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Boeing leases more South Carolina land as jet programs ramp up

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(Globalpost/GlobalPost)

By Harriet McLeod

CHARLESTON, South Carolina (Reuters) - Boeing Co <BA.N> has obtained a $1-a-year lease for another large tract of state land near its factory in South Carolina that will nearly double the amount expected for a planned expansion, a spokeswoman for the plane maker said on Friday.

Besides 267 acres it had planned to lease from the Charleston County Aviation Authority, Boeing added another 201 acres that had been privately owned, spokeswoman Candy Eslinger said.

Boeing did not say what it plans to build on the land, which is near its 787 Dreamliner final assembly plant in North Charleston.

The South Carolina land deal closed three days after Boeing received proposals from other states, including Missouri, Georgia, Alabama, California and Kansas, that want the company's lucrative new jet program, known as the 777X. Landing the program would mean thousands of jobs and billions of dollars in economic benefit to the winning state.

Palmetto Railways, a division of the South Carolina Department of Commerce, paid $49 million for the land, a department spokeswoman said. It will lease the property to Boeing for $1 a year until 2027, when the company can opt to buy it.

Boeing also leases the 264 acre-plot for its 787 final assembly plant for $1 a year from the Charleston County Aviation Authority. The lease term on that land expires in 2025, when Boeing has the option to purchase it.

The 468 acres in the latest tracts were bought with state bond funds allocated to Boeing that could only be used for land purchase and preparation, Eslinger said.

As part of the land transaction, South Carolina recently sold $85 million in bonds, raising a portion of the $120 million the state approved last spring for Boeing's expansion. The funds include money for infrastructure and wetlands mitigation.

Boeing has spent at least $1 billion in South Carolina and has committed to investing another $1 billion and hiring 2,000 people over the next eight years for work tied to the 787 and other projects.

Boeing also announced on Friday that it would begin construction next year on a new 230,000-square-foot paint facility on its main campus in North Charleston. The company said it expects to begin painting fully assembled 787 Dreamliners in South Carolina in mid-2016.

In November, it kicked off construction of a 225,000-square-foot propulsion center that will design and assemble part of the engine housing for another new jet, the 737 MAX. The facility is on Boeing-owned land about 12 miles from the main campus.

Boeing requested proposals for the 777X jetliner program from more than a dozen states after its unionized machinists in Washington state last month rejected a labor contract that would have guaranteed the plane be built there.

Boeing and union leaders met again this week and exchanged proposals, but on Thursday union leaders rejected a contract offer from Boeing.

Missouri lawmakers recently approved $1.7 billion in tax cuts and other benefits to Boeing. Alabama government leaders intend to pitch Huntsville, where Boeing has extensive operations. California, where Boeing's C-17 production is winding down, is also working on a proposal for the planemaker. Georgia has said it would offer two potential sites.

"We want it as bad as anybody else. And we can deliver it," Paul Campbell, director of airports for South Carolina's Charleston County Aviation Authority, said last week.

Washington state has remained in the running. Lawmakers last month passed $8.7 billion in tax incentives to keep Boeing in the region where it builds nearly all of its commercial aircraft. Analysts say there is a strong logic to building the new plane in the Seattle area, where the current 777 is made.

South Carolina officials tout the state's "right-to-work" status, which deters union organization of workers. Boeing opened its 787 Dreamliner final assembly plant in North Charleston in 2011 as the only other location besides Washington state in which it builds commercial airplanes.

The plant assembles fuselages for the 787, completing final assembly on about 1-1/2 planes per month. The production rate is expected to increase to three per month early next year, said Jack Jones, vice president and general manager of Boeing South Carolina.

(Reporting by Harriet McLeod; Editing by Colleen Jenkins, Lisa Von Ahn, Alden Bentley and Dan Greler)

http://www.globalpost.com/dispatch/news/thomson-reuters/131213/boeing-leases-more-south-carolina-land-jet-programs-ramp