The Man Who Landed the Golden Goose
2010 Person of the Year: South Carolina's Jack Ellenberg
By Mike Randle
Jack Ellenberg has worked with the South Carolina Department of Commerce since 1996. In his years as an economic development practitioner, he has worked many of the Palmetto State's largest and most notable projects, including BMW, Michelin and Google. While BMW will likely remain South Carolina's most important catch in its economic development history to date, the recent Boeing deal directed by Ellenberg will certainly advance to a close second when it is all said and done.
While Jack Ellenberg is Southern Business & Development’s "2010 Person of the Year" for his work in landing the Boeing project, other South Carolina officials worked as a united front during the Boeing site selection process. Some of those individuals' roles in the landing of Boeing are explained at the end of this story.
In the meantime, we talked to Jack about the Boeing project. Here is what he said to us:
SB&D: Jack, you worked on the Boeing project from Day One. Tell us about it.
Ellenberg: We laid the groundwork for Boeing many years ago. If you go back to the beginning when Ed McCallum (the consultant with the firm McCallum Sweeney, who advised Boeing in 2003) had what was then the first final assembly line for the 787, we worked closely with them and put together a very compelling argument that South Carolina would be a great location for Boeing. Unfortunately, it didn't go in our favor then.
What came out of that were the Vought facility and the Global Aeronautica joint venture facility (Boeing and Alenia). Vought would make the aft fuselage and Aeronautica would integrate the center section with the aft fuselage and load them on to the LCF (Boeing's transport plane, called the Large Cargo Freighter) and send them to Everett, Wash. We had the LCF base, which was important.
When we worked the deal and got Vought and Alenia, it was critical in our minds that we create an opportunity to allow final assembly of something. For example, back at that point in time, we went to great lengths to make sure that the entire site was permitted from an environmental standpoint so we could maximize build out of the property.
Again, this was something we had been preparing for for some time. I go back to our goal on Day One and that was obviously to get the original assembly line. We understood why we didn't get it. We were pleased that we got Vought and Alenia, but our goal had always been final assembly. That's why we put the pieces in place to move forward.
SB&D: What concerns did Boeing have about moving its first commercial aircraft final assembly plant outside of Washington State to South Carolina?
Ellenberg: When Boeing came around this time, obviously after acquiring Vought and Vought's share in the joint venture in Aeronautica, one of their chief needs was to be able to get moving quickly. The company had to know if they could get moving as quickly as they needed to to make the timeframe on construction and because we went to great length to permit the entire site, the answer was yes. So, again, going back to that argument that we felt our end game was always final assembly, we made sure everything was in place to allow for that. So when it came down to decision-making time, a lot of the pieces were already in place for the company to make a decision.
SB&D: The media and others have pointed fingers at the union in Washington as the reason Boeing didn't put the second line in the Puget Sound region. What about cost factors? Didn't they play a huge role in the decision by Boeing?
Ellenberg: I can't speak about labor issues Boeing had to address out west. You will have to talk to Boeing about that. But, costs were absolutely a factor in the project, both short term and long term. You're looking at a cost savings for the diversification and the assurance that you do have multiple manufacturing facilities. That the cost of doing business in South Carolina is lower than in Washington is something that factored heavily in their decision. It's not just today, but to them it's a long-term calculation, if you will. So absolutely, cost differentials did play a role.
SB&D: What about the supply chain to Boeing? Will there be a significant number of suppliers to the plant, like, say, an automotive facility?
Ellenberg: It's not like an automotive project, in as much as, if you look at the logistics model that exists today with the current 787 line, you have major components made around the world. The wings are made in Japan. Part of the fuselage is coming out of Italy; part of the fuselage is coming out of Wichita and South Carolina. You have the engine components, etc. and they are all being flown in the LCF (Large Cargo Freighter) to Everett.
Obviously, with South Carolina becoming a second assembly line, you are going to see a lot of those components coming into the state for the final assembly. However, it will be a delivery center. So to the extent that you have pieces that go into the final, kind of just-in-time model, relative to delivery for a particularly airline, we could see the benefit of that. But I don't see the logistics model changing dramatically from the one they already have.
There will be multipliers, obviously. I don't think you will see as large a number of tier-ones (primary suppliers) that would show up, say, like they did with BMW, again, because the logistics model is already in place. But you will have the tier-twos and tier-threes that will exist to support the logistics model. South Carolina does have a vibrant aerospace industry. I think you will see growth in our existing aerospace sector in the state as a result of the new Boeing facility.
SB&D: What about the site that Boeing is building on at the Charleston International Airport? Is it large enough for future expansion by Boeing?
Ellenberg: It is a bigger site than I think a lot of people realize it is (about 300 acres). It is a site they are comfortable with for their second 787 line. They've left room for expansion. Quite honestly, they haven't indicated what for. I think a lot depends on the continued success of the 787 line and the facility. But they do have room to grow that footprint.
SB&D: Some in Washington State and elsewhere have made it public that the quality of labor in South Carolina and the South in general is not good enough to build next generation aircraft. What do you say about that?
Ellenberg: South Carolina has a workforce that can make the best and most advanced products in the world. Some of the best, most well known products in the world are made right here. We have addressed those issues that might impede a business from being successful; tort reform, workers' comp reform, tax reform, worker training. At the end of the day it starts and stops with our workforce. We have a tremendous workforce. We have some of the best worker training in the country. I would argue that it's the best, but I recognize others are very capable as well.
SB&D: What would you like to say to the competition, or officials in Washington State? Some of the comments made by the Seattle and Washington-based media certainly brought to the surface once again the old misperceptions and Southern stereotypes.
Ellenberg: That's another thing. You go back to the way the deal was done. We are very proud of the fact that, you know, we didn't choose to discuss the merits of the project in the press. We don't believe in South Carolina putting its business on the street. I think that was much appreciated by the executives of Boeing that they knew when they were talking to us, it was staying with us.
If a company cannot be successful in one location, they are going to find a place where they can be and that's true anywhere in the world. So we take great pride in creating a business environment where companies can be successful. It’s just one reason why we’ve had the success we've had and why we have some of the most successful companies in the world choosing to manufacture their products here.
SB&D: We know that the original Boeing project in 2003 was yours and you were the point person for this one. Tell us how South Carolina officials united together to make this happen.
Ellenberg: This was a team effort, something we spent years building towards. When it came to crunch time, we were able to pull the team together, state and local, to get what we needed to get done.
A united front for Boeing in South Carolina
There are many people who deserve credit for landing Boeing, but none deserve it more than South Carolina Deputy Secretary of Commerce Jack Ellenberg. Jack has been on the Boeing project since 2003. And since his position isn't an appointment and he is not an elected official, few people realize Jack's critical involvement in the Boeing deal.
With a project, though, as large as Boeing's is, elected and appointed officials were equally involved in making the deal happen. Here are some officials that helped make the Boeing deal a reality in South Carolina.
U.S. Sen. Lindsey Graham
Former S.C. Commerce Secretary Bob Faith and current Secretary Joe Taylor
S.C. Gov. Mark Sanford
State Sen. Hugh Leatherman
Speaker of the House Bobby Harrell
President pro tem Glenn McConnell
Former Chief Judge and Nexsen Pruet executive Billy Wilkins
State Sen. Paul Campbell
Steve Dykes, Executive Director of the Charleston Co. Dept. of Economic Development
Charleston International Airport Aviation Authority