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 The acreage near Boeing's assembly line in North Charleston is just
one of a tantalizing collection of goodies that states across the
country are dangling to try to lure the lucrative new jet program,
known as the 777X, that promises thousands of jobs and billions of
dollars in economic benefit to the winning state.
Boeing has requested proposals for the jetliner program from more
than a dozen states after the unionized machinists in Washington
state last month roundly rejected a labor contract that would have
guaranteed the plane was built there.
Initial proposals are due next week, according to people familiar
with the discussions.
In Missouri, lawmakers are meeting in a special session to consider
tax cuts and other benefits for Boeing. Alabama government leaders
are preparing to pitch Huntsville, where Boeing has extensive
operations. California said it is working on a plan to meet Boeing's
requirement. Georgia said it may offer two potential sites.
"We want it as bad as anybody else. And we can deliver it," said
Paul Campbell, director of airports for Charleston County Aviation
Authority, in South Carolina.
Making 267 acres available near where Boeing already builds 787
Dreamliners, "absolutely is a plus," Campbell said. "They could
certainly use part of that property to build the 777X."
Washington state remains in the running. Lawmakers last month passed
$8.7 billion in aerospace tax incentives to keep Boeing in the
region where it already builds nearly all of its commercial
aircraft.
Analysts say there is strong logic to building the new plane in the
Seattle area, where the current 777 is made.
But the union's rejection of the labor offer further strained
relations between Boeing and the International Association of
Machinists. The vote also stirred turmoil within the union that
could complicate efforts to forge a new labor deal with Boeing.
GAME ON
Boeing has not said which states are in the contest. Some states
said they were under confidentiality agreements, while others have
been open about the process.
"Some locations that have received requests for proposals are being
open about it and others are not," Boeing spokesman Doug Alder said.
The Chicago-based company expects to choose a site "early next year"
but has not announced a firm deadline.
Boeing declined to comment on a report of a leaked copy of its bid
request that shows it may spend up to $10 billion on a new, 4.2
million-square-foot factory, and wants to be near rail, highway, air
and sea ports. It also wants land for free or at very low cost,
according to the report by the St. Louis Post-Dispatch.
Missouri's state legislature's debate on its plan offers the most
revealing look at what states can offer. The state senate on
Wednesday approved incentives that could be worth $1.7 billion over
23 years, provided Boeing creates 8,000 jobs in the state, according
to Gov. Jay Nixon.
The Missouri package, now before the House, includes payroll tax
credits, tax breaks for factory construction, job training and debt
financing, according to the state.
While the total is far less than the $8.7 billion package from
Washington state, costs such as energy, wages, taxes and shipping
can vary substantially from state to state, and labor laws change
the company's ability to set terms for workers, so that specific
breaks given to Boeing may not tell the whole story of a region's
competitiveness.
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In Alabama, officials are preparing to pitch Huntsville, where
Boeing already has extensive operations. The state legislature
convenes January 14 for a regular session, but could go into special
session earlier if needed, officials said.
Texas officials declined to confirm whether they are bidding, but
pointed to a large Boeing presence in the state. There is no
scheduled Texas legislative session in 2014, but the state has $116
million it can use without legislative approval to attract Boeing.
In California, the governor's Office of Business and Economic
Development is launching a tax-credit program in January for
companies that want to expand or relocate to the state, and Boeing
would be eligible for the program. The state also offers credits for
research and development and is exempting equipment purchases from
sales tax, starting next year. The value to Boeing would depend on
its investment.
Kansas confirmed it is bidding, but did not provide details. The
state is home to Spirit Aerosystems Holdings <SPR.N>, which makes
large structures for Boeing, including fuselages and wing pieces.
Utah also is on the list of states Boeing has asked for bids,
according to people familiar with the process, but officials there
declined to comment.
Wisconsin, which wasn't among those invited by Boeing, is preparing
a bid anyway.
"We've got a team of people working on it right now," said Mark
Maley, a spokesman for the Wisconsin Economic Development Corp. "We
think we can make a good case."
RENT: $1 A YEAR
Boeing's South Carolina plant assembles fuselages for the 787 and
performs final assembly on about 1-1/2 of the planes per month. The
production rate is expected to increase to three per month early
next year, said Jack Jones, vice president and general manager of
Boeing South Carolina.
Boeing leases its current land from the aviation authority for $1 a
year. The new land deal will double the size of Boeing's main
campus. The lease rate for the new land hasn't been disclosed. The
deal is due to close on December 13.
In 15 years, Boeing can pay the state the purchase price of $13.8
million and take title to all of the 267 acres, or it can extend the
lease, state officials said.
As part of the land transaction, South Carolina last week sold $85
million in bonds, raising a portion of $120 million the state
approved last spring for Boeing's expansion. The funds include money
for infrastructure and wetlands mitigation. State officials wouldn't
discuss any other incentives for Boeing.
Boeing has already spent at least $1 billion in South Carolina and
has committed to investing another $1 billion and hiring 2,000
workers over the next eight years, tied to the 787 and other
projects.
In November, it kicked off construction of a 225,000-square-foot
propulsion center that will design and assemble part of the engine
housing for another new jet, the 737 MAX. The facility is on
Boeing-owned land about 12 miles from the main campus.
Campbell, of the Charleston aviation authority, said Missouri's $1.7
billion incentive plan was revealing, and South Carolina does not
intend to tip its hand.
"That at least gives us an idea of what is out there, what we've got
to go up against," he said. Missouri would "also have to come up
with property. Boeing's got 267 (new) acres here."
[By Alwyn Scott and Harriet McLeod © 2013 Thomson Reuters. All
rights reserved.]
(Editing by Peter Henderson and Grant McCool) Copyright 2013 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
