Boeing to Get Another Taxpayer-Funded Gift

February 26, 2010

Investigative Reports

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The NerveOnce again, S.C. officials are doling out millions in taxpayer dollars to aerospace giant Boeing as the state’s general fund budget continues to bleed heavily.

The state Budget and Control Board without discussion Tuesday unanimously approved a request by the S.C. Technical College System for an additional $3.1 million this fiscal year to train Boeing workers through its Center for Accelerated Technology Training, also known as readySC.

Kelly Steinhilper, spokeswoman for the Technical College System, told The Nerve on Wednesday the money will be used to train workers at Boeing’s two existing facilities in North Charleston and the 787 Dreamliner final assembly plant under construction at the site.

The money was authorized under a budget proviso that allows the Technical College System, with Budget and Control Board approval, to “expend whatever funds as are necessary to provide direct training for new and expanding business or industry” through the Center for Accelerated Technology Training.

The proviso was last used in fiscal year 1994-95, Steinhilper said.

The Boeing training project, to be done in North Charleston, will increase the readySC program’s estimated expenditures this fiscal year by 55 percent to a projected total of $8.7 million, according to program documents.

It’s unclear where the additional $3.1 million will come from in the state’s general fund budget, which has been slashed by nearly $439 million since July 1. Even with those cuts, lawmakers are facing a projected $563 million deficit for next fiscal year.

Steinhilper referred all budget questions by The Nerve to the Budget and Control Board.

When asked by The Nerve about the new money for Boeing, Budget and Control Board spokesman Michael Sponhour said, “It’s basically an open-ended account. … The additional spending for that will be dealt with when the comptroller general closes the books (for the current fiscal year).”

The Comptroller General’s Office didn’t offer more clarity, either, though Comptroller General Richard Eckstrom joined fellow Budget and Control Board members Gov. Mark Sanford, Treasurer Converse Chellis, Senate Finance Committee Chairman Hugh Leatherman and House Ways and Means Committee Chairman Dan Cooper in approving the additional money.

Eckstrom spokesman R.J. Shealy told The Nerve on Wednesday that “excess unclaimed lottery prizes” would cover the difference. The readySC budget this year, without the Boeing training costs, already included an estimated $2 million in unclaimed prize money; with the Boeing project, the program faces a $2.2 million deficit even with the $2 million in lottery money.

The additional $3.1 million to train Boeing workers could have paid the salaries of more than 60 public school teachers this year, based on the state’s average teacher pay. School districts statewide this year have eliminated 1,400 teaching positions, even after receiving federal stimulus funds, according to the S.C. Department of Education.

Ironically, just before approving the new Boeing money, the Budget and Control Board voted to allow the state Department of Corrections to run an approximate $29 million deficit this fiscal year.

 

Bonanza for Boeing

Last month, the board quietly approved $270 million in bonds for the new Boeing plant, which, when interest is included, will cost state taxpayers a projected $400 million over 15 years.

Conservatively, S.C. taxpayers will shell out at least $500 million in incentives for 3,800 promised jobs at the new plant, or at least $131,578 per worker.

In a written response to a list of questions posed by The Nerve, Steinhilper said the readySC program is “committed to train up to 3,800 employees for the new second production line.”

She couldn’t provide a total estimated cost of the training, though a Department of Commerce cost-benefit analysis obtained earlier by The Nerve estimated it would cost nearly $34 million over 15 years.

Boeing spokeswoman Candy Eslinger told The Nerve on Wednesday that the Chicago-based company had planned to employ about 1,000 workers at the new plant with the scheduled production start-up in July 2011.

Under legislation passed in October, the company has seven years to create the 3,800 jobs, though the final incentives agreement allows a portion of those positions to include non-Boeing contract workers, such as janitorial and security personnel.

Experienced workers who want to be hired at the North Charleston site can apply at www.boeing.com, Eslinger said. Those who need training will go through the readySC program (www.readySC.org/787charleston ), she said.

The program is not yet accepting applications for the new plant because its classes are full, Eslinger said. About 600 people are currently being trained for Boeing’s two existing facilities, Steinhilper said.

Eslinger noted that “99 percent” of the current trainees are South Carolinians. She said Boeing “will focus on South Carolina” in hiring for the new plant, though when asked for a percentage estimate, she replied, “I don’t know if we know those targets right now.”

A group of workers at one of Boeing’s existing plants told The Nerve in December that about half of the workforce there were out-of-state contract employees, including many foreign nationals.

The readySC training is being done at Trident Technical College in North Charleston and on-site, Steinhilper said. There are two phases for both current and future Boeing workers; phase one, which started Jan. 7 for workers at the existing plants, is a 32-hour training program, while phase two is a 12-week course, she said.

In phase one, participants are not-yet hired Boeing workers and are not paid by the company during the training period, Steinhilper said. Participants accepted in the second phase are paid Boeing employees, she said.

The additional $3.1 million for the training program is broken down as follows, according to program documents:

 

  • Materials/supplies: $985,000
  • Staffing: $750,000
  • Lab Upfit: $600,000
  • Tool Room: $500,000
  • Operations: $185,000
  • Testing: $80,000

 

Steinhilper said the readySC program has about 45 certified instructors to “deliver training for Boeing,” all of whom are temporary program employees.

The training lab at Trident Technical College was upfitted to “provide effective hands-on training in an environment that parallels the factory floor setting,” Steinhilper said. The space is used to conduct training for projects in Charleston, Berkeley and Dorchester counties, she said.

Last fiscal year, readySC trained 5,116 South Carolinians for jobs at 83 companies statewide, Steinhilper said.

The program, she said, is “one of the oldest and most highly-acclaimed economic development training programs in the country.”

Reach Brundrett at (803) 779-5022, ext. 106, or rick@scpolicycouncil.com.