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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

July 1, 2009 at 10:29 AM

Is Boeing moving toward 787 assembly in South Carolina?

Top of the News: Is Boeing getting ready to drop another 787 bombshell? If so, it might land right in the heart of the Puget Sound aerospace cluster.

Persistent threats and rumors about the company adding production in the Charleston, S.C. area get more heft from blogger Jon Ostrower, who reports that sources say Boeing is poised to buy the Vought’s 787 operations in North Charleston that make the aft fuselage.

Last year, Boeing acquired Vought’s 50 percent interest in the plant where major sections of the Dreamliner are assembled.

If true, the news raises two issues. First, Boeing is desperate to assert more control over the disjointed supply chain for the much-delayed 787 (You can check out an animation of the chain here). Second, and more ominous, concerns hints that Boeing might set up a second 787 production line in union-averse South Carolina.

If the move happens, it’s the most striking evidence yet of a clear and present danger to some of the region’s best-paying jobs. Boeing executives, who made clear their contempt for Seattle by moving the headquarters, have given warnings about their displeasure with unions here. Union leaders say they are being made the scapegoat for bad management decisions. It will be gut-check time for state officials and the governor’s aerospace council.

The Midweek Briefing: The challenge led by China to the dollar as world reserve currency is real and growing. Says NYU economist Nouriel Roubini: “The process that will lead – in the medium to long term – to a challenge of the U.S. dollar as the major global reserve currency has started. The U.S. creditors – the BRICs, the Gulf states and others – are becoming increasingly alarmed that the U.S. will deal with its unsustainable fiscal path via inflation and debasement of the value of the U.S. dollar via depreciation. So they will not sit idly waiting for this to happen: they are already diversifying into gold, into resources…”

–Not good news for trade or inflation bugs: Japan’s core CPI was negative in May for the fifth consecutive month, posting its steepest decline since record-keeping began in 1970. That’s deflation. Euro zone countries aren’t doing much better. This gives some ammo to Fed governor Janet Yellen, who in a Tuesday speech said lack of inflation is her bigger worry.

–Even with the recession, cities in the Northwest continued to grow, according to new Census data. From July 2007 to July 2008, Seattle grew by 1.6 percent to around 599,000; Bellevue by 2 percent; Tacoma by 1.2 percent; Vancouver by 1.8 percent; Spokane by 0.6 percent, and Portland by 1.7 percent.

Today’s Econ Haiku:

Can these guys play nice?

Google Aps Sync for Outlook

Wait for the next brawl

Comments | More in Aerospace/Boeing


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