includ- got it done,” Lord said. ing Secretary Joe Taylor.

Lord said that, as a South CarolinSanford acknowledged that he had See ACCORD, Page 10 ➤ crossed swords in the past with Leath-

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Nov. 9 - 22, 2009

special report: Boeing chooses Lowcountry for expansion

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ACCORD, continued from Page 8

special report: Boeing chooses Lowcountry for expansion

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ian and apart from the firm’s role with Boeing, he appreciated seeing the teamwork. “We’re all better off when the legislative and executive work together,� Lord said. That teamwork helped South Carolina win over Boeing, along with what he called “the kind of pro-business environment I don’t think they have in Washington state,� Lord said.

Leatherman’s prowess on money matters as Finance Committee chairman played a particularly strong role in getting the right legislative package together, Lord said. “Sen. Leatherman is a master of what goes on in that committee,� Lord said.

He also noted the leadership of McConnell and House Speaker Bobby Harrell, R-Charleston, in getting their respective legislative bodies to approve the incentives.

Lawmakers had been working since August to get the deal ready, McConnell and Leatherman said, and they might well have brought the Legislature back to town for it, even if they hadn’t already needed to reconvene to pass unrelated unemployment legislation.

Rep. Paul Campbell, R-Goose Creek, said he met with Boeing company leaders to assure them that South Carolina’s work force could step up to the challenge of building the 787. Campbell, a retired

Gov. Mark Sanford signs the incentive package for Boeing to build a new plant in North Charleston as state and federal officials share the moment with him. (Photo/Courtesy of the Governor’s Office)

Alcoa executive who has managed plants here and in Washington state, said he used that experience in the discussion. “It was a leap of faith for Boeing to come here,� Campbell said.

Another success for legislative leaders, Lord said, was in keeping the proceedings quiet as talks went forward. “I give the whole Legislature credit,� Lord said.

Economic soil conditions

Sanford has sometimes in the past been a critic of tax incentives for busi-

nesses, but his office was in the loop throughout the making of this deal, through Taylor.

He said he doesn’t see a contradiction between such a sweeping incentives package and his philosophical view that much of job creation should come simply from making sure the state is economically competitive. “I feel that each one is what it is,� Sanford said.

Overall job creation still comes mostly from small businesses, he said, includ-

Nov. 9 - 22, 2009

ing current employers adding workers a few at a time.

The emphasis on South Carolina’s economic climate helped make possible the landing of such a big investment as Boeing, he said. “If our soil conditions weren’t right, you could offer anything you want to Boeing� and not attract them, Sanford said.

If Boeing’s investment in South Carolina produces anything like the economic impact of BMW, it’s likely to be seen as a huge part of the legacy of Sanford’s two terms as governor.

That seems especially incongruous when considering the political maelstrom surrounding Sanford as this deal has been on the negotiating table and his past battles with many of the key players. The travails of this summer, Sanford said, have taught him that “it really isn’t about me.�

Thousands of people will have a shot a better employment at Boeing, he said, and that’s a much more consequential development in the world than his own political fate.

Sanford said that political pundits will outline his legacy, and he thinks of it as something he cannot worry about given the tumult in his own life. Compared to that, the governor said, “all things fade in importance.� cr bj

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he gears started turning as soon as Boeing Co. announced its plans to locate in South Carolina.

Clemson University quickly identified contacts at the aircraft Executive maker’s research and development office, summary with an eye toward Aircraft maker a partnership simiputs South Carolar to the university’s lina on the map; multimillion-dollar economic develInternational Cenopers and univerter for Automotive sities across state Research. look to capitalize.

The Upstate Alliance, meanwhile, put together a list of all the suppliers in the Boeing 787 chain.

“We know who they are, and we’re going to go after them,” alliance CEO Hal Johnson said. “I think you will find many, many announcements related to this Boeing announcement.”

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Not only could Boeing bring new suppliers into South Carolina, its presence could create new opportunities for manufacturers already located here, said Ed McCallum, of McCallum Sweeney Consulting, which assisted Boeing when the company was deciding where to locate its first 787 plant.

“This makes sense for Boeing,” he said.

The Midlands has several advanced manufacturing firms that can support the aviation industry as well, said David King, director of marketing and new industry for the Central South Carolina Alliance.

McCallum rattled off some wellknown corporate names as potential beneficiaries of the Boeing announcement in the short term. Michelin North America supplies aircraft tires. General Electric already builds turbine blades for the 787 at its facility in Greenville and develops aircraft engines at other facilities. Cytec Industries makes carbon fibers for the aerospace industry.

He also mentioned American Titanium Works, which plans to build a $422 million facility in Laurens County and an accompanying R&D center

at CU-ICAR. Originally, the company didn’t plan to supply titanium to the aviation industry, said McCallum, who also assisted American Titanium in its site selection. That could change, McCallum said, and if it does, American Titanium could attract even more suppliers to the Upstate.

“The competitive advantage up here will be in advanced materials,” McCallum said.

Research and Development

That’s an advantage on which Clemson hopes to capitalize, as well. The university’s growing Advanced Materials Center in Anderson is conducting research on composite materials that could be used in the aerospace industry, said John Ballato, associate vice president for research and economic development at Clemson.

And the S.C. Research Authority is building an Innovation Center there, where young startup companies will be working to bring new advanced materials to the market.

Boeing’s planned investment in South Carolina “bodes well for us going back to the corporate office and seeing if there are some potential R&D partnerships with the university that could help them accelerate their return on investment in this state,” Ballato said.

He referred to CU-ICAR as one of two bookends for Clemson. The other would be a partnership with Boeing.

At CU-ICAR, BMW Manufacturing, Timken Co., Michelin North America and others have invested millions in research.

As soon as Ballato heard the news about Boeing, he contacted an old friend who once worked for Boeing’s R&D department.

“He can help identify the right people at Boeing to contact,” Ballato said. “Clemson does have and is continuing to build up its assets in Charleston, too.”

That includes the Restoration Institute at the former Navy Base in North Charleston, the H.L. Hunley submarine and Clemson Conservation Center, as well as a growing partnership with the Medical University of South Carolina, Ballato said.

“Those don’t necessarily relate to Boeing, but we have a presence in Charleston that is starting to grow and bear fruit,” he See OPTIMISM, Page 14

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Nov. 9 - 22, 2009

special report: Boeing chooses Lowcountry for expansion

www.charlestonbusiness.com 13

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special report: Boeing chooses Lowcountry for expansion

Nov. 9 - 22, 2009

A car chassis moves down the assembly line at the BMW automotive plant in Greer. When BMW came to South Carolina, it changed the shape of manufacturing in the state, attracting several feeder industries and sparking a research and development cluster in the Upstate. (Photo/James T. Hammond) OPTIMISM, continued from Page 12

â&#x17E;¤

said. â&#x20AC;&#x153;As a land-grant university, we do have a responsibility to the entire state.â&#x20AC;?

Small state

Economic developers are quick to point out that North Charleston is a short drive from any part of the state â&#x20AC;&#x201D; four hours at the most. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re already looking at how much it costs to get product there,â&#x20AC;? said Johnson, of the Upstate Alliance. â&#x20AC;&#x153;A project of this size is truly going to affect the entire state.â&#x20AC;?

And the Midlands has several shovelready industrial sites and available buildings within a 45-minute drive of the Boeing site, said King, of the Central South Carolina Alliance.

The military installations in central South Carolina offer the trained aircraft mechanics that Boeing and other aviation companies will need, he said, and the local universities and technical colleges can supply graduates to the industry. â&#x20AC;&#x153;I can assure you that there are a few more companies in and around the Puget Sound contemplating a move to South

Carolina,â&#x20AC;? he said of the area where Boeingâ&#x20AC;&#x2122;s Washington facility is located. â&#x20AC;&#x153;I would expect that Boeing will have a supplier symposium in the near future, and perhaps at that time we will have the opportunity to meet these companies,â&#x20AC;?

King said. â&#x20AC;&#x153;In the meantime, we will begin to develop a strategy that will market our regionâ&#x20AC;&#x2122;s assets to these suppliers.â&#x20AC;?

King, Johnson and McCallum all mentioned the marketing power that Boeing will bring. â&#x20AC;&#x153;This is national news. South Carolina is back on the map again,â&#x20AC;? McCallum said, noting that South Carolina has lost its share of economic development projects recently. â&#x20AC;&#x153;Nobody knows those stories and nobody can really talk about them. People can say â&#x20AC;&#x2DC;South Carolina is off its game.â&#x20AC;&#x2122; South Carolina is not off its game. You donâ&#x20AC;&#x2122;t win something like this if youâ&#x20AC;&#x2122;re not on your game. â&#x20AC;&#x153;Rolls-Royce looked at Greenville a while ago and went to Virginia,â&#x20AC;?

McCallum said. â&#x20AC;&#x153;I bet they wish they had changed their mind.â&#x20AC;? cr bj

Reach Scott Miller at 864-235-5677, ext. 29.

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special report: Boeing chooses Lowcountry for expansion

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Nov. 9 - 22, 2009

Line worker had â&#x20AC;&#x2DC;significantâ&#x20AC;&#x2122; impact on Boeing decision

By Molly Parker

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efore Gov. Mark Sanford signed Boeingâ&#x20AC;&#x2122;s incentive deal, politicians gathered for a round of congratulatory backslapping â&#x20AC;&#x201D; they even shared some hugs â&#x20AC;&#x201D; as the key players in the deal were named and congratulated.

For Dennis Murray, it was just another day at work in his job as a quality inspector at Boeing Charleston. His name was never called. Yet the Summerville man charged with guaranteeing the workmanship on the line likely deserves as much credit for the Boeing deal as anyone.

He wasnâ&#x20AC;&#x2122;t at the table for the highstakes negotiations. And Murray said his decision to seek a decertification election of the local Machinists union had nothing to do with helping nab the second 787 assembly line. He was simply angry.

Perhaps Murrayâ&#x20AC;&#x2122;s role in the stateâ&#x20AC;&#x2122;s largest economic deal in history was only happenstance â&#x20AC;&#x201D; but it was key nonetheless.

In selecting North Charleston for the second line, Boeing officials said their decision was driven by a need to diversify operations outside the Puget Sound area of Washington. The North Charleston plant will supplement the Dreamliner assembly operation in Everett, but it also provides Boeing with a backup plant in the event that workers in Washington strike again.

Boeing Charleston Vice President Tim Coyle said the end goal is to have a local facility that could produce Dreamliners even if operations are shut down in the Northwest.

The Dreamliner program, already months behind schedule, saw an additional delay last year when workers in Everett walked off the job for two months.

Until September, the International Association of Machinists and Aerospace Workers also represented Boeing workers in North Charleston. Murray didnâ&#x20AC;&#x2122;t act alone in the decertification effort, but he was the face and voice of the movement. â&#x20AC;&#x153;I was the biggest and the loudest,â&#x20AC;? he said.

After Sanford signed Boeingâ&#x20AC;&#x2122;s incentive package into law, the governor was asked about Murrayâ&#x20AC;&#x2122;s role in the deal. A smile stretched across his face; he was slow to formulate a response. â&#x20AC;&#x153;Generically, what the workers at Boe-

(Photo/Leslie Halpern)

â&#x20AC;&#x153;When they pulled a fast one and said, â&#x20AC;&#x2DC;Tough â&#x20AC;&#x201D; you have to live with us,â&#x20AC;&#x2122; a couple of us started figuring out how we could get rid of the union.â&#x20AC;?

Dennis Murray quality inspector, Boeing Charleston

ing have done and continue to do had a significant impact,â&#x20AC;? Sanford said.

Asked specifically whether the workersâ&#x20AC;&#x2122; decision to oust the union helped stack the cards in Charlestonâ&#x20AC;&#x2122;s favor, Sanford said: â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m not saying it was that, but you know what Iâ&#x20AC;&#x2122;m saying.â&#x20AC;?

Murray said he had no idea that North Charleston was in the running for a second assembly plant when he set into motion the chain of events that scrapped IAM Local 787.

Murray said he and several of his colleagues thought the Machinists union had negotiated a rotten deal with Vought Aircraft Industries, from which Boeing purchased the fuselage assembly plant in July. â&#x20AC;&#x153;The union was so hot and heavy to See UNION, Page 18

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special report: Boeing chooses Lowcountry for expansion

Nov. 9 - 22, 2009

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Nov. 9 - 22, 2009

with Boeing. Fifteen minutes after the sale transaction closed, Candie Murray faxed plant their flag, they basically accepted the petition for a decertification vote to the initial contract that Vought pro- the National Labor Relations Board while posed,â&#x20AC;? Murray said on a recent Sunday Dennis Murray was at work. afternoon in Summerville.

On Sept. 10, Boeing employees in the He and his wife, Candie, who rode collective bargaining unit voted 199-68 to into the Atlanta Bread Co. parking lot on kick out the 2-year-old union local. a motorcycle, drank coffee and smoked This vote of no confidence in the cigarettes while explaining how and why union came despite a strong effort by they worked as a team to overturn the Machinists to convince employees that a union. Candie Murray does not work for union presence would translate into betBoeing, but she helped her husband with ter working conditions. Union representhe paperwork. tatives pitched their cause to employees Dennis Murray said workers were in a door-to-door campaign. The union upset because â&#x20AC;&#x201D; in the unionâ&#x20AC;&#x2122;s eagerness highlighted wage differentials between to sign a contract â&#x20AC;&#x201D; a handful of mem- workers in Charleston and Everett as one bers voted for a deal that stripped the selling point.

300 or so workers it covered of benefits â&#x20AC;&#x153;These workers and this state have a previously in place. To usher in the deal, lot more going for them than just being the union called an emergency meeting cheaper than everyone else,â&#x20AC;? Bob Wood, in early November that the majority of spokesman for the Machinists unionâ&#x20AC;&#x2122;s workers in the collective bargaining unit 14-state Southern district, said at the never knew about. time.

Only 13 people attended, according to Shortly after the decertification vote, another employee who was present for Boeing awarded employees a 3% acrossthe vote. The contract was ratified on a the-board raise.

12-1 vote one business day before Vought Today, workers at the former Vought announced it was shutfacility earn about $15 ting down its assembly and change, Murray line for several months â&#x20AC;&#x153;These workers and this said. According to the and furloughing most contract available on state have a lot more the IAM Local 751 assembly line workers. â&#x20AC;&#x153;When they pulled Web site, a Grade 1 a fast one and said, going for them than just worker in Everett is â&#x20AC;&#x2DC;Tough â&#x20AC;&#x201D; you have to paid between $12 and being cheaper than live with us,â&#x20AC;&#x2122; a couple of $17 an hour. us started figuring out At Grade 3, employeveryone else.â&#x20AC;? how we could get rid ees make between $14 of the union,â&#x20AC;? Murray and almost $30 an Bob Wood said. hour. spokesman, Machinists union He said that, under Grades are deterSouthern district the contract, workmined by a mix of ers lost weekend and seniority and skill level. shift differential pay, as well as the ability The average worker in Everett makes to take vacation in half-day increments. about $26 an hour, according to newspaVought was as surprised as the major- per reports. At the top of the wage scale, ity of the work force that the union had a skilled laborer can make as much as accepted the deal, the specific terms of $36.89 per hour. which neither the company nor the union There is no wage scale in place at the disclosed.

Boeing Charleston plant. Workers receive At the time, Vought said the agree- almost identical wages, regardless of ment â&#x20AC;&#x153;includes terms and conditions experience or seniority. substantially similar to those in effect at Murray said most Boeing employees the time of the unionâ&#x20AC;&#x2122;s certification.â&#x20AC;? The are taking a wait-and-see attitude conthree year contract, one employee said, cerning what Boeing will do regarding called for 1.5% annual pay raises. wages after the first of the year.

Vought was paying all line workers He expects a minimum and maximum roughly $14 an hour, Murray said. scale, and a ladder that can be climbed Union representatives said the vote with seniority and experience. Murray, a was critical to ensuring callback rights by retired Air Force mechanic, said it doesnâ&#x20AC;&#x2122;t seniority when the Vought plant geared make sense that kids fresh out of high back up. But Murray said the plant was so school earn the same wage as someone young that seniority was a nonissue. with decades of experience.

He wanted a decertification vote â&#x20AC;&#x153;It doesnâ&#x20AC;&#x2122;t mean I expect to get dinimmediately, but he was told that such a ner served on a gold platter,â&#x20AC;? Murray said. vote could take place only from 60 to 90 â&#x20AC;&#x153;But if they want to get and retain good days before the three-year contract was to people, the only way theyâ&#x20AC;&#x2122;re going to do expire in 2011. that is to be competitive.

That window was moved up after Boeâ&#x20AC;&#x153;If they treat us like dumb hicks from ing acquired the Vought facility in a $1 the sticks, weâ&#x20AC;&#x2122;ll go elsewhere.â&#x20AC;? billion deal on July 30, because the contract had to be opened and renegotiated Reach Molly Parker at 843-849-3144.

Union continued from Page 16

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Nov. 9 - 22, 2009

special report: Boeing chooses Lowcountry for expansion

www.charlestonbusiness.com 19

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special report: Boeing chooses Lowcountry for expansion

Nov. 9 - 22, 2009

Building aircraft in Seattle takes 1 million lights and a little â&#x20AC;&#x2DC;magicâ&#x20AC;&#x2122;

By Molly Parker

tered commercial aircraft maker, traces those employees report to work for one of its Washington roots to 1910. That year, three continuous shifts at the Everett site.

William Boeing purchased a shipyard in The campus, which sits on roughly 100 PUGET SOUND â&#x20AC;&#x201D; From the balco- Seattle on the Duwamish River. It later acres, is permitted to hold a little more ny, looking down onto the Dreamliner became his first airplane than 30,000 employees at assembly line in Everett, it appears as factory. any given time. Four Boethough tiny Lego men and women are Today, Boeingâ&#x20AC;&#x2122;s manu- â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m angry. Iâ&#x20AC;&#x2122;m sad. ing commercial airplane piecing together larger-than-life flying facturing facility at its are produced Iâ&#x20AC;&#x2122;m disappointed. models machines.

Everett campus holds a there: the 747, 767, 777 â&#x20AC;&#x153;To this day, it still blows my mind,â&#x20AC;? Guinness World Record 787. Each assembly Iâ&#x20AC;&#x2122;m frustrated. Iâ&#x20AC;&#x2122;m and said Mary Hanson, who, like so many as the largest building in line has its own restaurant. others in the Northwest, followed in a the world by volume. It is 787 workers have the all of those things The family memberâ&#x20AC;&#x2122;s footsteps at the Boeing so large that, according to Dreamliner Cafe. Across Co. a widely circulated rumor, wrapped into one.â&#x20AC;? the way, â&#x20AC;&#x153;Triple 7â&#x20AC;? workShe works in Boeingâ&#x20AC;&#x2122;s corporate com- storm clouds once formed ers dine at the Twin Aisle munication office, assigned to the Dream- inside the facility.

Cafe.

Christine Gregoire liner. Her father was a Boeing engineer.

Hanson said she had â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s like a small city Washington governor After 18 years with the company, she heard, but couldnâ&#x20AC;&#x2122;t conhere,â&#x20AC;? Hanson said. said itâ&#x20AC;&#x2122;s still mind-boggling watching the firm, the tale about it rainWorking alongside the airplanes getting pieced together. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s ing inside. But itâ&#x20AC;&#x2122;s a big building, by any skilled laborers who stitch the planes magic.â&#x20AC;? measurement. Among the confirmed together are support staffers in a variAlthough it is a huge victory for the facts, Boeingâ&#x20AC;&#x2122;s Everett facility is so large ety of jobs, including human resources state, South Carolina will claim only that it requires its own fire department, management, engineering and weather a sliver of Boeing, compared with the security force, fully equipped medi- watching. Natural disasters around the companyâ&#x20AC;&#x2122;s presence in Washington. The cal clinic, electric substations and water globe could disrupt production or destroy Puget Sound area is steeped in Boeing treatment plant. pricey components - for example, Boeing tradition.

Boeing employees monitor tsunami warnings in SUN170409_D:Layout 1 11/3/09 6:48 PM Page 1 employs about 73,000 workThe company, the only U.S.-headquar- ers in all of Washington. The majority of Japan, where the Dreamlinersâ&#x20AC;&#x2122; wings and main landing gear wheel wells are made, and they track hurricanes off the coast of South Carolina, where fuselage sections are built.

What Boeing workers are not officially tracking is the surge of discontent that washed over Washington after Boeing selected North Charleston for its second Dreamliner assembly line. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m angry. Iâ&#x20AC;&#x2122;m sad. Iâ&#x20AC;&#x2122;m disappointed.

Iâ&#x20AC;&#x2122;m frustrated. Iâ&#x20AC;&#x2122;m all of those things wrapped into one,â&#x20AC;? Washington Gov. Christine Gregoire said in a televised news conference after the announcement.

But why? Boeingâ&#x20AC;&#x2122;s decision is expected Sunland Distribution is one of the largest to deliver an economic boom to the Lowthird-party logistics companies in the country, but the aerospace manufacturer Southeast, providing warehouse services, will continue on as a bright spot in the Puget Sound economy on a scale that transportation management services and Charleston is not likely to ever realize full supply chain consulting servicesâ&#x20AC;&#x201D; after all, there are 1 million lightbulbs in and all from right here in Charleston. the Everett factoryâ&#x20AC;&#x2122;s ceiling.

At full buildout in North Charleston, Tailored Warehousing & LogisticsBoeing is likely to employ about 6,000 Always a Better Fit! workers between its new assembly line and two existing fuselage plants.

John Monroe, a retired Boeing executive, said Seattleitesâ&#x20AC;&#x2122; angst is about more than just Boeingâ&#x20AC;&#x2122;s decision to locate the second assembly line outside of the state; itâ&#x20AC;&#x2122;s an overall concern that the compaDistribution, Inc. nyâ&#x20AC;&#x2122;s relationship with the Northwest is 800.295.0081 strained, he said. â&#x20AC;&#x153;We are really depressed up here in mparker@scbiznews.com

Location Is Everything.

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See SEATTLE, Page 22

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Nov. 9 - 22, 2009

special report: Boeing chooses Lowcountry for expansion

www.charlestonbusiness.com 21

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Boeingâ&#x20AC;&#x2122;s building by the numbers Dimensions of the Everett site â&#x20AC;˘ 1,025 acres, including 215 acres of paved yards and parking. â&#x20AC;˘ 282 acres of building area. â&#x20AC;˘ Parking stalls for up to 20,000 vehicles. â&#x20AC;˘ Permitted to hold up to 33,500 people at any one time.

Site development â&#x20AC;˘ 42-acre factory building completed in 1968 to build the 747. â&#x20AC;˘ Expanded by more than 45% in 1980 to house the 767 assembly line. â&#x20AC;˘ Expanded by an additional 50% in 1993 for 777 assembly.

Factory â&#x20AC;˘ Largest building in the world by volume as recognized by Guinness World Records. â&#x20AC;˘ 114 feet, 2 inches tall. â&#x20AC;˘ North to south 1,614 feet; east to west 3,500 feet. â&#x20AC;˘ Four hangar doors are 300 feet by 81 feet, and two hangar doors are 350 feet by 81 feet â&#x20AC;&#x201D; approximately the size of an American football field. â&#x20AC;˘ Largest digital graphic in the world (mural) on the south side of the factory building, as recognized by Guinness World Records â&#x20AC;&#x201D; more than 100,000 square feet. â&#x20AC;˘ 472 million cubic feet. â&#x20AC;˘ 4.3 million square feet. â&#x20AC;˘ 2.2 miles of outside wall. â&#x20AC;˘ 98.3 acres. â&#x20AC;˘ 75 NFL football fields could fit inside. â&#x20AC;˘ 911 NBA basketball courts could be accommodated. â&#x20AC;˘ 2,142 average-size homes (2,000 square feet) could fit inside. â&#x20AC;˘ 2.33 miles of pedestrian tunnels run below the factory. â&#x20AC;˘ No climate control: In winter, machinery, body heat and residual heat from lights keep it warm; in summer, the doors are opened to cool the building.

The paint â&#x20AC;˘ Three paint hangars, each humidityand climate-controlled. â&#x20AC;˘ It takes approximately four to seven days to paint an airplane. â&#x20AC;˘ Approximately 120 gallons of paint are used on a typical 747; 90 gallons on a 767; and 110 gallons on a 777. â&#x20AC;˘ Paint adds between 600 and 1,200 pounds of weight.

Factory transportation â&#x20AC;˘ 26 overhead cranes cruise on 39 miles of networked tracks; their combined lifting capacity is 1.9 million pounds. â&#x20AC;˘ 747/767 cranes can lift 34 tons; 777 cranes can lift 40 tons. â&#x20AC;˘ More than 100 forklifts operate throughout the factory. â&#x20AC;˘ About 45,000 crane lifts are made per month.

Railroad â&#x20AC;˘ 5.6% grade â&#x20AC;&#x201D; steepest active grade in the northern hemisphere. â&#x20AC;˘ 33,000-square-foot rail terminal building, built in 1992 to unload parts. â&#x20AC;˘ Up to 15 railcars a day deliver parts to the Everett factory.

Other â&#x20AC;˘ The Everett site recycles enough material monthly to fill more than nine 747-400 freighters. â&#x20AC;˘ Stormwater is controlled through a system of engineered wetlands and holding ponds â&#x20AC;&#x201D; the largest of which can hold 20 million gallons, enough to float an ocean-going ship. â&#x20AC;˘ As one of the major tourist attractions in Washington state, the Future of Flight Aviation Center and Boeing Tour is open year-round. The center opened in December 2005 and is expected to host more than 200,000 visitors annually.

Source: Boeing Co.

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special report: Boeing chooses Lowcountry for expansion

www.charlestonbusiness.com

SEATTLE, continued from Page 20

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Washington,” Monroe said.

In 2001, the company moved its official headquarters to Chicago. Monroe, who is now a volunteer with the Snohomish County Economic Development Council, said he wonders what’s next to go.

“I really, truly believe that it will be the beginning of the end, that when the next model decisions are made, they won’t be here,” Monroe said.

Monroe was program manager with the 777 line at his retirement in 2003. He had a great run, he said.

“You don’t spend 37 years doing that and just turn it off,” he said. “My pride, it will go on forever.

“I just think it’s sad that if they do leave here, that the experience and what I felt as a Boeing employee won’t exist for the next generation. That’s the real sad part.”

Snohomish County Executive Director Aaron Reardon encouraged Washington residents not to point fingers and place blame, though that’s exactly what has happened. Seattle-area fingers have been pointed at each other, at the union, at the company and at South Carolina.

Washington’s Machinists union and Boeing were engaged in contract negotiations until the day before Boeing announced it would expand in North Charleston.

In a news conference after Boeing’s

Workers in Everett, Wash., piece together one of the first 787s built for a customer. (Photo/Molly Parker)

announcement, Local 751 President Tom Wroblewski called the company’s talks with the International Association of Machinists and Aerospace Workers “a smoke screen” and a “bargaining chip to extort a bigger tax handout” from South Carolina.

Monroe said he wondered whether Boeing’s decision was a long time coming because of the rocky relations between Machinists and the company. In 20 years, workers in Everett have gone on strike four times.

“I wouldn’t put it beyond them to put that facility down there almost as a lesson, albeit a very expensive lesson, to get

the attention of labor,” Monroe said.

Reardon said it’s time for the Puget Sound region to take a closer look at what prompted Boeing’s decision, “so that we may play a role in rebuilding this relationship,” between the union and company.

Hal Fitzgerald, an industrial electronics technician in the company’s maintenance division in Everett, said Boeing managers have been holding meetings with employees in recent days. They have assured workers that Boeing will continue to operate full force in Everett.

Workers have been informed that Boeing will build a Dreamliner “surge” assembly line there, which could even-

Nov. 9 - 22, 2009

tually be turned into a third plant if 787 orders dictate a need, Fitzgerald said.

He said not every Everett worker is irate about the deal.

Fitzgerald, originally from Georgia, said he was drawn to Seattle because he wanted a career in the aerospace industry.

“Growing up, I wanted to be an astronaut, blasting off into space. All young men wanted that,” he said.

Fitzgerald worked for Boeing for three years before joining an apprenticeship program to increase his skill and earn a higher pay grade. At the end of the fiveyear company program, the job he wanted was not available because he lacked the appropriate seniority.

But Fitzgerald was so committed to staying with Boeing that he spent a full year as a janitor. And four years ago, he was transferred into his current job.

“I am a union member and I disagree with the Boeing Co. choosing to send it down,” Fitzgerald said. “That’s because you kind of have to root for your home team. But, at the same time, I understand why Boeing did it. I try to see it from both sides.

“You have to have a little faith in the process, too. That doesn’t mean you’re blind to the whole scheme of things, but you have to put your shoulder to the grindstone and give it all you’ve got.” cr bj

Reach Molly Parker at 843-849-3144.

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special report: Boeing chooses Lowcountry for expansion

Nov. 9 - 22, 2009

www.charlestonbusiness.com 23

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www.charlestonbusiness.com

special report: Boeing chooses Lowcountry for expansion

Nov. 9 - 22, 2009

Boeing merging into lowcountry traffic*

I

Commuting to Boeing … from everywhere

t’s hard to put Boeing’s 3,800 new jobs into a Lowcountry frame without a little head-scratching. Will it bring thousands more homes? Will restaurants sell millions more meals? Can I buy a bigger house now? The Business Journal wanted to offer some context for the recent announcement, so we asked data analysis company eSite Inc. to help.

We asked them to look at the impact the Boeing plant — when at peak hiring capacity — will make on one small segment of our economy that everyone seems to care a lot about: Cars and traffic. Here’s what eSite found.

7,043 more cars on the road

If these percentages hold true, this map — showing daily drive times from various ZIP codes to the Boeing plant on International Boulevard — could indicate where the 3,800 new Boeing workers might live. That has implications for health care, schools, recreational activities, real estate, retail sales and other economic drivers.

Less than 15 minutes: 27% 15 to 30 minutes: 37% 30 to 60 minutes: 27% Greater than 60 minutes: 9% Source: Data and analysis provided by eSite Inc., www.esite-usa.com

The average household in the income range of a Boeing worker will have 1.9 cars. At 3,800 new jobs, that represents 7,043 additional cars on the road. Source: EASI Analytic Software Inc.

1,761 new cars sold each year The average household for a Boeing employee will likely have 1.9 cars and will likely keep those cars an average of 49 months. This means that, of the 7,043 additional cars on the road, about 1,761 every year will be new. Source: R.L. Polk

Considering the life span of a set of tires, there will be 28,172 new tires sold every four years to those Boeing workers. That equals 1,760 sets of tires every year, at about $480 per set. Additional source: wisegeek.com

Okay, so those Boeing employees who are driving are not just going to work. Figure that some of those trips will be to partake of Charleston’s world-class food and beverage establishments. While not making too large of a distinction between fast food and four-star dining facilities, the data analyzers determined that Boeing’s new work force will purchase nearly 80,000 meals a year and spend an average of $1,048 each year eating out.

*Editor’s note: In providing this data analysis, the Business Journal made some general assumptions about average wages, current drive times in the Charleston market and the average cost of meals.

This information is based on what is known now and cannot take into account all the likely variables; therefore it should be considered informational and not an economic forecast.

Source: Information and analysis provided by eSite Inc., www.esite-usa.com

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special report: Boeing chooses Lowcountry for expansion

www.charlestonbusiness.com 25

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special report: Boeing chooses Lowcountry for expansion

www.charlestonbusiness.com

Nov. 9 - 22, 2009

ReadySC preparing work force training plan

By Molly Parker

On behalf of the cities and towns of South Carolina, the Municipal Association of South Carolina welcomes BOEING.

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mparker@scbiznews.com

echnical college officials are scoping out several buildings in the Charleston region that could serve as a training center for Boeing as the company plants its Dreamliner assembly line here. â&#x20AC;&#x153;We do have contingencies, some preliminary plans, in case certain things happen,â&#x20AC;? said Jim Maxon, the area director for ReadySCâ&#x20AC;&#x2122;s Charleston division.

Maxon said he couldnâ&#x20AC;&#x2122;t talk about which buildings were under consideration because of ongoing negotiations.

He did say they are located outside of Trident Technical Collegeâ&#x20AC;&#x2122;s main footprint in North Charleston.

ReadySC is a state-funded work force training program that operates under the umbrella of the S.C. Technical College System. Locally, the program trains a variety of skilled laborers from several companies that have a large local presence. The program has been utilized by Bosch Corp., DuPont and Venture Aerobearings, just to name a few Maxon said that Boeing has not yet approached ReadySC about its work force training needs related to the Dreamliner assembly plant.

Those discussions are likely to take place soon, Maxon said, but itâ&#x20AC;&#x2122;s a bit premature for a finalized plan. Tim Coyle, vice president of Boeing Charleston, said production is expected to start up around mid-2011, with delivery of the first airplane targeted for 2012.

The school is scoping out potential buildings so Trident can quickly stand up a facility in case Boeing needs one in short order. Coyle said about 1,100 assembly line workers will be hired at full production. Additional administrative and support staff will also work at the assembly plant, but ReadySCâ&#x20AC;&#x2122;s specialty is the training of the skilled laborers.

Without official plans in place related to the assembly plant, the college is currently focused on improvements to its existing work force training facilities, Maxon said.

Instructors have been working around the clock to certify a new surge of workers and contract employees as production ramps up at Boeing Charlestonâ&#x20AC;&#x2122;s operations near Charleston International Airport. Two-thirds of the Dreamlinerâ&#x20AC;&#x2122;s fuselage section is made at the plant, formerly owned by Vought Aircraft Industries; Boeing purchased the plant in the summer.

Boeing was ReadySCâ&#x20AC;&#x2122;s largest customer in the region long before its October announcement that it would assemble the

ReadySC has trained more than 1,500 workers for the Dreamliner program. (Photo/Molly Parker)

Dreamliner here. ReadySC has graduated 1,500 workers who have gone on to work at either the Boeing Charleston plant or the Global Aeronautica facility that is half-owned by Boeing in a partnership with Italyâ&#x20AC;&#x2122;s Alenia Aeronautica.

And many more workers are in the pipeline, Maxon said. The estimate is that about 600 more workers will need to be training in the next two years just for Boeingâ&#x20AC;&#x2122;s existing facilities. Currently, there are about 1,600 workers at Global Aeronautica and 900 with Boeing Charleston.

The ReadySC instructors at Trident â&#x20AC;&#x201D; the majority of which are retired Air Force mechanics â&#x20AC;&#x201D; are currently undergoing a Boeing-sponsored training program themselves. The aim is to tool their knowledge around the specific needs related to the Dreamliner, Maxon said.

This training takes place at Tridentâ&#x20AC;&#x2122;s Complex for Economic Development, a relatively new building on the schoolâ&#x20AC;&#x2122;s main campus.

The portion of the building committed to the Dreamliner is decorated to resemble an airplane, with its curvedceiling hallway and oval windows cut out of the classroom walls. The waiting area in the buildingâ&#x20AC;&#x2122;s entrance was inspired by an airport terminal.

In a recent speech, S.C. Commerce Secretary Joe Taylor credited Trident and ReadySC with being integral players in the negotiation process. In Seattle, critics of Boeingâ&#x20AC;&#x2122;s decision to place its second line in Charleston have expressed doubts as to South Carolinaâ&#x20AC;&#x2122;s ability to stand up a qualified work force.

Taylor said Boeingâ&#x20AC;&#x2122;s choice validates the strength of the stateâ&#x20AC;&#x2122;s technical college system.

ReadySC, he said, is the â&#x20AC;&#x153;best marketing tool we have.â&#x20AC;? cr bj

Reach Molly Parker at 843-849-3144.

Nov. 9 - 22, 2009

special report: Boeing chooses Lowcountry for expansion

www.charlestonbusiness.com 27

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