Business

Boeing baffles some with new line in S. Carolina

TACOMA -- It wasn't much of a surprise when Boeing announced that it would build a second production line for the 787 Dreamliner in South Carolina. But it was a shock nonetheless to the Northwest's collective psyche.

Here, after all, was a place that was accustomed to being ranked at the top of desirable places to live and work. Its crime rate was among the lowest in the country.

The scenery, when you could see it through the overcast, was nonpareil. And even Forbes Magazine had just put Washington in second place among the 50 states for its attractive business climate. The magazine ranked South Carolina 25th.

Its citizens were better educated, its overall corporate taxes were lower (says the governor) and there were even fewer mosquitoes per capita than in South Carolina.

So how could Boeing, as familiar a part of the Northwest scene as fir trees, a company that was founded here more than 90 years ago, succumb to the lure of South Carolina?

Boeing had been openly carrying on an affair with South Carolina for months. It bought a plant that built fuselage sections for the 787 from by Vought Aircraft Industries earlier this year. And it acquired Vought's 50 percent of another 787 subassembly plant nearby the year before.

Boeing had even applied for permits to clear forested land adjacent to those two plants and to begin construction even before it made its formal announcement. And the company had been negotiating with South Carolina's Gov. Mark Sanford for months on inducements.

The South Carolina Legislature was meeting to create a suitable dowry for the hoped-for nuptials between the state and the big B. That incentive package, according to South Carolina, will ultimately amount to $450 million in tax savings and credits.

Now that Boeing's decision has been made official, politicians are wondering very much out loud what the Northwest, what the state, what the business and labor community could do differently the next time. And that next time could come as soon as 2012 when Boeing and its two major unions again talk about new contracts.

Boeing now says it would have recommended to its board that the second line stay in Everett if the Machinists Union had accepted its proposal for a long-term agreement.

The union and the company each blame the other for the failure to reach agreement.

The union says the company was foggy about its requirements, noncommittal about whether agreeing to a deal would engender a recommendation to the company's board in Everett's favor and unresponsive when the union made specific proposals.

When the union proposed a deal through 2020, said Tom Wroblewski, the union local president, company negotiators seemed stunned that the union would offer a long term deal.

But Boeing spokesman Tim Healy said the company made clear its needs in any extended contract, and the union's final proposals failed to meet those standards. Had the union agreed, Boeing would have recommended Everett, he said.

According to Doug Kite and Ray Conner, Boeing's high level negotiators, here's what Boeing wanted, and here's what the union offered:

-- Wage increases: Boeing, 2 percent per year; Union, 3 percent per year plus cost-of-living increases.

-- Pension increases: Boeing, 2 percent per year; Union, $2.50 per month per year of service annual increase

-- Union organizing: Boeing, wants to be able to campaign against the union in certification elections; Union, company neutrality

-- Future airplane programs: Boeing, unable to commit to putting them in Puget Sound; Union, guarantees they'll happen here

-- Medical costs: Boeing wanted union members to help pick up the tab; Union, will share but beginning in 2018

  Comments