Boeing chief tells why S.C. chosen

The State
Wednesday, March 3, 2010
By DOMINIC GATES - Seattle Times

SEATTLE - Jim Albaugh, chief executive of Boeing Commercial Airplanes, conceded that the choice of North Charleston, S.C., over the Everett, Wash., for a new 787 Dreamliner assembly line is expensive and risky.

In South Carolina, Boeing must build a new factory and hire workers from an inexperienced labor pool.

But in an exclusive interview, Albaugh said the cost of the strike at its Puget Sound operations in fall 2008 outweighed that.

Albaugh - who last fall recommended to the board that it choose North Charleston - said Washington state is his preferred location for building future airplanes.

He said Boeing didn't pick South Carolina for expansion last year because of Washington's tax rates or regulatory system. Nor was it a question of chasing low wages.

"The overriding factor was not the business climate. And it was not the wages we are paying today," Albaugh said. "It was that we can't afford to have a work stoppage every three years. And we can't afford to continue the rate of escalation of wages."

The 787 assembly line is South Carolina's biggest economic development announcement, with Boeing investing $750 million and hiring 3,800 workers. Suppliers are expected to add thousands more jobs.

Although many union members believe the decision to go to Charleston was made long before last fall's final negotiations with the Machinists, Albaugh insisted it was not.

"I went into this feeling that if we could get it done here, we could save the company a lot of money," Albaugh said. "There were two things we needed, and we couldn't get those things done."

He repeatedly made clear that those two things - first, no strikes; second, lowered escalation of wages in the future - remain deal breakers for placing future work here.

Without that, he said, the company won't be competitive, not only against Airbus, but also against looming threats from plane makers in Canada, Brazil, China and perhaps Russia.

"This is a great work force here. They are magicians," Albaugh said. "My job is to make sure they have jobs five years from now, 10 years from now, 20 years from now.

"If we don't have a company, nobody has jobs," he said. "That's the worst outcome for Puget Sound."

Boeing's next new airplane after the Dreamliner will determine the future of aerospace in the Puget Sound region.

Albaugh said that when the time comes to choose a final assembly site for that plane, he doesn't want to hold an open competition as the company did in 2003 for the 787 Dreamliner.

"If I'm involved, I'm not going to have a competition like that," Albaugh said. "The commitment I can give you is that the first preference is to put the work here."