by  Molly Parker, Mike Fitts
and Ashley Fletcher Frampton

In this tough economy, even the smallest economic achievements have been blasted through the megaphone as recession-weary businessmen and women look to latch onto a sliver of hope.

So when Boeing selected Charleston for its second Dreamliner assembly line, the standard megaphone just wouldn’t do.

Suddenly, it seemed that no statement was overstatement.

“This is a life-changing event,” said Garry Neeves, vice president of business development for Regal Logistics, a third-party logistics provider that just recently set up shop in Charleston.
Glenn McConnell, S.C. Senate president pro-tem and a Charleston Republican, called the announcement “transformational.”

But what, exactly, will be transformed?  And how many parallels can be drawn to the state’s landmark economic development boon of the 1990s, the decision by German automaker BMW to locate a manufacturing facility in the Upstate?

Business and political leaders say Boeing’s plans for thousands of jobs will mean new demand for housing, increased personal spending, suppliers locating nearby and a vote of confidence that could make other corporate CEOs take notice of what the Lowcountry has to offer.  

Some of that impact will be long term.

More immediately, measurable changes include the expected infusion of construction jobs. Boeing estimates that about 2,000 jobs will be added after it breaks ground on its plant this month.

“That means Christmas to a lot of families,” said Joe Taylor, the state secretary of commerce, alluding to other short-term impacts the Boeing buzz could give the economy.

“Do you think the confidence, Mr. Mayor, is a little bit higher today?” Taylor asked, rhetorically, of Charleston Mayor Joe Riley at a press conference. “I bet the real estate market in Charleston got a jolt,” he said.

Local real estate experts agree the news is great for their industry, though some are looking long-term for the “jolt.” 

“I don’t really see it coming for another year or two, when they finish building the plant and moving people here,” said Gettys Glaze, president of the Multiple Listing Service in Charleston.

Glaze said the potential for thousands of new jobs is exciting and positive for his industry, but the local market is still plagued by oversupply of homes for sale, low demand and prices that aren’t realistic in today’s economy. New jobs will help boost demand in the next few years, but the news isn’t an instant fix.

Patty Scarafile, CEO of Carolina One Real Estate, said people tend to buy homes when they feel secure about their jobs. But the bulk of the promised new jobs aren’t coming until the plant is built, which Boeing officials expect to be some time in 2011. 

Construction boom to come

Scarafile said construction jobs could help the local economy and real estate market sooner. Another short-term win is the general optimism about the local economy that the Boeing buzz has created.

“Consumer confidence plays a large part in decisions that people make,” she said, whether they are buying gifts for Christmas or new homes.

Glaze said he hopes the optimism doesn’t worsen the problem of sellers listing their homes for the amount they need to make, not what the market will bear.

“What I hope does not happen is it creates a false expectation for sellers out there not to be realistic with their pricing,” Glaze said.

While it might be another year or more before Boeing begins hiring large numbers of workers, already some executives are seeking new homes in Charleston, Scarafile said. Carolina One is working with a third-party relocation company that is helping them.

“Actually we’ve begun to see a few of the executives already exploring housing opportunities in Charleston,” Scarafile said. “But we’re talking about single digits, not large numbers of moves at this point.”

The local commercial real estate market could also get a boost from Boeing’s announcement, said Thomas Buist, senior vice president for industrial services at Grubb & Ellis/WRS. 
Buist pointed out that the news came only weeks after TBC Corp. announced plans to locate a 1.1 million-square-foot tire distribution facility in Jedburg.

Many have said the Boeing announcement blows right past German automaker BMW’s investment in the Upstate in the 1990s, often cited as the standard for economic development in South Carolina.

But while Boeing may also be another game-changer for the state, the game might play out differently, said Doug Woodward, a Moore School economist.

Woodward conducted a study about Boeing’s potential impact for the company, the details of which have not been cleared for release by the company. Woodward also has studied the breadth of BMW’s economic benefit to the state.

They’re both huge investments in South Carolina, he said. But the aviation business is markedly different from auto manufacturing, and growth likely will take shape differently.

BMW required some of its suppliers to relocate to the state, which is not part of Boeing’s plan. It has been building an international supplier network for the Dreamliner for several years.

There should be some new businesses that follow Boeing into the state, and some expanded work for existing manufacturers such as tire maker Michelin, Woodward said, but it’s not likely to be such a surge as BMW brought.

“We do have a large manufacturing base who could move what they do in this direction,” Woodward said.

Boeing could drive growth by locating additional aircraft assembly projects in North Charleston in years to come. “That has huge potential,” Woodward said.

That potential is raising concern in Washington state over the move to South Carolina, he said. He noted that BMW has changed the vehicles that it has made in Greer while greatly increasing its overall investment in the state.

Since the first vehicles rolled off BMW’s assembly line in 1994, the plant has expanded from 1 million square feet to 4 million square feet. The workforce  has soared from 600 when the plant opened to 5,000 today. Five models have been built in the plant. Annual production will grow to 200,000 vehicles a year when a $750 million expansion is completed.

But, Woodward said the Charleston area aviation cluster’s future is tied to the success of the Dreamliner.

“Ultimately, it’s up to the demand for the airplane,” he said.