North Carolina loses again to Alabama in big game auto wars

The announcement that Toyota-Mazda veered from building a joint auto manufacturing plant in Randolph County and straight into Alabama was a major blow for North Carolina — again. The hailed megasite in Randolph County was groomed for just such an enterprise. North Carolina economic development officials have drooled over landing a auto-building plant for a few decades. And each time North Carolina seems to fall short of South Carolina or Tennessee or some other southern state but most often Alabama. This time it’s Huntsville Alabama.

Damn. The FBS football championship and 4,000 jobs, too?

It’s not because North Carolina didn’t put up the effort — an issue in the past. According to the News and Observer of Raleigh the state dangled $1.5 billion at Toyota-Mazda — a figure higher than Alabama managed this time. That’s a huge number, especially to those leery of such government payoffs so industries will locate in a community or state. I’m usually in that camp, although I realize that’s how the game is played so like the kerosene cucumbers Aunt Bee used to make on “The Andy Griffith Show,” I’ve learned to not exactly love it, but live with it.

That’s because Alabama provides an instruction manual in the 1990s for how much an investment at that level can mean over the long haul. Alamance County was involved. In fact, North Carolina probably lost the Toyota-Mazda deal back in 1993.

Yes, this Alabama envy for North Carolina is hardly a new thing. It actually started back in the 1990s when Alamance County with help from the state was pushing its own “megasite” — only that word was not yet invented. The target that time was Mercedes. The Alamance Chamber of Commerce and others in economic development circles pushed a site in Hawfields as car industry-ready with proximity to not one but two interstate highways. The state helped come up with a decent for that time cash incentives program as bait.

Alabama just came up with more. A whole lot more. A then record more. The tab for Alabama to get Mercedes in 1993 It came to a whopping $253 million. It was a stunning figure at that time and a bigger shock that Alabama was chosen. The national media — including the New York Times — openly questioned the wisdom of spending what amounted to $200,000 per job.

It turned out to be the smartest thing Alabama has ever done. What happened was a reshaping of not only how foreign automakers viewed manufacturing in the U.S. but a redefinition of economic possibilities in the South. Alabama was the epicenter but it had long reach into other nearby states, too.

That Alabama plant, which opened in 1997, has since expended. Today more than 3,400 people work there full time at jobs with an average annual salary of $70,000. The Mercedes plant originally called for the production of 60,000 vehicles annually and is now up to 300,000. Mercedes has invested billions in Alabama. Other associated parts linked to vehicle manufacturing moved their plants to Alabama or neighboring states. Then two more automakers — Honda and Hyundai — moved to Alabama, too.

This paragraph in a Tuesday story by the News and Observer in Raleigh is key.

North Carolina lost out because it does not have the supply chain logistics that the car companies want, according to one of the sources. The winning state was not disclosed but for months Alabama has been seen as the only rival to North Carolina for the project.

What exactly does that mean? Well, the N&O explained it better on Thursday.

Randolph County has nearly 1,900 acres set aside but it lacks the proximity to the supply chain that the car companies need. Huntsville on the other hand, is central to a multistate corridor of automotive manufacturing and supplying, and home to a Toyota engine factory. Alabama employs some 57,000 people in the automotive industry and is the site of three other auto assembly plants: Mercedes-Benz, Honda and Hyundai.

According to an article on the Alabama Department of Commerce website, Made in Alabama, since Mercedes chose Alabama in 1993 Alabama has become one of the top five auto-producing states in the U.S. Mercedes was later joined by Honda and Hyundai. Together, those three companies built 1 million vehicles last year. Jobs have grown by 200 percent in 15 years.

mercedes

The Mercedes plant in Alabama manufacturers 300,000 vehicles annually. Photo by AL.com.

Mercedes’ decision to build its first U.S. manufacturing plant in Alabama was a signal seen around the world that the state was fertile ground for new business opportunities, said Greg Canfield, secretary of the Alabama Department of Commerce in a story on AL.com. It has raised the state’s game in terms of foreign investment and made it an attractive site for other manufacturing companies.

“Mercedes’ initial vote of confidence in Alabama has been proven correct time and time again, thanks to the company’s strategic vision and the skill and dedication of their workers here who have helped them achieve and surpass those goals,” Canfield said.

Meanwhile in Alamance County, the Hawfields site was shopped for a long time to different manufacturing firms. Ultimately it became something a few years ago known as Project Swordfish. The outcome of Project Swordfish was large-scale distribution centers for retail or other outlets, the largest one there is attached to Wal-Mart. OK, but not the game-changer a car company would be. The biggest outcome I’ve noticed from the slew of distribution centers that are taking advantage of Alamance County’s location along two interstates is it forced some local companies to raise their pay above minimum wage.

As legacies go, Alabama’s is far better.

Today North Carolina has other “megasites” it’s shopping. It has invested time, infrastructure and money at two locations in Chatham County, one on the Randolph-Guilford County border and another in Edgecombe County, according to the N&O.

Again, from the N&O.

Alabama had an advantage in that it already produces engines in Huntsville, Ala. Alabama has other production facilities for the automotive industry. But the industry has also been expanding in North Carolina with a substantial operations presence of parts-makers and suppliers.

At the moment it looks like North Carolina is once more on the outside of landing an auto production plant. The N&O pointed out that the state has financial incentives in place for what it calls “transformative” projects. That would translate into at least 5,000 jobs and $4 billion in investments. State leaders from both parties made a good faith bipartisan effort to land Toyota-Mazda and congratulated each other for their hard work and odd for these days partnership. They feel that next time the state will be in even stronger position to get this kind of industry to North Carolina.

It’s just that those deals don’t roll around every day. Every miss puts North Carolina further behind Alabama and other states. At this point it might be tough to catch up. After all, Alabama has a 24-year head start.

 

 

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