Landing of Boeing stresses South Carolina's development needs

By ANDY BRACK

Don't get me wrong about Boeing's big announcement that it will bring thousands of jobs to South Carolina.

It's absolutely outstanding news – even "transformational," as state Sen. Larry Grooms (R-Berkeley) says. But while construction of a second assembly line will lead to $750 million in investment and 3,800 jobs for the company to get the state's $450 million in incentives, many parts of South Carolina won't benefit.

How many people in, say, Hartsville, Dillon or Greenwood will get jobs because of the expanded plant? Few. Yes, there will be a lot of spin-off jobs, just as scores of suppliers for BMW located around Spartanburg after the German company announced it would open a plant in Spartanburg. Since the 1992 BMW announcement, the company has invested $4.2 billion and built 1.5 million cars.

Suppliers have invested an additional $2.1 billion, according to the BMW Web site. But as Columbia economist Harry Miley says, building a state economic development strategy on the backbone of landing a huge company every now and then isn't the smartest way for the state to grow. "

Can we really sit around and wait every 17 years for a big announcement?" he asks. "I don't think so."

Miley, former chair of the state Board of Economic Advisors, stressed how huge and important the good news about Boeing is for the poor Palmetto State. "It boosts our reputation. It makes us look like we know what we're doing [with economic development.] This is a good industry because it has a lot of spinoffs. "

But, we have some underlying structural problems in South Carolina that this is not going to help and there are a lot of areas of South Carolina that won't ever know who Boeing is," he said. "We've still got to focus on them."

He's talking about improving worker skills, bettering the state's low graduation rate and focusing on job creation all over South Carolina. S.C. Policy Council President Ashley Landess warned of hidden implications associated with the tax breaks given to Boeing. In a press release, the council called the Boeing package short-sighted and "bad public policy," such as when viewed through the lens that the state lost 80,000 jobs over the last year. The Boeing plant will create only 542 jobs each year for the next seven years, it said. "For the money we're paying Boeing, we could come close to eliminating corporate taxes for all South Carolina businesses," she said. "That kind of economic stimulus benefits the entire state and has a real impact on unemployment. Legislative leaders are congratulating themselves for creating jobs. They didn't. Instead, they increased the cost of government at the expense of already-struggling citizens, who cannot afford the cost of this subsidy."

But Otis Rawl, head of the state Chamber of Commerce, said a big-picture view had to focus on Boeing's suppliers, many of whom likely would move to the state to be able to be near to the plant.

Those jobs generally will locate within a 100-mile radius of the North Charleston plant, which means some job help for rural areas, he said. "This announcement sends the message that South Carolina has gotten back in the game of economic development," Rawl said. "It gives us all a little sense of things getting better." Perhaps one thing that the Boeing announcement will force, Rawl added, is a refocused political debate on how to reshape a huge driver of all economic development – how the state educates its residents.

"We're going to have to take a look at some type of statewide funding for public education," he said.

Currently, rural areas have high property tax rates, which are disincentives for business development.

But if the state crafted some way to ensure that rural areas could lower taxes needed to run government, then rural areas would be more competitive. Additionally, comprehensive statewide funding of education would likely ensure better educational quality in rural areas, which also would give economic developers more tools to attract jobs.

Bottom line: Boeing's announcement is great, but South Carolina now needs to take the truly transformational step of reworking how it attracts businesses and grows jobs by focusing on statewide educational and economic solutions.

Andy Brack, publisher of SC Statehouse Report, can be reached at: brack@statehousereport.com.