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Landing Diverted
EADS bypasses Palmetto State
By Matthew French
Staff Writer
EADS North America’s key determinant in selecting Mobile, Ala., over North Charleston boiled down to 2,000 feet—the distance from Mobile’s deep-draft loading facility to the airport and the assembly plant site.
“Alabama created the site ‘perfect storm,’” says Ralph D. Crosby Jr., EADS North America’s chairman and CEO. “They have a deepwater draft loading facility immediately adjacent to the airport and runway, so the components would only have to move a maximum of 2,000 feet to the assembly site. No one could come near the risk minimalization and cost effectiveness of that site.
“All four potential locations were very qualified candidate sites, with the Brookley Industrial Complex (in Mobile) meeting or exceeding all of our requirements for the KC-330 production facility,” he says. “In the end, it was a tough decision to make, but Brookley has shown it has all we require in terms of transportation infrastructure, runways, community support and an active aerospace industry.”
Mobile and Charleston also battled for the Global Aeronautica plant, a partnership between Dallas-based Vought Aircraft Industries and Italy-based Alenia Aeronautica. The partnership eventually chose Charleston to manufacture the fuselage for Boeing’s 7E7 Dreamliner jet. Mobile dropped out of the Global Aeronautica race in August 2004 after the company said it expected to employ 600 people, about 400 fewer than the Alabama contingent had been lead to believe in earlier discussions.
The Lowcountry had been in the running for EADS alongside Melbourne, Fla., Kiln, Miss., and eventual winner Mobile, Ala. The four finalist sites had been selected after the company received more than 70 site proposals from 35 states.
The consolation prize
The company was impressed by each of the four sites it reviewed and will create a tri-state university-level engineering internship and cooperative program at the engineering center in Mobile, Crosby says.
Graduate and undergraduate students from Florida, Mississippi and South Carolina will be selected to work at the Airbus facility under terms of five-year, $100,000 grants provided to each state by EADS North America. Participants in the program will be selected by the individual states.
A competitive edge
In addition to the short distance from Mobile’s deep-draft facility, the city had another edge over all other contenders: a strong, preexisting EADS presence.
In January, EADS North America opened an aircraft support center, which was built to support the Coast Guard in transitioning the CN-235 maritime patrol aircraft into active service, as well as providing computer-based training to maintenance crews and serving as the primary spare parts depot and service center for CASA aircraft, headquartered in Madrid, Spain.
The 13,000-square-foot service center employs about 30 people. Mobile also has been selected as the site to build the company’s C-295 transportation aircraft, which it plans to offer to the U.S. Army. If EADS is awarded this contract, it would likely add an 18,000-square-foot hangar facility at the site.
Zero net loss
While Charleston did not gain the estimated $500 million to $2 billion the engineering center and possible aircraft plant could have brought to the region, neither did it lose anything.
“The actual economic impact of not getting the plant is zero,” says Al Parish, director of the Center for Economic Forecasting at Charleston Southern University. “We didn’t lose anything, but neither did we gain anything. If it was indeed better incentives that lured it to Mobile, then we have to look at what was offered.”
David Ginn, president and chief executive of the Charleston Regional Development Alliance, says the region has nothing to prove and that it wasn’t for lack of something vital that Charleston was not selected.
“We have already shown the world that we are competitive in terms of infrastructure, people and training,” Ginn says. “We have the business packages that we are able to deliver and are already competitive.”
Ginn says he looks at the current status of economic development in the Charleston area with a positive view.
“I look at this as an exciting bird-in-hand scenario: We already have Boeing, through Vought and Alenia, and they are working on their 400-acre site now and have very exciting plans for the future,” he says.
Alliance members also courted 75 aerospace executives during the recent Paris Air Show and are pursuing three projects from those meetings.
Parish echoes Ginn’s sentiment, saying the region did not lose anything but adds that some soul searching should now take place to ensure similar opportunities don’t bypass the region in the future.
“What we will have to do now is evaluate where we missed the criteria and move forward so that, when another company like EADS comes along, we don’t miss the opportunity,” Parish says.
The state not winning the EADS bid can be compared to the state’s loss of a bid to lure Mercedes, Ginn says.
“When South Carolina won the BMW plant, we didn’t sit back and say, ‘Gee, I hope we get another one, just to prove that we’re good,’” he says. “We’d gotten one of the best in BMW, so who cares if Mercedes goes to another state?
“Now we’ve got Boeing here, one of the best,” he continues. “It would be nice had EADS come here, but we don’t need them here to prove we’re good and to prove we’re competitive.”
Clare Morris, director of marketing and communication for the S.C. Department of Commerce, says she doesn’t think there was anything the state could have done better to lure the company here.
“In his discussions with the company, (EADS) commended (Commerce) Secretary Faith, on how professional, prepared and polished the presentations were,” Morris says.
The Commerce Department is certainly disappointed for the state but adds that the time put into the project and presentations will not go to waste. The state can build on that information and be even more prepared when future prospects consider the state, she says.
“I feel like South Carolina will increasingly be regarded as an elite aviation destination,” Morris says.
Where Charleston missed out
It is widely speculated that several factors could have hurt Charleston’s chances at landing a second aircraft plant in a year: education, incentives and infrastructure. The lack of a skilled technical workforce would likely be a problem the company faced regardless of its choice of location. Not many places have 1,000 skilled engineers sitting around unemployed, says Parish.
“If EADS had chosen Charleston over Mobile, they would almost certainly have to import a considerable number of highly skilled laborers,” he says. “With Vought-Alenia here, as well as the other Lowcountry manufacturers, there certainly aren’t 1,000 people who can fill that void. However, Mobile doesn’t have the workers, either; they already have two EADS plants, so they too are going to have to import the labor.”
The education reputation
The big drawback to the Charleston area, and South Carolina as a whole, continues to be education, Parish says.
“I think that’s the one thing that keeps a lot of companies from looking at us,” he says. “It’s not about taxes, but indirectly about the workforce and available labor. If it weren’t for Trident Technical College teaching some of these specialized skills, we’d be in real trouble.”
South Carolina needs to learn from this process and focus more attention on education to ensure students receive the instruction they need to succeed in the business world, says Otis Rawl, vice president of public policy for the South Carolina Chamber of Commerce.
“The first thing we have to do is continue to improve our education system to make sure that we have qualified employees for when the next opportunity comes along,” Rawl says.
Incentives
It will likely be some time before it is discovered exactly what incentives EADS was offered by Mobile and the three losing sites. Alabama has been highly successful in economic development and is widely known for giving large incentives to bring large employers to the state.
EADS refused to discuss the incentive package until all the details have been worked out.
“When Mercedes chose Alabama over South Carolina in the early ’90s, it did so because Alabama offered incentives that we, to our credit, weren’t willing to match,” says Parish. “As a result, the Mercedes plant hasn’t even paid for itself. If Alabama did something like that again, then, as hard as it might be to stomach, we were right in not matching them.”
Infrastructure
Charleston’s network of roads is not comparable to other parts of the nation. While Interstate 26 leads to Interstate 95 and the upstate, it is the only major corridor to and from the region. That, most concede, is a problem unlikely to change in the foreseeable future.
However, Parish says he is surprised that EADS chose Mobile over Charleston, given the efficiencies available at the South Carolina port that are nearly unmatched.
Besides being 2,000 feet from the site, “If EADS liked Mobile’s port or airport structure or setup better, it’s something we have to look at to fix,” he says. “Their port is not nearly as efficient as ours or as large as ours.”
Matthew French covers manufacturing for the Business Journal. E-mail him at mfrenchg@crbj.com.
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