South Carolina's Aviation Sector Takes Flight

by Sharon H. Fitzgerald

You might just say that South Carolina's economy is taking off. Under construction in North Charleston is a new Boeing facility, only the second of its kind, for assembly of the 787 Dreamliner aircraft. Capital investment will be at least $750 million, and job creation is expected to be in excess of 4,000. In short, the November 2009 announcement was the largest in South Carolina history.

“I'll never forget in our first meeting with Boeing, the question was, ‘How long do you think it will take for us to get our permits?' And our answer was, ‘When do you need them?'” recalls state Commerce Secretary Joe E. Taylor Jr.

Paving the way for the deal was Boeing's purchase in July 2009 of Vought Aircraft Industry's North Charleston plant, which performs fabrication and assembly of structures and systems for the 787 aft-fuselage sections. The new facility will be adjacent to the acquired Vought site. “I think the business-friendly attitude of the state, our right to work law, the leadership of the governor and our state legislature, and the Commerce Department and permitting agencies' abilities to really work together just impressed them tremendously,” Taylor says. In May, Boeing announced that it would also locate a fabrication and assembly plant for plane interiors somewhere in South Carolina. The announcement of a location is expected this summer.

“At this point, 95 cents of every dollar that's been spent on Boeing construction, engineering, management and so forth has been spent with South Carolina companies. So they've been able to access most all their construction needs and expertise within the state. Typically, that generally leads to some savings, and that's been a wonderful compliment for the companies of South Carolina,” Taylor adds.

Boeing is one of more than 100 aviation and aerospace companies with South Carolina operations, which employ more than 16,000 people statewide. Other notable industry names include BAE Systems, Champion Aerospace, Eaton, GE Aviation, Global Aeronautica, Lockheed-Martin, Honeywell, Michelin Aircraft Tires and Northrop Grumman.

Taylor notes that despite the dismal economy during 2009, South Carolina missed its record recruitment year for number of jobs created by less than 1,000. “In world-class manufacturing, knowledge-based jobs, distribution and services, I think we're doing pretty darn swell right now,” Taylor says. He credits the state's success to a business-friendly attitude that has resulted in tort reform, workers' compensation reform and initiatives to drive down business taxes. “I always believe that companies choose to go not where they can get the most money, but make the most money,” he says. “That's what we try to do in our state – build an environment where you can compete from here with anywhere in the world.”

INDUSTRIES AND INNOVATIONS

The good news continued in May, when First Quality Tissue announced its intention to build a $1 billion plant in Anderson County. The facility will use a sophisticated process called Thru-Air-Dried technology to expand its capacity in the tissue and disposable-towel industry. The company expects to create 1,000 jobs.

Life sciences is a thriving sector in Florence County. In 2008, Hoffmann La-Roche chose the community for a $500 million pharmaceutical laboratory and bulk manufacturing center. Last year, Roche completed a $60 million plant expansion. Based in South Carolina, IRIX Pharmaceuticals has two facilities in the state, one in Greenville and the other in Florence, where the company manufactures active ingredients for medicines. Joe King, executive director, Florence County Economic Development Partnership, also notes that Florence County is a hub for healthcare. “We have two hospitals,” he says. “It's unheard of for a community our size to have two.”

Last year, Florence also nabbed a new Johnson Controls battery recycling plant; a customer service facility for Monster.com; and Materials Innovation Technology, a manufacturer of advanced materials.

Advanced materials as a sector is picking up steam in South Carolina, Taylor says, citing two examples: DuPont's new Kevlar plant in Berkeley County and

American Titanium Works' titanium mini-mill in Laurens County.

Automotive manufacturing remains strong in the Palmetto State, thanks to:

Then, of course, there are the suppliers, which now number more than 200.

In Charleston, booming sectors are aerospace, thanks of course to Boeing, and defense. The city is home to the U.S. Navy's Space and Naval Warfare Systems Center, an operation that generates $5 billion in revenues annually in support of naval intelligence and surveillance missions. In May, the center broke ground on a new 20,220-square-foot engineering laboratory for highly sophisticated information technology.

David Ginn, president and CEO of the Charleston Regional Development Alliance, says alternative energy is on the horizon. That's because the Clemson University Research Institute won a $100 million grant from the U.S. Department of Energy to test next-generation wind turbine drivetrains at its North Charleston research campus. Completion of the test facility is targeted for the third quarter of 2012.

TALENT AND EDUCATION

“I think our No. 1 incentive for recruiting companies to the state of South Carolina is our technical college system and our readySC program,” Taylor says. “We work with companies to actually recruit their workers, screen their workers to their specifications and train their workers, so the day the plant is ready to open, the workforce is there and ready to produce.” The state's 16 technical colleges develop a training curriculum specific to a company's workforce requirements. Since readySC's inception in 1961, more than a quarter million workers have been trained.

King in Florence County also points to the Southeastern Institute of Manufacturing and Technology as “a phenomenal asset for the whole state.” Located adjacent to Florence-Darlington Technical College, SiMT is a technical service provider and a training facility. SiMT provides engineering/CAD/CAM, rapid prototyping, and 3D/virtual reality services in addition to manufacturing workforce development and business process training.

ASSETS

At the top of South Carolina's list of assets is the Port of Charleston, blessed with a natural, deepwater channel. Ginn calls the port “an international hub,” with accompanying services such as freight forwarders, custom house brokers, bonded warehouses, admiralty lawyers and international banking. Late last year, Maersk Line, one of the world's largest shipping companies, signed a new five-year agreement to maintain its services at the Charleston Port.

The port's continued expansion is in anticipation of the widening of the Panama Canal, a massive project scheduled for completion in 2014. The result will be the ability of much larger ships to make the trip, and Ginn says the Port of Charleston will be able to handle the larger vessels and the larger number of them. Other good news was the decision in October 2009 by TBC Corp. to occupy a 1.1 million square foot distribution center at the port. TBC is one of the largest marketers of automobile replacement tires.

Another South Carolina asset that continues to attribute to job creation is low-cost, reliable power. State-owned utility Santee Cooper is South Carolina's largest power producer, selling about two-thirds of its electricity on a wholesale basis to the 20 electric cooperatives statewide. “The Milliken Institute took a look and decided that the whole state was the sixth lowest-cost place to do business in the U.S. and has very low electric rates,” says Mike Brown, Santee Cooper's manager of economic development. Power prices are about 25 percent below the national average.

Asked how the state keeps electricity costs so low, Brown says, “We made a decision several years ago to focus on building base load generation. That means it's more expensive upfront, but it delivers a lower cost of electricity over its life. That is particularly important when you're talking to manufacturing entities about locating here.” And Santee Cooper does a lot of that. The utility's economic development arm markets the state and its communities, and Santee Cooper professionals reach out to prospects themselves.

LIFESTYLE

South Carolina offers a competitive cost of living and easy access, thanks to five interstates, five primary airports and about 70 general-aviation airports. The state's location affords four distinct seasons, with hot summers and mild winters.