The Drive to Move South
This article, published in Business Xpansion Journal in April 2005, is adapted from a report issued by The Council of State Governments' Southern office, the Southern Legislative Conference (SLC), in October 2003. The article outlines the growing role of the automobile industry in the Southern states and why it continues to be a leading destination for the industry.
Content
To
lIIove
By Sujit M. CanagaRetna
Editor's Note: This article is adapted Jrom a report issued by The
Council oj State Governments' Southern oJJice, the Southern Legislative
ConJerence (SLC), in October 2003 .
The Southern Legislative
B
growing role of the auto-
eginning this fall, Hyundai Motor Corp., the South Korean
automaker that is competing aggressively and successfully
against both U.S. and fo reign automakers for the loyalty of
American consumers, will start producing sedans at its first
American manufacturing plant in Montgomery, Ala.
Hyundais decision to locate a manufacturing facility in the Deep
South reflects a trend that has gathered momentum in the last two
decades, i.e. , an increasing number of foreign automakers establishing assembly plants in the South. From BMW in Spartanburg
County, S.c. , to Mercedes in Tuscaloosa, Ala., to Toyota in
Georgetown, Ky, an expanding number of Southern states have
succeeded in luring an impressive roster of foreign automakers to
set up assembly operations within their borders.
America's complicated and multi-faceted love affair with the automobile has flourished for more than a century now. The automobile's impact on American society and cultural mores remains so
pervasive that there are few other products that can stake the same
claim. In fact, few, if any, other products have been so enshrined in
Conference outlines the
mobile industry in the
Southern states and why
it continues to be a
leading destination
for the industry.
April 2005
35
the nation's movies, clothing, dance,
music and in the general American
psyche as has the car. Similarly, automobiles have been reviled, celebrated,
nearly worshiped, sometimes banned ,
used incessantly and relied on ·almost
entirely for most of our surface transportation needs . In addition, there are
few other industries in the country
that can claim the kind of economic
complexity, broad connections and
impact that the automobile industry
can since the beginning of the 20th
century From employing a formidable
percentage of the nation's workforce
- numbering many millions in direct,
indirect and dependent employees at thousands of assembly plants and
auto parts production and service
facilities and tens of thousands of dealerships , the industry generates tens of
billions in wages and hundreds of billions in annual sales.
While the national economic figures
and their ripple effects remain truly
massive, the automobile industry'S
contribution to the economic magnitude of the 16 states in The Council of
State Governments' Southern region,
the Southern Legislative Conference,
remains significant too . According to
information released by the federal
government, the motor vehicle industry's contribution to the gross state
product of these Southern states
amply documents this assertion.
For instance , in 2001 , the industry
amounted to $ 10.3 billion in
Kentucky, $5.5 billion in Missouri and
$5.4 billion in Tennesse e. These
amounts constituted 8.5 percent of
GSP in Kentucky, and 3 percent of GSP
in both Missouri and Tennessee ,
respectively. Some of the specifics on
the role of the automobile industry are
worth reiterating to drive home the
point that the industry has catapulted
the states in the region to rank among
the fastest growing in the country
• The state of Kentucky is the fourth
largest car producing state in the United
States and one of the nation's top selling
cars, the Toyota Camry, is manufactured at the company's Georgetown
plant. The importance of the industry
to the state economy is more than confirmed by the 87,794 Kentuckians
employed by 461 motor-vehicle related
facilities as of July 2003.
• The BMW plant in Spartanburg,
S.c., announced in 1992, manufactures
the Z3 and Z4 roadsters and the X5
sports activity vehicle. This plant
involves a total investment of $1.9 billion and employs 4,300 workers. The
plant's total economic output is more
than $4.1 billion (based on 2001 operations) , in addition to supporting
16,991 jobs and producing $691 million in wages. State officials were ecstatic in September 2002 when BMW, to
commemorate the plants 10th anniversary in South Carolina, announced a
$400 million expansion with an additiona1400 jobs in the pipeline.
• The Mercedes plant in Tuscaloosa,
Ala., established in 1993, produced more
than 100,000 M-Class sports utility vehicles in 2002 and employed close to 2,000
people. Because Mercedes has initiated a
$600 million expansion in the state, the
number of employees is expected to
expand to about 4,000 people and production was expected to increase to
160,000 vehicles per year by 2004.
• Tn Mississippi , Nissan's announcement in November 2000 to build a
manufacturing facility in Madison
County near Canton was greeted with
great enthusiasm. The state provided
Nissan with $363 million in direct
incentives to build a $l. 4 billion
assembly plant. According to the
Mississippi Development Authority,
production at the plant commenced
ahead of schedule in May 2003 and
will result in 400 ,000 vehicles being
produced annually. In addition, in a little more than two years, 18 companies
had established operations as suppliers
to the Nissan plant. Some of the other
positive flows from the Nissan plant
include an estimated 31,683 total jobs
(direct, indirect and induced) by 2010;
$903 million in total personal income
(once again, direct, indirect and
induced) being generated, also by
2010 ; and , $393 million in Madison
County taxes and $287 million in state
taxes being generated by 2010.
• The South's latest automobile manufacturing plant was announced in
February 2003 when Toyota , the
world's third-largest automaker, decided to set up an assembly plant in San
Antonio, Texas. The plant, an $800
million operation employing 2 ,000
workers, is scheduled to build 150,000
Tundra full-size pickup trucks by
2006. While the combined state , county and City incentive package amounted to $133 million, the economic ripple effect is expected to reach $1 .4 billion within the next decade. In addition to the $80 million annual payroll,
thousands of spin-off jobs are anticipated given the need for parts and
other supplies.
The element of globalization
remains strong in the automobile
industry, and the ever-increasing roster
of foreign automakers establishing
assembly plants in the country, especially in the South, remains one of the
most striking features in the industry
during the past few decades. Several
reasons are proffered for the growing
number of auto makers that are either
locating or -relocating their assembly
operations in Southern states. For
instance, automakers can create
ground-up manufacturing facilities incorporating the latest technologies
- more easily in the South than reconfiguring the older assembly plants in
the Midwest and Northeast. Assembly
plants in the South, such as the Nissan
plant in Smyrna, Tenn., have achieved
impressive effiCiency and productivity
gains and automakers are eager to take
advantage of these gains. Southern
states have offered auto makers attractive incentive packages including such
compelling features as tax breaks, state
funding for programs to train workers,
an abundant labor pool at a relatively
lower cost, low rates of unionization
and the ability to train a workforce that
has not worked in the auto industry
previously
Another important consideration in
the location of auto plants in the South
involves the highly efficient intermodal
transportation networks in the region,
which includes highways, airports and,
most importantly, ports. A number of
the nation's busiest and most efficient
ports are located in the South, and they
remain a decisive factor in the location
calculations of the automakers. The
cluster effect, created by the presence
of numerous automobile assembly
plants and thousands of auto parts
suppliers in close proximity to each
other, is another major advantage
"Thefinest Business Park between Dallas and Atlanta"
Rankin County is strategically located within a day's
drive of many of the nation's most lucrative markets
throughout the Southern Sun belt region and the
industrial Midwest. In addition to the advantages
afforded by our excellent location, Rankin County
is in ~ position to offer you an impressive list of
state and local economic incentives:
• U.S . Customs Port of Entry
• Foreig n Trade Zone
• Right to work state
---
------ ==-::---
Rl'"KltI
The East Metropolitan Center, a newly developed
multi-use business park in Rankin County, MS, has
been targeted as potentially "the finest business
park between Dallas and Atlanta." The Centers
infrastructure provides all the amenities to make
it an excellent choice for corporate headquarters,
incubators, light and heavy industry, distribution
centers and other businesses.
ECONOMIC OEVELOPMENT AUTHORITV
601/825.2268
• Property tax exemptions
• Favorable state financing, sales tax exemptions & discounts
Mississippi
We have the right tools for the auto industry.
Mississippi is primed for growth. Or so thinks Nissan,
who brought their $1 billion plant to the state in
2000. We're at the hub of the South's auto corridor,
where suppliers, dealers, R&Ders and designers are
assembling. How about your business? Call today at
1-800-528-5196 or email [email protected]
for more information.
• Favorable unemployment insurance
rates, workers' compensation rates,
and tax rates
• Jobs tax credits
Child care tax credits
• Basic skills training & retraining
. ..and more!
MISSISSIPPI . \
POWER
A SOUTHERN COMPANY
1-800-528-5196 • www.mspower.com/ecodev
PHONE
l
36
601 / 825.2268 • FAX 60 1/825. 1977 • 10 1 Service Drive • PO Box 129 • Brandon, MS 39043 • www.rankinfirst.com
www.bxjonline.com
j
-- ~--- ---- ---- --
© 2003 Mississippi Power Company
April 2005
37
available to those automobile industry
players locating to the South. Finally,
the benefits flowing from such general
features as the weather, climate, cost of
living, lower or no personal income
taxes, free or inexpensive property
costs to build assembly plants , and
quality of life are some of the other
positive attributes considered by corporations locating the in South.
On the topic of the increasing globalization of the automobile industry, in
addition to foreign automakers
increasingly establishing plants mostly
in the American South, there is another important trend: a booming international trade in automobile and automotive parts. Even though there was a
significant increase in imports in passenger vehicles, light trucks and automotive parts between 1996 and 2002,
the growing relevance of international
trade in the industry is indisputable.
Despite a negative trade balance in
these items in 1996, the situation
worsened by 2002, when the u.s.
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country
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!.
Perhaps the most instructive statistic
to be extrapolated from the table
involves the continued decline of the
sale of American vehicles as a proportion of total sales in recent times. From
71.3 percent in 1997, this percentage
declined every year to finally reach 61.3
percent in 2002. In contrast, the sale of
foreign vehicles increased in each of
these years at the expense of American
vehicles, from 28.7 percent in 1997 to
38.7 percent in 2002. In fact, between
1997 and 2002, the sale of Japanese
vehicles increased from 23.6 percent
to 27.9 percent; German vehicles
increased from 2.9 percent to 5.4 percent; Korean vehicles increased 1.1 percent to 3.9 percent; and vehicles from
other countries increased, albeit marginally, from 1.1 percent to 1.5 percent.
It should also be noted that the foreign automakers generally have been
better at weathering the economic
storms than the Big Three, even recording impressive earnings levels in recent
years. Hence, it is quite apparent that
the industry in general will continue to
face serious obstacles and challenges in
rising to overcome the turbulent economic waters; the Big Three, in particular, will confront an even greater challenge as they tussle with the competition from foreign auto makers and an
economy still trying to leap over hurdIes in several areas.
But for the South, even with the
economic challenges, the surge of
the automotive industry brings the
promise of economic opportunity. The
sphere of influence of the industry is
undeniable, and the benefits derived,
1997
America
10,761
71.3ct/o
10,345
61.3%
5.40/0
430
2.9%
Japan
3,564
23.6%
Korea
169
1.1%
650
3.90/0
Other
163
1.1%
251
1.5%
Total '
15,087
16,867
100.0%
Germany
915
t
I.
4,706
Source:
u.s.
100.0 0/0
Department of Commerce , Office of
TVA's Megasiles Ready For Auto Assemblers
Research shows that several major
auto makers will consider locating
additional auto plants to the South
during the next decade. As a result,
Tennessee Valley Authority Economic
Development launched its Megasites
program in its service territory last
year to support these auto assemblers'
large property needs.
Auto assemblers are looking for
1,000 or more acres to accommodate
their latest facilities. They want shovel ready properties, which are owned
by a Single owner. TVA has three such
sites certified to support the industry's endeavors.
These sites include: The 1,400-acre
Lowndes County-Golden Triangle
Megasite, near Columbus, Miss.; the
2,100-acre Hopkinsville-Christian
County-Interstate 24 Megasite in
Kentucky.; and the 1,200-acre PUL
Alliance-Wellspring Project in Tupelo,
Miss.
After the third site was announced,
the PUL Alliance-Wellspring Proj ect,
TVA Chairman Glenn McCullough Jr.
had this to say: "Having a third certified
megasite ready for development gives
northeast Mississippi and the
Tennessee Valley a huge advantage in
the recruitment of new automotive
manufacturing facilities and other
industries. TVA is committed to working with our economic development
partners to deliver a strong, thriving
valley economy that provides more and
better jobs and a higher quality of life
for the people we serve."
McCallum Sweeney Consulting, an
international site consultant search
firm based in Greenville, S.c., certifies the megasites. The firm is
researching 25 potential megasites
from around the Tennessee Valley
service territory, which includes
Tennessee ,
Georgia,
Alabama,
Mississippi, Kentucky, Virginia and
North Carolina.
For complete details about the three
megasites visit wwwtvaed.comlmegasites.htm.
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38
trade deficit soared to unprecedented
heights. (It should be noted that this
trend in the automob'ile sector is symptomatic of a much broader trend with
the overall U.S. trade deficit plunging
toward deficits for some years now.)
SpeCifically, between 1996 and 2002,
the U.S. trade balance in passenger
vehicles, light trucks and automotive
parts deteriorated from $63.1 billion to
$123.6 billion, or by almost 96 percent.
As a direct result of the sluggish U.S.
economy, still displaying the lingering
effects of the 2001 recession, the automobile industry continues to be buffeted on many fronts. After consecutive
years of increasing car and light trucks
sales between 1996 and 2000, the
number of vehicles sold in 2001 fell to
17.1 million and then to 16.9 million
in 2002. These slumping sales numbers are reflected in the tightening
profit margins of the Big Three U.S.
automakers (Daimler Chrysler, General
Motors and Ford), all faCing additional
sales pressure from the growing roster
of foreign automakers. As noted, not
only do these foreign automakers manufacture vehicles in the United States,
they import them for sale in the country, too. The following table reinforces
the growing importance of foreign
auto makers in overall U.S. sales and
provides sales figures for new car and
light trucks in the United States in
1997 and 2002. While the table affords
a comparison between American (primarily the Big Three) and foreign
automakers, the data also demonstrates the percentage of total vehicle
sales controlled by each major country.
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April 2005
39
whether directly or indirectly, substantial. In a region of the
country once viewed as the bastion of low-skill, low-wage
positions, the thriving automobile industry has vaulted a
number of locations into magnets for high-tech, higherwage positions. The presence of a Mercedes facility in
Alabama and a BMW facility in South Carolina has certainly eased in a sea of change in both the perception and
structure of these Southern states' economies.
As outlined, the automobile industry remains one of
the most important elements in this vast, complicated
American economic system, and recent trends indicate
that an increasing proportion of this production is
occurring in the South. In addition to contributing significantly to the states' gross product, these auto plants
proVide employment to tens of thousands , generate billions in diverse forms of revenue and create myriad
other benefits. Globalization's influence is more than evident in this industry too, as more companies combine
their assets and skills to better harness their resources in
order to compete effectively and efficiently: •
Sujit M. CanagaRetna is the senior fiscal analyst Jar The Council
oj State Governments. For a copy oj this report in PDF Jormat
visit www.slcatlanta.orgiPublications.htm or call CanagaRetna at
(404) 633-1866 or e-mail [email protected].
Where you Need to be and
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Location has its/" ~
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www.embdc. org
Central U.S. Lomtion
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Excellent Schools, Universities and Technical Training
Located within two hours by major highway of the new Nissan plant in Canton, the Greater Hattiesburg,
Mississippi area offers more than just aconvenient location. Here, you'll find acomplete package of opportunities and
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Technically Skilled Workforce
Highly Competitive locol and State Incentives
lIIove
By Sujit M. CanagaRetna
Editor's Note: This article is adapted Jrom a report issued by The
Council oj State Governments' Southern oJJice, the Southern Legislative
ConJerence (SLC), in October 2003 .
The Southern Legislative
B
growing role of the auto-
eginning this fall, Hyundai Motor Corp., the South Korean
automaker that is competing aggressively and successfully
against both U.S. and fo reign automakers for the loyalty of
American consumers, will start producing sedans at its first
American manufacturing plant in Montgomery, Ala.
Hyundais decision to locate a manufacturing facility in the Deep
South reflects a trend that has gathered momentum in the last two
decades, i.e. , an increasing number of foreign automakers establishing assembly plants in the South. From BMW in Spartanburg
County, S.c. , to Mercedes in Tuscaloosa, Ala., to Toyota in
Georgetown, Ky, an expanding number of Southern states have
succeeded in luring an impressive roster of foreign automakers to
set up assembly operations within their borders.
America's complicated and multi-faceted love affair with the automobile has flourished for more than a century now. The automobile's impact on American society and cultural mores remains so
pervasive that there are few other products that can stake the same
claim. In fact, few, if any, other products have been so enshrined in
Conference outlines the
mobile industry in the
Southern states and why
it continues to be a
leading destination
for the industry.
April 2005
35
the nation's movies, clothing, dance,
music and in the general American
psyche as has the car. Similarly, automobiles have been reviled, celebrated,
nearly worshiped, sometimes banned ,
used incessantly and relied on ·almost
entirely for most of our surface transportation needs . In addition, there are
few other industries in the country
that can claim the kind of economic
complexity, broad connections and
impact that the automobile industry
can since the beginning of the 20th
century From employing a formidable
percentage of the nation's workforce
- numbering many millions in direct,
indirect and dependent employees at thousands of assembly plants and
auto parts production and service
facilities and tens of thousands of dealerships , the industry generates tens of
billions in wages and hundreds of billions in annual sales.
While the national economic figures
and their ripple effects remain truly
massive, the automobile industry'S
contribution to the economic magnitude of the 16 states in The Council of
State Governments' Southern region,
the Southern Legislative Conference,
remains significant too . According to
information released by the federal
government, the motor vehicle industry's contribution to the gross state
product of these Southern states
amply documents this assertion.
For instance , in 2001 , the industry
amounted to $ 10.3 billion in
Kentucky, $5.5 billion in Missouri and
$5.4 billion in Tennesse e. These
amounts constituted 8.5 percent of
GSP in Kentucky, and 3 percent of GSP
in both Missouri and Tennessee ,
respectively. Some of the specifics on
the role of the automobile industry are
worth reiterating to drive home the
point that the industry has catapulted
the states in the region to rank among
the fastest growing in the country
• The state of Kentucky is the fourth
largest car producing state in the United
States and one of the nation's top selling
cars, the Toyota Camry, is manufactured at the company's Georgetown
plant. The importance of the industry
to the state economy is more than confirmed by the 87,794 Kentuckians
employed by 461 motor-vehicle related
facilities as of July 2003.
• The BMW plant in Spartanburg,
S.c., announced in 1992, manufactures
the Z3 and Z4 roadsters and the X5
sports activity vehicle. This plant
involves a total investment of $1.9 billion and employs 4,300 workers. The
plant's total economic output is more
than $4.1 billion (based on 2001 operations) , in addition to supporting
16,991 jobs and producing $691 million in wages. State officials were ecstatic in September 2002 when BMW, to
commemorate the plants 10th anniversary in South Carolina, announced a
$400 million expansion with an additiona1400 jobs in the pipeline.
• The Mercedes plant in Tuscaloosa,
Ala., established in 1993, produced more
than 100,000 M-Class sports utility vehicles in 2002 and employed close to 2,000
people. Because Mercedes has initiated a
$600 million expansion in the state, the
number of employees is expected to
expand to about 4,000 people and production was expected to increase to
160,000 vehicles per year by 2004.
• Tn Mississippi , Nissan's announcement in November 2000 to build a
manufacturing facility in Madison
County near Canton was greeted with
great enthusiasm. The state provided
Nissan with $363 million in direct
incentives to build a $l. 4 billion
assembly plant. According to the
Mississippi Development Authority,
production at the plant commenced
ahead of schedule in May 2003 and
will result in 400 ,000 vehicles being
produced annually. In addition, in a little more than two years, 18 companies
had established operations as suppliers
to the Nissan plant. Some of the other
positive flows from the Nissan plant
include an estimated 31,683 total jobs
(direct, indirect and induced) by 2010;
$903 million in total personal income
(once again, direct, indirect and
induced) being generated, also by
2010 ; and , $393 million in Madison
County taxes and $287 million in state
taxes being generated by 2010.
• The South's latest automobile manufacturing plant was announced in
February 2003 when Toyota , the
world's third-largest automaker, decided to set up an assembly plant in San
Antonio, Texas. The plant, an $800
million operation employing 2 ,000
workers, is scheduled to build 150,000
Tundra full-size pickup trucks by
2006. While the combined state , county and City incentive package amounted to $133 million, the economic ripple effect is expected to reach $1 .4 billion within the next decade. In addition to the $80 million annual payroll,
thousands of spin-off jobs are anticipated given the need for parts and
other supplies.
The element of globalization
remains strong in the automobile
industry, and the ever-increasing roster
of foreign automakers establishing
assembly plants in the country, especially in the South, remains one of the
most striking features in the industry
during the past few decades. Several
reasons are proffered for the growing
number of auto makers that are either
locating or -relocating their assembly
operations in Southern states. For
instance, automakers can create
ground-up manufacturing facilities incorporating the latest technologies
- more easily in the South than reconfiguring the older assembly plants in
the Midwest and Northeast. Assembly
plants in the South, such as the Nissan
plant in Smyrna, Tenn., have achieved
impressive effiCiency and productivity
gains and automakers are eager to take
advantage of these gains. Southern
states have offered auto makers attractive incentive packages including such
compelling features as tax breaks, state
funding for programs to train workers,
an abundant labor pool at a relatively
lower cost, low rates of unionization
and the ability to train a workforce that
has not worked in the auto industry
previously
Another important consideration in
the location of auto plants in the South
involves the highly efficient intermodal
transportation networks in the region,
which includes highways, airports and,
most importantly, ports. A number of
the nation's busiest and most efficient
ports are located in the South, and they
remain a decisive factor in the location
calculations of the automakers. The
cluster effect, created by the presence
of numerous automobile assembly
plants and thousands of auto parts
suppliers in close proximity to each
other, is another major advantage
"Thefinest Business Park between Dallas and Atlanta"
Rankin County is strategically located within a day's
drive of many of the nation's most lucrative markets
throughout the Southern Sun belt region and the
industrial Midwest. In addition to the advantages
afforded by our excellent location, Rankin County
is in ~ position to offer you an impressive list of
state and local economic incentives:
• U.S . Customs Port of Entry
• Foreig n Trade Zone
• Right to work state
---
------ ==-::---
Rl'"KltI
The East Metropolitan Center, a newly developed
multi-use business park in Rankin County, MS, has
been targeted as potentially "the finest business
park between Dallas and Atlanta." The Centers
infrastructure provides all the amenities to make
it an excellent choice for corporate headquarters,
incubators, light and heavy industry, distribution
centers and other businesses.
ECONOMIC OEVELOPMENT AUTHORITV
601/825.2268
• Property tax exemptions
• Favorable state financing, sales tax exemptions & discounts
Mississippi
We have the right tools for the auto industry.
Mississippi is primed for growth. Or so thinks Nissan,
who brought their $1 billion plant to the state in
2000. We're at the hub of the South's auto corridor,
where suppliers, dealers, R&Ders and designers are
assembling. How about your business? Call today at
1-800-528-5196 or email [email protected]
for more information.
• Favorable unemployment insurance
rates, workers' compensation rates,
and tax rates
• Jobs tax credits
Child care tax credits
• Basic skills training & retraining
. ..and more!
MISSISSIPPI . \
POWER
A SOUTHERN COMPANY
1-800-528-5196 • www.mspower.com/ecodev
PHONE
l
36
601 / 825.2268 • FAX 60 1/825. 1977 • 10 1 Service Drive • PO Box 129 • Brandon, MS 39043 • www.rankinfirst.com
www.bxjonline.com
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© 2003 Mississippi Power Company
April 2005
37
available to those automobile industry
players locating to the South. Finally,
the benefits flowing from such general
features as the weather, climate, cost of
living, lower or no personal income
taxes, free or inexpensive property
costs to build assembly plants , and
quality of life are some of the other
positive attributes considered by corporations locating the in South.
On the topic of the increasing globalization of the automobile industry, in
addition to foreign automakers
increasingly establishing plants mostly
in the American South, there is another important trend: a booming international trade in automobile and automotive parts. Even though there was a
significant increase in imports in passenger vehicles, light trucks and automotive parts between 1996 and 2002,
the growing relevance of international
trade in the industry is indisputable.
Despite a negative trade balance in
these items in 1996, the situation
worsened by 2002, when the u.s.
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country
..j
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!.
Perhaps the most instructive statistic
to be extrapolated from the table
involves the continued decline of the
sale of American vehicles as a proportion of total sales in recent times. From
71.3 percent in 1997, this percentage
declined every year to finally reach 61.3
percent in 2002. In contrast, the sale of
foreign vehicles increased in each of
these years at the expense of American
vehicles, from 28.7 percent in 1997 to
38.7 percent in 2002. In fact, between
1997 and 2002, the sale of Japanese
vehicles increased from 23.6 percent
to 27.9 percent; German vehicles
increased from 2.9 percent to 5.4 percent; Korean vehicles increased 1.1 percent to 3.9 percent; and vehicles from
other countries increased, albeit marginally, from 1.1 percent to 1.5 percent.
It should also be noted that the foreign automakers generally have been
better at weathering the economic
storms than the Big Three, even recording impressive earnings levels in recent
years. Hence, it is quite apparent that
the industry in general will continue to
face serious obstacles and challenges in
rising to overcome the turbulent economic waters; the Big Three, in particular, will confront an even greater challenge as they tussle with the competition from foreign auto makers and an
economy still trying to leap over hurdIes in several areas.
But for the South, even with the
economic challenges, the surge of
the automotive industry brings the
promise of economic opportunity. The
sphere of influence of the industry is
undeniable, and the benefits derived,
1997
America
10,761
71.3ct/o
10,345
61.3%
5.40/0
430
2.9%
Japan
3,564
23.6%
Korea
169
1.1%
650
3.90/0
Other
163
1.1%
251
1.5%
Total '
15,087
16,867
100.0%
Germany
915
t
I.
4,706
Source:
u.s.
100.0 0/0
Department of Commerce , Office of
TVA's Megasiles Ready For Auto Assemblers
Research shows that several major
auto makers will consider locating
additional auto plants to the South
during the next decade. As a result,
Tennessee Valley Authority Economic
Development launched its Megasites
program in its service territory last
year to support these auto assemblers'
large property needs.
Auto assemblers are looking for
1,000 or more acres to accommodate
their latest facilities. They want shovel ready properties, which are owned
by a Single owner. TVA has three such
sites certified to support the industry's endeavors.
These sites include: The 1,400-acre
Lowndes County-Golden Triangle
Megasite, near Columbus, Miss.; the
2,100-acre Hopkinsville-Christian
County-Interstate 24 Megasite in
Kentucky.; and the 1,200-acre PUL
Alliance-Wellspring Project in Tupelo,
Miss.
After the third site was announced,
the PUL Alliance-Wellspring Proj ect,
TVA Chairman Glenn McCullough Jr.
had this to say: "Having a third certified
megasite ready for development gives
northeast Mississippi and the
Tennessee Valley a huge advantage in
the recruitment of new automotive
manufacturing facilities and other
industries. TVA is committed to working with our economic development
partners to deliver a strong, thriving
valley economy that provides more and
better jobs and a higher quality of life
for the people we serve."
McCallum Sweeney Consulting, an
international site consultant search
firm based in Greenville, S.c., certifies the megasites. The firm is
researching 25 potential megasites
from around the Tennessee Valley
service territory, which includes
Tennessee ,
Georgia,
Alabama,
Mississippi, Kentucky, Virginia and
North Carolina.
For complete details about the three
megasites visit wwwtvaed.comlmegasites.htm.
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2002
27.9%
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38
trade deficit soared to unprecedented
heights. (It should be noted that this
trend in the automob'ile sector is symptomatic of a much broader trend with
the overall U.S. trade deficit plunging
toward deficits for some years now.)
SpeCifically, between 1996 and 2002,
the U.S. trade balance in passenger
vehicles, light trucks and automotive
parts deteriorated from $63.1 billion to
$123.6 billion, or by almost 96 percent.
As a direct result of the sluggish U.S.
economy, still displaying the lingering
effects of the 2001 recession, the automobile industry continues to be buffeted on many fronts. After consecutive
years of increasing car and light trucks
sales between 1996 and 2000, the
number of vehicles sold in 2001 fell to
17.1 million and then to 16.9 million
in 2002. These slumping sales numbers are reflected in the tightening
profit margins of the Big Three U.S.
automakers (Daimler Chrysler, General
Motors and Ford), all faCing additional
sales pressure from the growing roster
of foreign automakers. As noted, not
only do these foreign automakers manufacture vehicles in the United States,
they import them for sale in the country, too. The following table reinforces
the growing importance of foreign
auto makers in overall U.S. sales and
provides sales figures for new car and
light trucks in the United States in
1997 and 2002. While the table affords
a comparison between American (primarily the Big Three) and foreign
automakers, the data also demonstrates the percentage of total vehicle
sales controlled by each major country.
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April 2005
39
whether directly or indirectly, substantial. In a region of the
country once viewed as the bastion of low-skill, low-wage
positions, the thriving automobile industry has vaulted a
number of locations into magnets for high-tech, higherwage positions. The presence of a Mercedes facility in
Alabama and a BMW facility in South Carolina has certainly eased in a sea of change in both the perception and
structure of these Southern states' economies.
As outlined, the automobile industry remains one of
the most important elements in this vast, complicated
American economic system, and recent trends indicate
that an increasing proportion of this production is
occurring in the South. In addition to contributing significantly to the states' gross product, these auto plants
proVide employment to tens of thousands , generate billions in diverse forms of revenue and create myriad
other benefits. Globalization's influence is more than evident in this industry too, as more companies combine
their assets and skills to better harness their resources in
order to compete effectively and efficiently: •
Sujit M. CanagaRetna is the senior fiscal analyst Jar The Council
oj State Governments. For a copy oj this report in PDF Jormat
visit www.slcatlanta.orgiPublications.htm or call CanagaRetna at
(404) 633-1866 or e-mail [email protected].
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Location has its/" ~
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Meridian, Mississippi
"the Strategic Center of the South"
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Central U.S. Lomtion
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Located within two hours by major highway of the new Nissan plant in Canton, the Greater Hattiesburg,
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Technically Skilled Workforce
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