Boeing to invest $1 billion to expand South Carolina 787 factory

By Harriet McLeod

CHARLESTON, South Carolina (Reuters) - Boeing Co plans to invest at least $1 billion to expand production at its 787 Dreamliner factory in South Carolina over the next eight years, creating at least 2,000 jobs at the final assembly plant in North Charleston.

Boeing made the announcement a day after rival Airbus broke ground for a $600 million airplane factory in Alabama, which it says will create 1,000 jobs.

South Carolina is considering providing $120 million in funding to help Boeing's expansion, state Rep. Bobby Harrell, speaker of the South Carolina House, said on Tuesday.

Boeing recently agreed to pay Charleston County Aviation Authority $12.5 million for about 320 acres adjacent to its campus, doubling its footprint.

The state money would pay for roads, site preparation, utilities and construction, said Harrell, who introduced a bill for the funding Tuesday.

When Boeing came to South Carolina in 2009, the company told state officials that it would invest $750 million and create 3,800 jobs, Harrell said.

"They did $1 billion and created 6,000 jobs and counting, and they did it in three years," Harrell said. "This is a company that is known for underpromising and overdelivering."

In addition to expanding production of the 787 - which has not flown in nearly three months due to battery problems - Boeing will build an information technology center, Harrell said. The construction will also include an engineering component and a research and development component, he said.

To qualify for the incentives, Boeing said it would create 2,000 new jobs and invest more than $1 billion in South Carolina over the next eight years. The moves are "part of our overall plan to capture market growth and deliver on our commitments to customers and other stakeholders," said Candy Eslinger, a Boeing spokeswoman in South Carolina.

Since 2009, Boeing has invested more than $1 billion in land, facilities, infrastructure, and tooling in South Carolina, Boeing South Carolina spokeswoman Candy Eslinger said in a statement.

South Carolina also gave Boeing $270 million in appropriated state money at its startup of the plant, Harrell said. But with tax breaks, leasing breaks and other incentives, South Carolina's incentives to Boeing at that time added up to an estimated $750 to $900 million.

Boeing's 787 Dreamliner has been grounded since January 16 after lithium-ion batteries overheated on two jets that month.

Boeing redesigned the battery system and completed testing last week. The new system is awaiting approval by the Federal Aviation Administration and foreign regulators. On Tuesday, United Airlines scheduled a flight for May 31 with the new jet, a sign of optimism that it will be back in service by then.

(Reporting by Harriet McLeod in Charleston.; Editing by Alwyn Scott and Alden Bentley)