STEVE INSKEEP, host:
The airplane maker Boeing announced yesterday that it will build a second production line for its new 787 jet at a facility in North Charleston, South Carolina, not at Boeing's main factory in suburban Seattle. As you can imagine, South Carolina is celebrating.
NPR's Wendy Kaufman reports this decision was driven largely by the company's desire to expand in a non-union environment.
WENDY KAUFMAN: Union machinists at Boeing have gone on strike four times in the past seven rounds of contract talks, and Boeing has had enough. By setting up a second production line in a non-union facility in a right-to-work state, Boeing hopes it will have more control.
The company says the union was a significant factor in its decision to expand in South Carolina. But company spokesman Russ Young says there were other issues, too. South Carolina offered sizeable financial incentives, and the Boeing Company wanted to diversify its production base beyond its Everett, Washington, factory.
Mr. RUSS YOUNG (Spokesman, Boeing): We build billions of dollars of airplanes under one roof, and you know what? If something falls on that roof�
KAUFMAN: He cites the possibility of natural disasters or even terrorism. Diversification has another advantage, he says: more political clout.
Mr. YOUNG: For us, quite honestly, to get another governor and then two senators and more members of Congress on our side, you know, that's - again, that's one of those things.
KAUFMAN: South Carolina hopes the new production line will ultimately result in about 4,000 new jobs. But before it can begin turning out airplanes, Boeing has to get the 787 off the ground. The plane is about two-and-a-half years behind schedule and still hasn't taken its first test flight.
Boeing has turned to union machinists - members of the IAM - to fix many 787 problems created by outside suppliers, so the company's decision not to expand in a union shop was a particularly tough blow.
Mr. TOM WROBLEWSKI (President, Machinists Union, Seattle): I'm very disappointed.
KAUFMAN: Tom Wroblewski is head of the Machinists Union in Seattle.
Mr. WROBLEWSKI: Every single one of our members works hard. They are working long hours, overtime to make the 787 successful, and this is how they're treated with the second the line going somewhere else. They're very disappointed.
KAUFMAN: During discussions with Boeing earlier this month, union leaders offered Boeing a 10-year, no-strike commitment. But in return, the union wanted job security and certain other benefits. Boeing wasn't interested.
Establishing a second production line far from the main factory makes things more challenging, and many critics, including analyst Scott Hamilton say that with the 787 behind schedule and over budget, Boeing shouldn't add any more complications.
Mr. SCOTT HAMILTON (Defense Analyst, Leeham Securities): And I think the risks outweigh the risks of dealing with the IAM. You'd have to hire a whole new set of people, train them, all that sort of thing, and I just think it's the wrong move to make.
KAUFMAN: But another industry analyst, Richard Aboulafia, believes that Boeing did the math and rightfully concluded that it should move some production to a non-union factory.
Mr. RICHARD ABOULAFIA (Airline Industry Analyst): I think Boeing decided that no matter what, the costs and risks are - nothing is as bad as risking another 52-day strike like the one they endured last year.
KAUFMAN: The first planes to be built in South Carolina are slated for completion in early 2012. But that assumes from here on out, everything goes smoothly, and given the history of the 787, that doesn't seem very likely.
Wendy Kaufman NPR News, Seattle.
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