Charlotte weighs bid for major Boeing plant

by Rick Rothacker, Ely Portillo and Steve Harrison, Charlotte Observer, December 5, 2013.

Charlotte officials are working to enter the multi-state competition for a manufacturing plant to build Boeing’s new 777X jetliner, a project that could potentially bring more than 8,000 jobs and a major aerospace industry player to the city.

Boeing has sent requests for proposals to more than a dozen cities and states to see if they’re willing to put up the incentives to win its new factory. Many of the states are publicly touting their efforts.

Missouri is considering adding $150 million a year worth of incentives to lure Boeing. Alabama’s governor has met with Boeing officials. California, Salt Lake City and Texas are also potential sites, analysts say, as is North Charleston, S.C., which already has a plant to produce the Boeing 787 Dreamliner.

Charlotte could have some factors going for it: Undeveloped land around Charlotte Douglas International Airport, a new rail yard, access to a skilled manufacturing workforce. But the city and state would likely have to put up big incentive money to have a shot.

State and local governments have until Tuesday to submit their proposals, according to documents obtained by the Observer and circulating among Charlotte city officials.

City officials have received a request from Chicago-based Boeing to submit a proposal for the facility, Jerry Orr, the city’s former aviation director, told the Observer. City officials are working with the Charlotte Chamber on the proposal, he said.

“Everyone wants this,” said Orr, the executive director of the Charlotte Airport Commission, which is in a legal battle over whether it or the city should control Charlotte’s airport. “This is the big prize.”

The documents obtained by the Observer lay out a host of requirements Boeing is seeking from state and local governments. The company wants to acquire the site at little or no cost, and it wants tax incentives. Boeing also needs a technically skilled workforce to manufacture the next-generation airliner, which Boeing says will be “the largest and most efficient twin-engine jet in the world.”

The city of Charlotte has had some communication with the Charlotte Chamber about the project, but any work on landing the 777X appears to be in the early stages.

“I’m aware of it, but can’t comment on it,” said the city’s economic development director, Brad Richardson.

Charlotte developer Johnny Harris, who leads an oversight committee for the new airport commission, said the city and state are aware of the project but couldn’t comment further. Charlotte Chamber president Bob Morgan, officials at Charlotte Douglas International and the N.C. Commerce Department declined to comment.

Boeing spokesman Doug Alder said the company isn’t publicly identifying any of the places the company sent requests for proposals. He said Boeing hopes to reach a final decision on where to locate its 777X manufacturing early next year.

Boeing made it clear that it will consider sites outside of Washington state – long a major manufacturing location for the company – after its machinists union rejected contract modifications, Howard Rubel, a Jefferies aerospace analyst, wrote in a November note to investors. But it’s not certain that production will actually relocate.

“Potential sites are Long Beach, Salt Lake City, San Antonio, and Charleston,” Rubel wrote. “In our view, it would have been a big benefit for the company to continue the 777 line in Everett (Washington). And it still might, given certification and capital demands.”

Incentives are key

Rubel said Boeing is soliciting 15 bids from locations interested in landing the new factory.

A key South Carolina lawmaker said he was unaware if that state had sent an incentives proposal to Boeing.

“They know South Carolina has tremendous interest in it,” Senate Finance Chairman Hugh Leatherman, R-Florence, told The (Columbia) State. A spokeswoman for the S.C. Commerce Department would not comment.

South Carolina has given Boeing $570 million in economic incentives since locating a jet manufacturing plant in North Charleston. That includes $120 million awarded this year for an expansion that could add another 2,000 jobs to the company's 6,000 employees in that region.

The Charlotte City Council has not reviewed any proposal in closed session, according to two elected officials. That is a critical step when the city and Mecklenburg County are considering incentives to land a company.

The incentives needed to land a Boeing plant would likely dwarf some of the state and local subsidies given to other major companies in Charlotte. In 2011, for example, Chiquita Brands International agreed to move its headquarters from Cincinnati to Charlotte on the promise of more than $22 million in state and local incentives.

In typical deals, the city and county can provide land for a company, which appears to be a prerequisite for Boeing. The jet manufacturer is asking for sites of 300 to 400 acres, according to the Boeing document.

The city owns about 100 acres west of the airport, and plans call for it to acquire several hundred more. Charlotte Douglas is also buying about 370 acres directly south of the airport, with plans to eventually raze the homes there and use the area for businesses.

Ideal spot for Boeing?

The document from Boeing specifies the ideal location for the new manufacturing facility: Adjacent to a major airport, with jet fueling capacity, at least a 9,000-foot runway, and ready access to a rail connection and highways.

Charlotte Douglas sits at the intersection of Interstates 485 and 85. Two of its runways are at least 9,000 feet long. A new Norfolk Southern rail freight terminal is opening at the airport in the coming months, with connections to coastal ports that could be used for shipping airplane parts.

And more than 5,000 acres of mostly undeveloped land, known as Dixie-Berryhill, sit directly to the west of Charlotte Douglas.

“I think Charlotte has a very, very good shot at this,” said Orr. “They’ve got all the pieces.”

Other North Carolina airports could also fit the requirements, such as the Global TransPark in Kinston.

The factories Boeing is contemplating would be massive, according to the request for proposals. The largest of three options outlined would be a 4.2-million-square-foot factory, responsible for the wings, fuselage, final assembly and delivery of the airplanes. With a total value of equipment and improvements of up to $10 billion, it would employ a projected 8,500 workers at peak employment in 2024.

The smallest of Boeing’s proposed factories would be a facility to build the 777X’s wings, while the rest of the plane was assembled elsewhere. The 1.1-million-square-foot factory would be worth up to $4 billion, and would employ a projected 2,760 workers in 2024.

Construction on the factory would begin in November 2014 or June 2015, depending on the option Boeing chooses.

The city would have to give its tentative approval for zoning changes. And the city and county would likely be asked to refund Boeing millions of dollars in property taxes that would be paid on the plant and its equipment.

But, as in the Chiquita deal, the lion’s share of incentives would likely come from the state, possibly through a refund to the company on the income taxes withheld for each employee.

The Charlotte City Council has said recently it wants to attract more manufacturing jobs. And new mayor Patrick Cannon has also emphasized his desire to bring more blue-collar work to the city. THE (COLUMBIA) STATE CONTRIBUTED.