Project Buffalo Does Charleston have what Vought Aircraft needs? BY JOHN P. MCDERMOTT Of The Post and Courier Staff With 600 jobs and a state-of-the-art manufacturing plant at stake, the state's economic development forces have spent much of this year hoping to bag what's been code-named Project Buffalo. And now, with a decision expected any day, the state's odds of luring Vought Aircraft Industries Inc. to Charleston appear to be looking up. The financial assistance that the Texas company wants is already in place, courtesy of a little-noticed piece of legislation passed earlier this year. Also, a tract of open land next to Charleston International Airport that Vought is considering for its plant seems to be an ideal fit for its needs. What's more, the Dallas-based maker of aircraft fuselages and other structural components could have another reason to make its $300 million investment in the Lowcountry: the low number of unions in South Carolina. The Palmetto State has the lowest unionization rate in the country, with just 1.8 percent of workers represented by organized labor. That distinction could give the state an extra boost in its efforts to woo Vought to Charleston in light of a recent dust-up at the company's home base. Vought employees in Texas, represented by the United Auto Workers, voted overwhelmingly last week to reject the company's latest contract offer and go on strike, though there was no immediate walkout. It was the second time in two weeks that the workers had turned down a contract, reportedly over proposed changes to their health benefits. Another vote was scheduled for today. It's unlikely that a diminished threat of union unrest was the overriding reason that Vought put South Carolina on its short list for the new plant. But playing the union card hasn't hurt South Carolina's hand, a person familiar with the talks said. "Our work force has a strong tradition of working well with management," this person said. Vought spokeswoman Lynne Warne declined to comment about the site--selection process last week, other than to say it is ongoing. She said the company has not set a date to announce its decision, which has been pushed back several times. Sources outside the company expect Vought to announce the plant site by the end of the month. Vought and its Italian manufacturing partner, Alenia Aeronautica, have been tapped by Boeing to build about 26 percent of the structural components that will make up the 7E7 Dreamliner, a fuel-efficient, wide-body jet designed to replace the 757 and 767. Boeing is Vought's biggest customer. The 7E7 contract calls for Vought to deliver its first fuselage sections in 2006. Boeing hopes to complete the first of an estimated 3,500 Dreamliners in 2008. The 7E7 is going from the drawing board to the assembly line as the commercial aircraft business struggles to regain altitude. Vought, for instance, lost $213 million between 2001 to 2003 on combined revenue of $3.8 billion, and is $38.5 million in the red through the first half of this year. The company has blamed the downturn in its fortunes on the last recession and the after--effects of the 2001 terrorist attacks, both of which have led to a decline in aircraft orders and deliveries. In response, Vought announced this year that it is closing plants in Tennessee and Florida and consolidating their operations in Texas. An industry-wide turnaround is not likely until "2005 or later," the company said in a recent filing with the Securities and Exchange Commission. Vought hopes the launch of the 7E7 will help fuel its recovery. The company's interest in South Carolina is tied directly to Boeing's nationwide search last year for a home for the 7E7 assembly plant. Boeing, which needed to be next to a runway and near a deepwater port, was impressed by the Charleston International property and made it one of its three finalists. It eventually picked Everett, Wash., home of its commercial aircraft business. When Vought initiated its search, it started with the sites that Boeing had favored most because the companies' requirements were so similar. For instance, both companies need to be near a long runway because many large components they will handle will be transported by specially modified 747s. Aside from Charleston, Vought considered an industrial complex near Mobile, Ala. Also, the Global TransPark development near Kinston, N.C., came up as another potential finalist for the plant. Charleston's odds of winning the project improved last month when Alabama announced it had ended talks with Vought after the company disclosed that it expected to hire 600 workers, or 400 fewer than it had suggested in past discussions. Meanwhile, Sen. Elizabeth Dole, R-N.C., has been urging Vought to build its plant in Global TransPark. Dole's office said late last month that it had an understanding with the company that the senator would be informed if Kinston was dropped from contention. A Dole spokesman could not be reached for comment last week. Texas officials still consider their state to be in the running, according to a recent report. Vought has said the availability of tax breaks and other financial assistance will weigh heavily in its decision. Tom Risley, Vought's chief executive, said this summer that the winning location must have the funding in place and that he did not want to wait for legislation to be passed. That prerequisite could give South Carolina one of its biggest edges. At the state Commerce Department's behest, lawmakers this year quietly passed an incentive bill that provides up to $50 million in bond funding for businesses that invest in a major air cargo facility. Vought could qualify for the assistance if it operates at least 20 flights a week from Charleston. State Sen. Larry Grooms, who supported the bill, said the legislation was tailored for a specific unidentified company. "It was by design to put us in competitive position for a major project," he said last week. Grooms said the bill was deliberately attached to an unrelated piece of tax legislation. "We didn't want to put it out as standalone legislation," he said. "It would have been a red flag. We didn't want to let the cat out of the bag with the other competing states." Grooms said he understood that the relatively swift passage of the bill "made a tremendous impact" on the company that the Commerce Department was targeting. Also, a person close to the state's dealings with Vought and Alenia said that Gov. Mark Sanford has played a key role in courting the two companies. Sanford, for instance, has met with their top executives during trips to Dallas and Italy. The 600 jobs would not all be filled by Vought. An undisclosed number of workers would be employed by Alenia. Others at the plant would work for Boeing. Privately held Vought is owned by the Carlyle Group, a politically connected investment group based in Washington, D.C. The "Buffalo" plant project calls for two major structures. Vought will require a fabrication plant where it will build two 7E7 fuselage sections. It also will operate an adjacent "integration" center with Alenia where the two Vought components will be fused together and equipped with hydraulic systems, tubing and insulation. The complex also will make parts on the horizontal stabilizer for the 7E7. The Dreamliner assembly process will mark a radical departure from traditional aircraft manufacturing. Parts will be simpler and major components will snap together, reducing production time. Also, about half of the midsize airframe, including the wings and the parts that Vought and Alenia will make, will be formed not from aluminum but from lightweight composite materials, such as carbon fiber and resin epoxies, to cut fuel consumption. If Charleston wins it, the Vought plant is likely to attract other aerospace companies and jobs to the region. The last major aircraft manufacturer that had a significant presence in the area was Lockheed Martin, which made composite parts for fighter jets and transport planes at the Stark Industrial Park. The company closed its North Charleston plant in 1997.
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