Economic Development 101 — Southern Style

Was anyone really surprised when Boeing made the announcement that it intends to locate the second 787 production line in South Carolina?

Reading an online Seattle Times story the weekend before the announcement, and then reading the comments, made me understand how badly the Boeing machinist’s refuse to “get it.” They remind me a lot of the Republican Party here in Washington State — they would rather be “right,” than move towards the center and actually win.

The machinists find themselves in this particular predicament because they have abused the right to strike more often than not. Talks between the union and Boeing over a 10-year no-strike clause that the company reportedly needed in order to bring the second Dreamliner line to Everett, broke down on the eve of the announcement. Senator Patty Murray asked both sides to meet in her Washington D.C. office and resume talks. The fact Boeing failed to even respond, spoke volumes.

The Machinist’s union has failed to grasp the fact that in our global economy their past, strike-won victories were little more than skirmishes in a much larger economic war they will lose in the end unless their strategy — and attitude changes.

For example, was there anyone — other than the Boeing machinists — that didn’t think they were not only arrogant, but just plain greedy, to strike this last time, while the economy all around them was tanking?

Some posters on the Times’ site talked about how if the company thinks a two-plus year delay (caused by who?) for the 787 is a problem now, just wait until they try and build those planes in South Carolina.

Here’s a news flash… South Carolina, along with several other southern states (most notably Georgia, Tennessee, Alabama, Texas, and Mississippi) have been patiently waiting for this day. All have trained their workers diligently; refined and streamlined their permitting processes so it only takes weeks, or at most months, to permit a major manufacturing facility — not multiple years and millions of dollars of environmental “process.” They’ve tailored their tax structures so they’re not only business-friendly, but people-friendly and fair, with neither side carrying the load for the other; and provided tax incentives to attract economic development — instead of treating business as the enemy the way we do here.

The economic incentive package tailored to land the Boeing assembly facility easily received key approval in the South Carolina Senate. The full Senate voted 44-0 on low-interest construction bonds and incentives that include a sales tax exemption on fuel used in test flights. To qualify, a company would have to create at least 3,800 full-time jobs and invest at least $750 million in the state over seven years. This looks like a win-win to me. Can you imagine our state doing this?

What has really struck me is the arrogance of the machinists. They honestly believe they’re the only ones with the skills to build airplanes. If you think a bunch of redneck hicks just off the tobacco plantation are going to be building those 787’s, you better think again. It will be the same quality of people who build the high-dollar BMW’s in South Carolina, upper end Mercedes in Alabama — where Boeing already has major facilities — Ford’s in Georgia, Nissan’s in Tennessee and Mississippi, and Toyota trucks in Texas. If you haven’t been down to Dixie in a while — if ever — you will be shocked at the high level of skill and technical expertise you’ll find. Granted, building airplanes is much more technical than cars, but the assembly line principle is still the same. It’s simply a matter of educating workers what to do — not them being too stupid to learn it, as the machinists seem to think.

While both Boeing and the Machinist’s union blame each other for the strike problem, which brought this issue to a head, I believe that the decision to locate the line in South Carolina had at least as much to do with this state’s policies, and excessive over-regulation, as it does with the union. Even though Bill Boeing started the company here, Boeing owes this region nothing. It’s a global company, competing in a global economy. Boeing has been a good corporate citizen, providing thousands of upper income jobs for people here, and supporting multiple non-profits. But it reached the tipping point when the machinists refused to agree to a no-strike clause.

It has been a long, slow process, but if you look closely, you’ll find Boeing is reducing its corporate footprint in Washington, albeit slowly but steadily, and has been for years. The large new shopping center sitting just South of Boeing Renton is physically located on top of what once was a Boeing facility.

Boeing has made its wishes and needs known to the state, which for the most part have routinely fallen upon deaf ears. Moving its headquarters to Chicago, should have been a 2x4 to the side of the head of the legislature and Governor. Our Governor’s response? A loss of 900 jobs will not matter that much. That kind of arrogance, and the long-held philosophy that businesses is an adversary instead of an asset, has come home to roost.

Our state’s main transportation infrastructure is in shambles. making it difficult to conduct business regionally. Time is money, and it’s very costly to move people and equipment between plants located from Everett to Renton. Meanwhile the Puget Sound Regional Council is pushing to toll I-5 and I- 405. How many more ways can we find to shoot ourselves in the foot, and help states like South Carolina steal our major employers?

Meanwhile Gov. Christine Gregoire expressed her disappointment with Boeing’s decision by saying, “We did all we could to demonstrate that Washington is the best place in America to build airplanes. State and local government worked hand in hand with our capable Congressional delegation, business and community leaders, educators and countless others to show our collective support for locating the second 787 assembly line here.”

Well Governor, it wasn’t nearly enough. This isn’t a problem that just cropped up overnight. It’s been decades in the making.

The bottom line is, the rules and regulations in this state — even given the concessions the state has made to the aerospace industry — are overly restrictive and still make it hard to do business here. The legislature, and those special interest groups that fund the election of legislators, refuse to deal with this simple fact in any way, shape or form. And therein lies the main problem.

South Carolina just gave us a lesson in Economic Development 101. The question is, was anyone in Olympia paying attention?