Boeing has stated that it will being moving all 787 Dreamliner production to its North Charleston, SC assembly plant starting in March of 2021. The move was widely suspected and Boeing first acknowledged the move back in September of 2020. The company is aiming to cut costs following a double whammy to its sales and revenue sheets, the 737 Max worldwide grounding and the Covid-19 pandemic.
The 737 Max grounding lasted two years, and Boeing was not able to delivery any of the 737 Max’s that it has produced. Delivery is when Boeing gets most of the money from the sale of the plane, so the company went two years without one of its most profitable and best selling airplanes brining in any meaningful revenue. As the Covid-19 pandemic hit, air travel plummeted worldwide and airlines were no longer wanting to take delivery of any new planes they had on order, forcing Boeing to sit on more airplanes they could not deliver to customers.
When Boeing announced the move last year, Washington Gov. Jay Inslee said if Boeing moved, it would force the state to take “a hard look at the company’s favorable tax treatment.” That didn’t phase Boeing because the company recently suffered a setback at the World Trade Organization, WTO, which ruled Washington state’s tax breaks amounted to government support and that Europe was free to impose several billion dollars worth of import tariffs on new Boeing aircraft to European airlines.
“The move was ultimately a two part problem, one was the unions in Seattle which drove up the cost of manufacturing and the second was the tax breaks the company was getting and were later ruled illegal by the WTO and the resulting foreign import tariffs are greater than the cost of simply moving production to a less expensive location. In a way, South Carolina is the China of the United States for manufacturing. No unions, less state taxes, less corporate tax, lower cost of living and an available labor pool,” says Dana Hargrove, an economist with Chase bank. “Sometimes Unions ask for too much and do not understand how that can directly lead to the company either taking drastic action or shutting down or moving operations. When that happens, union workers are left out in the cold. There is a fine line between a union ensuring worker’s rights and fair pay, and going overboard with exceptionally high pay for the job skill at hand and way above average benefits. That is why employees like unions, but the fail to see how asking for too much can sink their job or the company” Hargrove added. Some unions even dictate certain business decisions a company is allowed to make, pilot unions for airlines are a great example of that, in which an airline is limits on what size a region airplane can be, and how many flights must be a mainline flight versus a regional flight.
The 787-10 Dreamliner is already produced at it’s SC facility and is the only location the -10 is made. Boeing will be brining the 787-8 and 787-9 to SC.