Share
COLUMBIA A week before North Charleston landed a new Boeing jet assembly line, U.S. Sen. Lindsey Graham thought South Carolina had lost the deal.
Boeing CEO James McNerney called Graham's Senate office, saying what a hard choice he had to make between South Carolina and Washington state, where Boeing assembles all of its commercial planes.
The call had the tone of breakup.
"He said, 'You couldn't have treated us any better, but we have a big footprint in Washington,'" Graham said last week. "I told him, 'Do what you think is best for Boeing. We will be the best partners we can be, but we understand this is a negotiation, a business decision.'"
Graham's reaction was part of a soft sell he thought would appeal to Boeing executives, who were in contentious talks with union workers in Washington. Those talks broke down last weekend, setting off a final push by S.C. recruiters and lawmakers.
On Wednesday afternoon, McNerney called: "We're coming to South Carolina."
In the end, Graham figured, "Southern gentility was more attractive."
South Carolina won Boeing's new assembly line for the 787 Dreamliner despite the company's last-minute request for $37 million, doubts about the state's work force and South Carolina's history of political friction.
The deal's impact is huge for South Carolina, a state staggering under the nation's fifth-highest unemployment rate:
$450 million in state incentives to attract a company that will employ an estimated 3,800 workers by the middle of next decade.
$750 million in initial investment from Boeing - the state's biggest, topping the $500 million BMW pledged in 1992 for its Greer plant, a number since far surpassed.
$10 billion in direct and indirect investment over the next 15 years from Boeing and its suppliers, according to a forecast from a state economist.
The timing of Boeing's announcement was helped by a special session that started Tuesday to correct an unemployment benefits glitch. That gave lawmakers a chance to approve the incentives package - a show of faith just as Boeing's board met in Chicago to choose a site.
As the deal became public, Lawmakers and lobbyists around the State House said they had never seen leaders of the House and Senate work so cooperatively before.
What else but the state's largest economic development deal would have Gov. Mark Sanford praising one of his chief nemeses, state Sen. Hugh Leatherman, R-Florence?
State leaders each played a role, quit politicking and held their tongues, state Commerce Secretary Joe Taylor said.
Helped by a failure
The path toward winning Boeing's new 787 assembly line started when South Carolina lost the last one.
In 2003, as Boeing planned its first 787 assembly line, then-S.C. Commerce Secretary Bob Faith offered two S.C. sites, one in Charleston and one in Myrtle Beach. Both were near a port and an airport with the long runways that Boeing wanted.
But the deal fell through.
"Their (CFO) resigned and, ultimately, their (CEO) stepped down, and they, ultimately, decided to put that first line in Everett (Washington)," Faith said. "We felt like we had won the deal, but because of all of their internal difficulties, moving to South Carolina was a bridge too far."
Still, Faith thought the initial effort proved South Carolina was serious about doing business with Boeing. It cleared the way for South Carolina to land two Boeing suppliers, Vought and Alenia plants, for North Charleston shortly thereafter with an estimated $120 million in state and local incentives.
The plants, which make and assemble the rear fuselage for the 787, now employ about 2,500. Faith called that "a heck of a consolation prize."
Because of those plants, an aviation infrastructure began to form. Trident Technical College, for instance, began to develop a training program to prepare workers in aviation.
"We wouldn't even be in the conversation if we hadn't negotiated the Vought-Alenia deal," Harrell said. "Getting to this point has been the goal all along."
South Carolina continued to lobby Boeing after North Charleston landed the Vought-Alenia fuselage work.
A couple of other turning points came in July.
That month, Taylor met with the state's Joint Bond Review Committee, which includes House and Senate members and oversees debt raised to pay for big projects.
The committee is led by Leatherman, chairman of the Senate's influential Finance Committee. Tired of other states beating out South Carolina, he said he wanted to build a ready incentive pool to close a big development deal.
Leatherman said Taylor agreed to think about the incentive pool and get back to him.
Also in July, Boeing bought Vought's operations in North Charleston - a move that came after complaints about delays at the plant.
That gave Taylor hope that South Carolina might be in the running for a long-discussed, second 787 assembly line: "It just made business sense. But it came faster than we expected."
The next month, Boeing officials came to the state and "wanted to learn just how quickly they could do it," Taylor said of a new assembly line.
The question on the minds of many S.C. officials: Was Boeing just using South Carolina as a pawn to extract promises from Washington state?
Sen. Larry Grooms, a Charleston-area state senator seeking the GOP nomination for governor, said he asked that question when he met with Boeing's officials in August. Billy Wilkins, a former federal judge now practicing with the Nexsen Pruett law firm, asked the same question of a friend who is a Boeing executive.
Boeing answered that its interest was genuine.
Wilkins pulled together an experienced business law team, including a former S.C. Department of Revenue director to handle negotiations for Boeing. Those relationships were critical because "when I talked about South Carolina, it was believed," he said.
Wilkins' call to his friend at Boeing set in motion a series of mid-August meetings in Charleston that put the project on a fast track.
But Boeing had its questions, too: Could South Carolina bring the needed work force?
Sen. Paul Campbell, R-Berkeley, said Boeing officials needed convincing that local workers were at least equal to those of Washington, where the aeronautics industry long has been part of the regional culture. Campbell answered questions on labor relations, worker's compensation and other on-the-ground realties of S.C. manufacturing.
He was able to give Chicago-based Boeing officials a critical insight into the capabilities of the S.C. work force, having overseen for years an Alcoa plant in Bellingham, Wash., and retiring after 10 years as Alcoa's regional president at its plant in the Lowcountry, just outside of Berkeley.
Graham, familiar with the aircraft maker as a member of the Senate Armed Services committee, suggested Boeing officials speak with executives at Michelin, which has S.C. plants and makes aircraft tires. Graham also touted the state's skilled ex-military veterans and its technical colleges, known for working closely with businesses.
There was an opportunity to convince Boeing, Graham discovered.
During a meeting a few months ago in Graham's Senate office, Boeing boss McNerney talked about how labor relations with workers in Washington state were a problem. A strike last year lasted two months.
"He was openly frustrated about the interruption due to the strike," Graham said. "I told him, 'South Carolina was not going to be a problem.'"
And Leatherman said he pitched how S.C. workers - averse to unions - were capable and motivated, just wanting a day's pay for a day's work.
Then, Leatherman pushed to sweeten the pot.
"I found we were at a competitive disadvantage to many states," said Leatherman of his discussion about incentives with Taylor. "I said, 'We need to put together a package.'"
That led to creation of an incentives package that eventually included $170 million in taxpayer-backed bonds, eliminating Boeing's S.C. corporate income taxes, as well as a handful of sales tax exemptions for computers, fuel for test flights, and construction material and equipment.
A question asked quietly was whether Sanford would back the incentive-laden deal.
Sanford - a fiscal libertarian who opposes incentives but now is under siege by scandal and threats of impeachment - was not an issue in the talks with Boeing, Graham said.
"Mark has his philosophical views about recruiting," Graham said. "At one point, I told him, 'You have to spend money to make money.'"
Despite his reputation for eschewing incentives, Sanford said he understood Boeing's potential was different. The incentives did not bother him.
Just days after the call that made it sound like Washington would get the assembly line, Graham got a different message from McNerney.
"We want to let you know we're really, really serious about this," Graham recalled McNerney saying. "And I said, 'We're really, really serious, too.'"
The talks with the union representing workers in Washington were going nowhere. The Machinists union offered a 10-year, no-strike pledge, but added demands that displeased Boeing, according to reports in the Seattle Times.
Last weekend, Graham got a call from Boeing general counsel Michael Luttig, a former federal appellate judge whom Graham had supported as a potential Supreme Court nominee.
Luttig told Graham that South Carolina's incentive package was great, but Boeing officials had run the numbers again and had a last-minute request. Boeing wanted to make sure that making the request would not anger S.C. officials.
The request wasn't small: Boeing wanted another $37million in bond money, Graham said.
Sanford said the final $37million was money Boeing would have received in the future, anyway, but decided to get it up front.
Boeing lawyer Luttig came to South Carolina on Monday to finish the details on the incentives package with Leatherman and Taylor.
The same day, Boeing's board met in Chicago to decide where to put the assembly line.
As lawmakers in special session scurried about Wednesday, some complained about all the waiting around that was taking place.
Soon after the final passage on the incentives deal Wednesday afternoon, Leatherman announced: "Boeing has chosen North Charleston!"
