Dividends and Boeing to move all Dreamliner production next year

When you buy a dividend paying company, it often has production facilities in multiple locations, this is good for diversification. It is also good when companies play off each municipality and state to receive the most grants or forgivable loans or industrial bonds or other incentives municipalities and states can offer. All companies were started somewhere so that is their historical home, but many other the years move to other areas. In the case of Boeing, the company was founded in the Seattle area, the corporate headquarters a few years ago was moved to Chicago and the company established a plant in South Carolina in 2012.

In an article by Eric M Johnson of Reuters, the company examined their costs, decided on a cost-cutting strategy to move operations for the Dreamliner or the Boeing 787 production from Seattle to North Charleston, South Carolina. It was good news for one city, bad news for another. The company said, the single site would improve operational efficiency as the US plane maker adjusts to the market downturn and positions itself for recovery.

If the idea of union and non union workforces played a role, it might have. Seattle is unionized, the union tried to organize the South Carolina plant but was unsuccessful.

In Washington State and in Seattle, politicians took out their “swords” and called the move an insult to the workers who work there and would examine the company’s favorable tax treatment.

The labor force in South Carolina maybe less expensive, but for Boeing to increase production to the 10 or 11 planes a month will mean a significant investment in the South Carolina facility.

Linking to dividend paying stocks, all large companies will go through a similar type of decision making process when it comes to cost cutting. One facility will benefit while another will not. One hopes the remaining plant location was enough diversified that people will do other things. However with every production facility an infrastructure develops to help train and support those jobs. From the community colleges and universities to retraining facilities to supplier jobs in the community. What decisions will they make? When profits are being made, all can be good with the company. When the company enters a cost cutting program, the benefits are to the company not the community.

There are more questions than answers, till the next time – to raising questions.

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