SC incentives to Boeing nearing $1bn

Boeing told Washington State that incentives had nothing to do with its decision to locate 787 Line 2 in Charleston (SC)–that it was all about the unions.

This article in the Charleston Post and Courier reveals that incentives there are approaching, if not already exceeding, $1bn. And you know these weren’t negotiated in the short time IAM 751 and Boeing met. So while Boeing assured Washington that incentives weren’t an issue and it was all about the union….

2 Comments on “SC incentives to Boeing nearing $1bn

  1. We can develop a troika of pretty sound hypothesis from this information.

    First, is that Boeing’s financial position is even worse than previously thought, based on the idea that none of the debt issued lately will be needed for the Charlston facility, and instead will be used to stanch the bleed arising from serious management missteps. And they are already funding pensions and 401Ks with Boeing Stock instead of cash. And I could care less if they are new shares or not, it’s dilutive.

    But look for more cash bleed as Boeing tries to hire, train, and pay a scratch workforce in S.C., and pay them for several years before a single airplane rolls out. The bad joke on S.C. is that a substantial percentage will have to be hired from out of state. S.C. have no aerospace engineering schools I know of.

    Second, is the thought that labor was somehow the prime motivator for the move. I think now that that issue is in reality somewhere way down on the list, but then again, labor makes a convienient scapegoat and fine cover for a billion dollar’s worth of taxpayer funded largesse. I stated from day one tht the labor issue was a red herring, and so it is, but look for Boeing to continue to use it to try and beat up on it’s unions in preparation for the next round of contracts. You can also look for such a tactic to backfire on them, and if used consistently and faithfully, to foment another strike some three years hence. Such a strike will have nothing to do with money or benefits or work rules, It will be the worst sort of labor dispute; One based on mutual dislike and lack of respect. I think the unions would, on balance, accept less next time if unmolested, but Boeing has been going out of it’s way to rub it’s workforce wrong. It won’t be able to resist doing the same in Charlston, and I predict that it will unionize withing five years, probably under the UAW.

    Alan Mulally is now Wall St’s darling for what is happening at ford. He’s sucessfully gotten the UAW to play ball with him, I think mostly by being both realistic and respectful. McNerny and Co will not learn from this, they are genetically incapable of anything except strife when it comes to matters regarding labor.

    There is now noise in the state legislature about industrial/economic diversification. They had to be hit across the head, but it seems that there are signs of intelligent life in Olympia these days, at least when it comes to Boeing.

    Lastly, it proves, beyond any doubt that there is one state (S.C.) with an even less sound and fiscally responsible legislature that Washington State.

    Fellow sharholders beware:

    Just as 787 first flight was baked into the stock price at wheels up, a successful flight test program has been baked in over the past several weeks. If anything goes even moderatly seriously awry (meaning anything Boeing can’t dismiss easily with a press release) the stock is going to get hammerd badly.

  2. I would look a bit deeper into management styles,
    (North American versus European, Asian ) especially in respect to how the workforce (and their unions) is handled. And I would like to hear some predictions
    on how an Airbus subsidiary would fare in the US 😉

    The auto industry may be good for comparison:
    GM does not cope at home and runs aquisitions
    overseas “dry” in a couple of years ( SAAB ).
    Opel’s livelihood depends on GM influence being sparse.
    In contrast Toyota and BMW seem to be quite productive in their US sites.

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