Aerospace takes off in Southern states

Generous incentive packages, lower costs help lure companies

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TOP 10 STATES IN AEROSPACE JOB GROWTH

(2007-2012)

South Carolina: 613 percent

North Carolina: 34 percent

Pennsylvania: 33 percent

Michigan: 25 percent

Washington: 18 percent

Oklahoma: 17 percent

Georgia: 16 percent

Oregon: 12 percent

Maryland: 11 percent

Illinois: 9 percent

SOURCE: Avalanche Consulting, based on U.S. Bureau of Labor Statistics data

NEW JOBS IN THE SOUTH

Other aerospace firms that have recently expanded or relocated to the South:

Honda Aircraft Co. expects by the end of 2015 to add more than 400 new jobs at its R&D facility in Greensboro, N.C., which currently employs more than 750.

Rolls-Royce opened a new aircraft parts manufacturing facility in Crosspointe Centre, Va., in 2012, creating 140 jobs.

Dassault Falcon Jet Corp. announced in 2013 its plans to expand its “completion” center in Little Rock, Ark., which could add 300 jobs to the estimated 1,800 workers there.

Embraer, the Brazilian aerospace conglomerate, broke ground in Melbourne, Fla., in 2012 for a new technology center to employ 200 engineers and added 50 manufacturing jobs last year with a new hanger manufacturing facility at Jacksonville Florida International Airport.

The South is home to auto giants Mercedes-Benz, Volkswagen and Nissan Motor Co. It is increasingly attracting some of the biggest names in aviation, including Boeing Co. in South Carolina, Airbus in Alabama, Gulfstream Aerospace Corp. in Georgia and GE Aviation in North Carolina.

Aerospace companies are taking a cue from the auto industry and moving their manufacturing operations to Southern states. The region’s lower costs, generous state incentive packages, and right-to-work laws that make it hard for unions to organize are motivating these companies to choose the South.

Four Southern states were among the top 10 states in aerospace job growth between 2007 and 2012, with South Carolina far ahead of the others, thanks to Boeing. Aerospace jobs in South Carolina jumped by more than 600 percent over that time period, from 865 workers to 5,685 workers, said Amy Holloway, president of Avalanche Consulting of Texas, who analyzed data from the U.S. Bureau of Labor Statistics.

Boeing selected North Charleston, S.C., in 2009 to produce its 787 Dreamliner aircraft, in large part because of the $900 million in tax breaks and other incentives the state offered over 30 years.

North Carolina ranks second in aerospace job growth with a nearly 34 percent increase over the same period. California, Connecticut, Kansas, Texas, and Washington still have 65 percent of the country’s nearly 500,000 aerospace jobs. But of those states, only Washington has seen an increase in aerospace jobs since 2001, Holloway said.

The other states have either remained relatively unchanged or lost employment. California, for example, has lost more than 8,000 aerospace jobs since 2002, including Lockheed Martin, which moved its corporate headquarters to the Washington, D.C., area. Besides opening its plant in South Carolina, Boeing in 2012 announced it was closing its Wichita, Kan., plant and moving that production to Oklahoma, Texas and Washington, affecting more than 2,100 workers.

U.S. manufacturing jobs in general were waning even before the recession, with employment shrinking by 22 percent between 2002 and 2012. The aerospace sector grew 7 percent over that same period. And the sector is expected to keep growing. Boeing projects a demand for 35,000 new planes by 2032. Airbus projects building more than 29,000 jets in the same period.

States are fighting to land these jobs. Boeing, the world’s largest aerospace company, sparked a bidding frenzy among states last year when a workers’ union in Washington state rejected the company’s contract offer and the company started looking elsewhere to make its 777X jet. Missouri, for example, held an emergency special legislative session in December 2013 and approved a $150-million-a-year economic incentive package to lure Boeing there.

Washington kept the project after the union decided to accept the offer after all, including freezing pensions and changing to a 401(k) plan.

The auto industry’s strong presence in the South has helped the region compete for aerospace jobs, in part because of the number of suppliers there that can provide goods to both sectors. The lower cost of living in some areas and a military presence with aviation-focused technologies and expertise also help attract aerospace companies.

Hourly compensation rates in general averaged $27 in Southern states in 2013, compared to $30 nationally. In the aerospace industry, labor costs in Washington are among the highest in the country. The mean annual salary of an aerospace machinist in Everett was $53,500, compared to $45,500 in Charleston, S.C., and $42,500 in Kinston, N.C., according to a 2009 consultant’s report. In previous years, California, Kansas and Washington all had educational institutions that provided aerospace companies with a stream of engineers and technicians with the know-how for such complex work, explained Sujit M. CanagaRetna, a fiscal policy manager at the Council of State Governments, who has studied the issue in a new report. These states still can offer the expertise, but other states are offering to provide specialized training, including those in the South.