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Southern Auto Industry - Some Backstory


Looks like, for now, some Southern Republican Senators have succeeded in their effort to kill the U.S. auto industry, and further diminish their favorite bogeyman, labor unions.  Their reasons are multivalent but the fact that the south boasts large, highly subsidized foreign auto plants, featuring thousands of non-union jobs is certainly front and center.

We know the South threw billions of subsidy dollars to land these jobs, but at what cost?  And how good is the labor pool to work at these plants?

An August, 2005 article in Facing South, the online magazine of the Institute For Southern Studies, Toyota Reveals Limits of Great Southern Jobs Scam offers some insight...

Last month, Toyota made a decision that didn't get a lot of press, but sent ripples of concern through state houses across the South.

The Japanese auto giant announced that it was going to bypass offers of hundreds of millions of dollars in "recruitment incentives" (corporate subsidies) from several Southern states, and would instead set up shop in Ontario, Canada, which was offering much fewer give-aways.

The decision to head north was an embarassment for Southern states eagerly competing to lure Toyota, on several levels. Not only did they lose a trophy job-creator for their state. But the reason Toyota gave for the move was especially damning:
"The level of the workforce in general is so high that the training program you need for people, even for people who have not worked in a Toyota plant before, is minimal compared to what you have to go through in the southeastern United States," said Gerry Fedchun, president of the Automotive Parts Manufacturers' Association, whose members will see increased business with the new plant [...]

Several U.S. states were reportedly prepared to offer more than double [the] subsidy [Southern states were offering]. But Fedchun said much of that extra money would have been eaten away by higher training costs than are necessary for the Woodstock project.

He said Nissan and Honda have encountered difficulties getting new plants up to full production in recent years in Mississippi and Alabama due to an untrained - and often illiterate - workforce. In Alabama, trainers had to use "pictorials" to teach some illiterate workers how to use high-tech plant equipment.

And where did the money to subsidize these plants come from?  From education, of course...

Starting with Alabama's successful bid to lure a Mercedes plant in 1992 with an incentive package that eventually cost over $300 million in tax breaks and other give-aways -- while the state's education system was under court order for lack of funding -- Southern states have shoveled billions of dollars to huge foreign automakers, turning the South into the "new Detroit."

But now companies are waking up to the limitations of locating in a state that cares more about handing out tax breaks than investing in its people.

What has always been a question for me is aren't there any blue collar Republicans that are union members?  Don't any blue collar Republicans drive F-150's and would be laughed out of the good-old-boys club for showing up in a Toyota? 

The answer came from of all sources, Joe The Plumber.  On CNN, on election day, the host asked him, "Joe, you currently don't make $250,000, why is it so important to you that those who do be allowed to keep their tax breaks."  Joe's answer put it all in perspective, "Principle." 

"Principal," that ought to keep food on the table for all those blue collar Republican union auto workers.  What a country.

  

10 Comments

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Not to mention the lack of anything resembling a healthcare burden for a Canadian auto plant. Cuts vehicle unit cost even in a non-union operation, wouldn't you think?

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Well. Well. Maybe insisting on teaching our children that the world is 5000 years old, humans walked with dinosaurs and, that some ancient Palestinian's ignorance about how babies are made has a negative economic effect after all.

What a revelation......learning, math, science and art is important.

"Praise the Lord and pass the ammunition." NOT!

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You are right, healthcare is an issue but Canadian hourly wages are right up there with their brothers in Detroit.

I don't know what healthcare benefits the foreign companies offer their non-union workers. I do know that the wage disparity between union and no-union auto worker is mainly benefit related.

Back then the deal they could get in the South most likely was the best economically speaking leaving the possibility there were other mitigating circumstances.

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Great point. Healthcare and retirement benefits are one of the biggest differences between American and foreign carmakers in the U.S. In Canada, Japan, etc. the healthcare component is not as crippling to the industry (although if GM and the others had been smart, they would have begged for Clinton's plan in the early 1990s).

Another important point is that the Japanese and South Korean and German car manufacturers in Japan, South Korea and Germany ARE SUBSIDIZED by their home governments.

So it's not fair to compare apples and oranges and pretend it's apples and apples.

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Steve,

It's really tacky to write an article up concerning the illiteracy of American workers and put a big typo in the punchline.

Principle, not principal. Principal is the guy in charge of a high school or the amount you borrow to buy a house.

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I thought the typo was the punchline.

Anyhow, I'm amazed at the number of ways you can illustrate the hypocrisy of Shelby, Sessions, DeMented and the rest of our southern fried congressional delegation. Not to mention stupidity. The only ones stupider will be the Democrats if they don't make this crew of losers the poster children once the dominos start to fall.

This urge to go union-busting in the middle of an economic catastrophe will most likely be the tipping point that shoves the UAW Repub over to our side. It's a damn shame it may take the loss of who-knows-how-many-hundred thousand jobs to do it.

I'm waiting for BMW to start asking for additional concessions to maintain their S.C. expansion plan. Union or no union, let's see how fast DeMented lines up behind a bailout plan when it's his butt that's on the line.


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Sorry for the "principal, principle" error. I'm very dyslexic. When I grew up in the 50's I was continuously made fun of by my teachers (and the Principal) and was delegated to the last row, last seat. Despite the handicap I've gone on to create and do some pretty incredible things, with technology, no less. And, my son who is also dyslexic is a Ph.D molecular biologist doing cancer research.

I bring this up not as an excuse but to point out that we are all different, and we all have something to offer. I hope you will look at my future blogs. I can't promise there won't be any dyslexic-bombs but I'll try my best.

Happy Holidays.

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freep.com link embedded in this column is broken
www.freep.com/money/autonews/uaw27_20030827.htm

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Seems like the repubs just keep painting themselves into corners. Naturally, they need to keep people in the south illiterate in order to get them to vote against their own self-interest - to keep repubs there in power. But if illiteracy means no jobs and no factories and therefore no tax base, then who are the greedy gonna shake down for money to get re-elected? What a circus.

Thanks for this great blog. Sad, but great.

What a colossal misuse of money!

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True that. Welcome to the sonny South.

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steve katz

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