April 09, 2013
Boeing has pledged to double its factory investment at its 787 factory in North Charleston, S.C., and to add another 2,000 jobs in exchange for a transportation infrastructure and tax incentive deal that began working its way through the state legislature Tuesday.
The city and surrounding Charleston County are proposing a 4% city and county tax rate and road improvements in exchange for the company’s commitment to add another 2,000 jobs and make an additional $1 billion investment by 2020 at its factory campus next to Charleston International Airport, according to North Charleston Mayor Keith Summey. Without the incentives, Boeing would pay taxes at a 10.5% rate, he says.
The company has acknowledged the size of its pledge but not commented on how the added workers and infrastructure will be used.
The tax incentive package is expected to emerge from the South Carolina General Assembly for Gov. Nikki Haley’s signature in as little as 10 days, Summey says. Haley has been in agreement from the start, promoting the deal through the state commerce department.
For Boeing, the agreement would mark a third major phase in its investment in North Charleston following its initial takeover of 787 fuselage fabrication and integration factories formerly owned by Vought and Alenia Aeronautica and the subsequent commitment in 2009 to open a second 787 final assembly line next to them.
In its initial 787 assembly commitment, Boeing pledged $750 million in factory construction and equipment and to create 4,500 jobs.
It has easily met those targets. Its 787 factories now employ 6,000, and the company reports spending $1 billion, not including about that same level to buy out Vought and Alenia.
Summey says the city and county will use half the reduced tax revenues they receive from Boeing to float a bond issue to pay for the infrastructure improvements they have promised the company. Summey says the added employment and business activity will cover any loss the governments suffer from reduced tax revenues. “We’ll be fine,” he says of the city’s needs.