THE SOUTHERN OFFICE OF THE COUNCIL OF STATE GOVERNMENTSP.O. Box 98129 | Atlanta, Georgia 30359 ph: 404/633-1866 | fx: 404/633-4896 | www.slcatlanta.orgSERVING THE SOUTHS O U T H E R N L E G I S L A T I V E C O N F E R E N C EO FT H E C O U N C I L O F S T A T E G O V E R N M E N T S Copyright July 2015THE DRIVE TO MOVE SOUTH ADVANCES:AUTOMAKERSREVITALIZE THE U.S.ANDSOUTHERNECONOMIESA REGIONAL RESOURCE FROM THE SLCIn2008and2009,theAmericanautoindustrywas in dire shape.*,Production of trucks and cars at the industrysNorthAmericanfacilitieshadslumped from 15.4 million units in 2007, to 8.8 million units in2009,asteep43percentdecline;1meanwhileU.S.ve-hiclesales(trucksandcars)saggedfrom16.5million units in 2007, to 10.6 million units in 2009, a precipitous 36 percent drop.2The Big Three U.S. automakersGen-eralMotors,ChryslerandFordwereforcedtomake wrenchingcutsintermsofemployeesandproduction. GeneralMotorsandChryslerhadnorecoursebutto secureemergencybailoutassistancefromthefederal government,andconsumersandcompanies(including those in the auto sector such as parts suppliers) faced se-riousdifficultiesinsecuringloansasaresultofacredit freeze that was sweeping across the U.S. economy, along withamultiplicityofotherchallenges.Thenegative consequencesoftheGreatRecessioncausedhavocon myriadsectors,andthefabledAmericanautoindustry, along with many other components of the U.S. economy, faced a series of grim choices.While there has been a rad-ical but positive transformation in the nations economic fortunes in the more than six years since the onset of the *ThisRegionalResourceusesthetermsautomobileandautomo-tive interchangeably to represent the broad swath of companies and workers employed in the entire auto sector. Information in this Regional Resource is current as of December 31, 2014, unless otherwise specified.GreatRecession,therestillaresignificantsectorswith-intheU.S.economythatremainweak.Figures1and2 graphicallypresentinformationontruckandcarpro-duction and sales in the past decade and a half, reiterating the difficulties faced by the industry in the years leading up and during the Great Recession, along with the indus-trys recovery in more recent years.Thenationsautomotivesectorhasdemonstratedim-pressive resilience and vigor, as demonstrated in Figures 1and2,adevelopmentthatundoubtedlyrefutesthe prognosticationsofexpertswhopredictedthedemise oflargesectionsoftheU.S.autoindustry.Focusingon the Big Three reveals that for the fourth quarter of 2014, GeneralMotorsreportedanetincomeof$1.1billion,3 andChrysler(nowcalledFiatChryslerAutomobiles) earned $669 million (with net income for 2014 amount-ing to $1.2 billion).4Ford announced a pre-tax profit of $1.1 billion, also in the fourth quarter of 2014 (the compa-nys 22nd consecutive profitable quarter), and net income of $3.2 billion in 2014,5 a complete transformation of the financial position of the Big Three from when they were hemorrhagingbillionsofdollarsinlossesthroughout the Great Recession.IntermsofthebailoutassistanceprovidedbytheU.S. governmentunderPresidentsBushandObama,while GeneralMotorsandChrysler(andtheirautoparts Photo courtesy of BMW Manufacturing News Centerby Sujit CanagaRetna, Fiscal Policy Manager2 THE DRIVE TO MOVE SOUTH ADVANCESsuppliers)receivedabout$80billioninassistancein exchangeforcompanystock,whenthefederalgovern-ment divested itself of almost all its holdings in the two companies at the end of 2013, the government suffered a loss of $11.7 billion ($10.5 billion on General Motors and $1.2 billion on Chrysler).At the end of 2014, the federal governmentreleasedupdatedfiguresonthebailoutas-sistance, including the sale of 54.9 million shares of Ally Financial,previouslyknownasGeneralMotorsAccep-tanceCorporation(GMAC),theautofinancearmof GeneralMotors.6(Officialshadarguedthatthebailout was critical for auto financing to continue to ensure car and truck sales and keeping auto dealerships open.)The Ally Financial sale, alone, which signaled the end of the bailoutprogram,recouped$1.3billioninprofitstothe federal government, while the GMAC investment yield-ed $2.4 billion in profits.ThroughtheentireTroubledAssetReliefProgram (TARP) and other efforts, U.S. taxpayers injected $426.35 billionintobanksandautocompanies.Withthefinal sale in mid-December 2014, the federal government indi-cated that the total sale of stock and interest accruals had generated$441.7billion,areturnof$15.35billion,eight yearsaftertheinitialinterventionbytheBushAdmin-istration.Eventhoughtheoverallbailoutresultedina profit, the auto rescue did not; however, December 2014 figures indicate that the loss was $2.2 billion smaller than wasdocumentedinDecember2013($9.5billionasop-posed to $11.7 billion).7Notwithstandingtheselosses,industryexpertsas-sert that the $9.5 billion8 was a relatively small price to payforstavingoffaneconomicdepressionandgener-allyagreethatthefederalgovernmenthadtostepin. Consensus among experts maintains that the federal as-sistance was critical because the entire industry was in a depression, and it could have dragged the whole country into one.9In December 2014, in the context of the final sale of stock of what once was General Motors finance arm,GMAC,TreasurySecretaryJacobLewnotedthat while profit was not the motive to bail out Detroit and WallStreet,itisimportanttonotewerecoveredmore than we disbursed.10InApril2015,RobertJ.Samuelson,aneconomistand columnistforTheWashingtonPost,opinedthattheauto bailout was a solid success and worthy of celebration.11 05,000,00010,000,00015,000,00020,000,00020132012201120102009200820072006200520042003200220012000199919981997TotalCarsTrucksFigure 1 North American Car and Truck Production: 1997 to 2013Source: Wards Automotive Yearbooks, http://wardsauto.com/data-centerTHE DRIVE TO MOVE SOUTH ADVANCES 3Inthiscontext,thefactthattheindustryhasmadesig-nificant progress since those glum days in 2008 and 2009 speaksvolumesabouttheresiliencyoftheindustryand theindustryswillingnesstomakeradicalchangesona rangeofissues.NotonlyarethethreeU.S.automakers thrivingcomparedtotheirdolefulpositionin2008and 2009,thedozenorsoforeignautomakers(rangingfrom BMW to Mercedes to Toyota to Volkswagen) with man-ufacturingfacilitiesinanumberofmostlySouthern statescontinuetoperformadmirably.Notably,even during the darkest days of the Great Recession, not one of these foreign automakers, operating largely in the South, wasforcedtodismissasingleemployee;evenmoreim-pressively, a number of these foreign automakers actually expanded their operations during the Great Recession, a Fornearlyadozenyears,theSouthernLegislativeConference (SLC),theSouthernOfficeofTheCouncilofStateGovernments (CSG),hasbeenstudyingthegrowingeconomiccloutoftheauto-mobileindustryintheSouthernregion.Pleasevisithttp://www.slcatlanta.org/Publications/index.php?topic=8toreviewthemany publicationsandpresentationsonSLCsfocusontheburgeoning automobile sector in the South.In particular, the 2003 SLC Special SeriesReportentitledTheDrivetoMoveSouth:TheGrowingRoleof the Automobile Industry in the Southern Legislative Conference Economies containsextensivedetailsonthefactorspropellinganincreasing numberofautocompanieslocating,relocatingorexpandingtheir operations in the SLC region. Figure 2 U.S. Vehicle Sales: 1999 to 2014Source: Wards Automotive Yearbooks, http://wardsauto.com/data-center (accessed March 23, 2015)He noted that the rejuvenated auto industry, i.e., General Motors and Chrysler after closing several dozen plants, paringbillionsindebt,adoptinglowerwagesfornew workersandslashingthenumberofdealershipshas returnedtoprofitability.Samuelsonnotesthatmotor vehicles and parts have provided 25 percent of the recov-erysgaininmanufacturing,despiterepresentingonly6 percent of manufacturings value added.Along those lines, the Ann Arbor, Michigan-based Center forAutomotiveResearch(CAR)releasedsomesobering statisticsinDecember2013,12documentingthatthefi-nancialassistanceprovidedtotheautoindustryaverted certain economic catastrophe.Specifically: IfGeneralMotorshadgoneunderin2009-2010,the country would have suffered 1.88 million job losses; If the entire auto industry had shut down in 2009-2010, thecountrywouldhaveexperienced4.15millionin job losses; If only General Motors had gone under, the federal and stategovernmentswouldhavelost$39.4billionintax revenue and jobless benefit payments; and Iftheentireautoindustryhadcollapsed,thelossto thefederalandstategovernmentswouldhavebeen $105.3 billion.1305,000,00010,000,00015,000,00020,000,0002014201320122011201020092008200720062005200420032002200120001999TotalCarsTrucks4 THE DRIVE TO MOVE SOUTH ADVANCESdevelopment that has indisputably assisted in the nascent resurgenceoftheAmericanmanufacturingsectorinre-cent years.Section IAreviewofdatarelatedtothenationsgrossdomestic product (GDP) demonstrates the growing importance of the auto industry in the aftermath of the Great Recession. The role the industry has played in the U.S. economy has beendocumentedextensively,andanalystshavebeen closelymonitoringtheindustryduringthepost-Great Recession years.Even though the industrys contribution toGDPandoverallU.S.manufacturinghasbeenwan-ing in recent years in comparison to several decades ago, theimpactoftheindustryremainssignificant,bothin terms of output, employment and other factors.Accord-ing to the U.S. Department of Commerce, a breakdown of grossoutputbyindustryformotorvehicles,bodiesand Industryexperts,suchasresearcherswiththeCenterforAuto-motiveResearch,maintainthattheautoindustryhadhistorically contributed between 3 percent and 3.5 percent to the nations GDP. SeeHill,Kim;Monk,Debra;andAdamCooper,Contributionofthe AutomotiveIndustrytotheEconomiesofAll50StatesandtheUnited States, Center for Automotive Research, April 2010. 2005 2006 2007 2008 2009 2010 2011 2012 2013All industries 23,517.2 24,891.8 26,157.2 26,825.8 24,655.2 26,097.3 27,526.9 28,693.5 29,721.3Manufacturing 4,770.6 5,052.3 5,355.0 5,454.9 4,465.5 4,988.7 5,573.3 5,800.7 5,926.9Motor vehicles, bodies and trailers, and parts523.8 524.5 513.4 421.1 320.0 422.7 488.8 540.9 600.9As a percent of all industries 2.23% 2.11% 1.96% 1.57% 1.30% 1.62% 1.78% 1.89% 2.02%Source: U.S. Department of Commerce, Bureau of Economic Analysis (Release date November 13, 2014; accessed on February 26, 2015;http://www.bea.gov/iTable/iTable.cfm?reqid=51&step=51&isuri=1&5101=1&5114=a&5113=3361mvgo&5112=1&5111=start&5102=15#reqid=51&step=51&isuri=1&5101=1&5114=a&5113=3361mvgo&5112=1&5111=start&5102=15)Table 1 U.S. Gross Output by Industry (All Industries, Manufacturing and Auto Industry)A Word on OrganizationThis SLC Regional Resource is divided into three sections.Section I provides details on broad, national trends on the in-fuence wielded by the nations automotive sector on gross domestic product, specifcally the breakdown of gross output by industry; the contribution of new and used motor vehicles and auto parts to the U.S. economy; and the auto industrys contributions to the nations employment rolls.In particular, this section emphasizes the revival of the auto industry in the United States compared to the extremely bleak outlook the industry faced six or seven years ago, during the height of the Great Recession.Section II provides an array of details on how the industry continues to advance in the SLC states, includ-ing details on the many foreign automakers impressive performance in recent years, even during the most desolate days of the Great Recession.Section III demonstrates the auto sectors sphere of infuence around the SLC region reinforcing the mounting importance of the automobile sector and related manufacturing operations.trailers, and parts reveals that the sectors contribution to total manufacturing had slouched to 1.3 percent in 2009, from as high as 2.2 percent in 2005; it started picking up in2011and2012and,by2013,thesectorscontribution had risen to 2.02 percent of total manufacturing of all in-dustries.Table1documentsthesegrossoutputtrends between 2005 and 2013.(The gross output of an industry is the market value of the goods and services produced by an industry, including commodity taxes.)A review of the entire automotive sectors contribution to GDPoverthepastdecadeandahalfalsorevealsinterest-ing trends.Figure 3 provides this information graphically.As evident in Figure 3, between 1997 and 2013, the contri-butionsoftheAmericanautomotivesectorpeakedat5.2 percent of GDP in 1999, a time when both the U.S. economy andtheAmericanautomotivesectorwereinascendan-cy.From that zenith, the sectors contribution to GDP has been waning, even dipping to 2.2 percent in 2009, when the automotive sector was in complete disarray.Impressively, thesectorhasbouncedbackandisrecovering,increasing its contribution to as much as 3.6 percent in 2013, the most recent, full year available at the end of December 2014.THE DRIVE TO MOVE SOUTH ADVANCES 5Sources: http://www.bea.gov/iTable/iTable.cfm?ReqID=51&step=1#reqid=51&step=51&isuri=1&5114=a&5102=15 (Automotive Output Data, based on Gross Output by Industry: Motor vehicles, bodies and trailers, and parts) and http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1#reqid=9&step=3&isuri=1&904=2009&903=5&906=a&905=2013&910=x&911=0 (GDP Data, based on National data: Gross domestic product)01%2%3%4%5%6%20132012201120102009200820072006200520042003200220012000199919981997Figure 3 U.S. Automotive Output as a Percent of GDP: 1997 to 2013Based on U.S. Department of Commerce data from 2014, the auto industrys influence on the economy has grown impressivelysincetheendoftheGreatRecession.Fu-eled by a number of factors, including the availability of easycredit,contributionstotheU.S.economybynew andusedmotorvehiclesandautopartsmanufacturing andsalesincreasedbynearlyonepercentagepointbe-tween the second quarter of 2011 and the second quarter of 2014.Figure 4 provides a graphical representation of this trend.AsindicatedinFigure4,theAmericanautomotivesec-torcontributed0.42percentofapercentagepointof annualizedgrowthtothenations4percentgrowthin thesecondquarterof2014,anoticeableimprovement from the flat (or zero) growth rate during the same peri-odthepreviousyear,0.01percentcontributionin2012, and the negative growth (-0.52 percent) demonstrated in thesameperiodin2011.Furtherhighlightingthecon-tinuedgrowth,in2014,theindustryscontributionsare expected to surpass levels reached just before the onset of the Great Recession.Analysts point to the availability of Figure 4Percentage Point Change in Auto and Auto Parts Contributions to U.S. GDP: 2011 to 2014Source: http://www.ibtimes.com/auto-industry-contribution-us-gdp-way-2011-when-fears-double-dip-recession-made-consumers-1643732 -0.6-0.4-0.20.00.20.40.62014 Q2 2013 Q2 2012 Q2 2011 Q2-0.520.01 0.426 THE DRIVE TO MOVE SOUTH ADVANCEScredit,particularlyrecord-lowlendingrates,asamajor factorbehindtheimprovedproductionandsalesfig-ures.For instance, outstanding auto loans in the United States exceeded $902 billion in July 2014, a 29 percent leap compared to July 2011.Figure 5 provides a graphical rep-resentation of this trend.Alongwiththeresurgenceintheoutputoftheautoin-dustrytooverallGDP,growthintheindustryalsohas resultedinimprovementstothenationsemployment rolls.While it is important to stress that for a variety of reasonssuchasimprovementsintechnologyandau-tomationthemodernmanufacturingfacilityneedsa significantly lower number of workers, nevertheless, the numberofworkersintheautosectorhasbeenrisingin the post-Great Recession years.Table 2 provides a break-down of these numbers between 2005 and 2012.As indicated in Table 2, the negative effect of the Great Recessiononemploymentintheautomotivesectoris apparentinacomparisonofthedecliningpercentof employeesbetween2005and2009.Specifically,from a review period high of 1.28 percent of employment in all industries in 2005, the employment level plunged to 0.99percentin2010.Intheensuingthreeyears,2011 through 2013, the employment levels began a slow as-centandclimbedto1.07percentofallindustriesby 2013.Onceagain,itisimportanttostressthatdueto automationandsignificanttechnologyadvances,the employment demands of the U.S. manufacturing sector 2005 2006 2007 2008 2009 2010 2011 2012 2013All industries 139,006 141,440 142,928 142,000 136,170 134,846 136,438 138,778 141,411Private industries 115,633 117,941 119,259 118,414 11 2,139 110,848 112,815 115,388 118,130Manufacturing 14,235 14,167 13,883 13,425 11,856 11,524 11,738 11,944 12,031Motor vehicles, bodies and trailers, and parts1,103 1,069 996 883 675 681 725 785 828Other transportation equipment 675 695 718 731 681 653 663 681 688Sub-total: motor vehicles, bodies and trailers, parts and other transportation equipment1,778 1,764 1,714 1,614 1,356 1,334 1,388 1,466 1,516Auto industry percent of total FTE and PTE1.28% 1.25% 1.20% 1.14% 1.00% 0.99% 1.02% 1.06% 1.07%Source: U.S. Department of Commerce, Bureau of Economic Analysis (Release date January 23, 2014)Table 2 Full-Time Employees (FTE) and Part-Time Employees (PTE) by Industry (Thousands)never will reach levels required in prior decades.Nev-ertheless,therisingnumberofthoseemployedinthe Americanautomotivesectorwillenhancetheecono-mys potential.A review of North American car and truck production statisticsfurtherreinforcestheimprovingAmerican auto industry in the last few years.Table 3 details this information.Figure 5Outstanding U.S. Auto Loans: July 2011 to July 2014 (in billions)Source: http://www.ibtimes.com/auto-industry-contribution-us-gdp-way-2011-when-fears-double-dip-recession-made-consumers-1643732THE DRIVE TO MOVE SOUTH ADVANCES 7As mentioned at the outset, North American car and truck production experienced a steep decline between 2008 and 2009, when production levels dropped from 12.9 million vehiclesto8.8millionvehicles.Reviewingthedatafor car and truck production during the 1997 to 2013 period reveals two major developments: In2000,NorthAmericancarandtruckproduction reached 17.7 million vehicles.In fact, historical records indicatethatthenumberofvehiclesproducedin2000 was the highest level, even as far back as 1951, the year when Wards began compiling the statistic; WhiletheproductionofcarsdominatedNorthAmer-icanvehicleproductionforanumberofdecades, beginninginthe1980s,truckproductiongradual-lygainedground.In1997,truckandcarproduction reached parity and, in the ensuing 15 years or so, trucks graduallydominatedvehicleproductiontrends.In 2004, truck production constituted 61 percent of all ve-hiclesmanufactured,thehighestpercentagereached beforelevellingoffinthesubsequentdecade.In2013, the most recent complete year presented in Table 3, cars comprised43percentofallvehiclesandtruckscom-prised 57 percent.AnothertrendregardingimprovementsintheAmer-icanautoindustryrelatestoU.S.vehicleautosales. Table4providesthisinformationfortheperiod1999 through 2014.According to data contained in Table 4, U.S. vehicle sales experienced a sharp decline in 2009, dropping from 13.5 million in 2008 to 10.6 million, a direct impact of the in-tensityoftheGreatRecession.Movingforwardfrom 2009, U.S. vehicle sales began picking up and, by the end of 2014, had increased to 16.8 million, a remarkable turn-aroundfromthegloomydaysoftheGreatRecession whenmanyexpertspredictedthedemiseoftheAmeri-can auto industry.In fact, within the space of five years (2009to2014),U.S.vehiclesalesincreasedbynearly60 percent.Whilethe2014totalstillwaslowerthanthe all-time high reached in 2000 (17.8 million), analysts are Year Cars Trucks Total% of Cars% of Trucks2013 7,106,013 9,395,102 16,501,115 43% 57%2012 6,959,318 8,841,625 15,800,943 44% 56%2011 5,625,273 7,853,153 13,478,426 42% 58%2010 5,084,984 7,072,056 12,157,040 42% 58%2009 3,961,589 4,800,234 8,761,823 45% 55%2008 6,144,277 6,778,191 12,922,468 48% 52%2007 6,418,498 9,007,847 15,426,345 42% 58%2006 6,836,897 9,040,264 15,877,161 43% 57%2005 6,518,697 9,800,086 16,318,783 40% 60%2004 6,347,881 9,876,983 16,224,864 39% 61%2003 6,567,592 9,647,745 16,215,337 41% 59%2002 7,286,516 9,431,037 16,717,553 44% 56%2001 7,083,587 8,733,067 15,816,654 45% 55%2000 8,151,905 9,507,795 17,659,700 46% 54%1999 8,198,169 9,417,952 17,616,121 47% 53%1998 7,929,968 8,102,907 16,032,875 49% 51%1997 8,105,627 7,949,915 16,055,542 50% 50%Source: Wards Automotive Yearbooks, http://wardsauto.com/data-centerTable 3North America Car and Truck Production: 1997-2013Table 4 U.S. Vehicle Sales: 1999-2014Year Cars Trucks Total% of Cars% of Trucks2014 7,687,619 9,154,354 16,841,973 46% 54%2013 7,585,341 8,298,102 15,883,443 48% 52%2012 7,244,439 7,544,036 14,788,475 49% 51%2011 6,089,708 6,951,210 13,040,918 47% 53%2010 5,635,739 6,136,787 11,772,526 48% 52%2009 5,401,565 5,200,478 10,602,043 51% 49%2008 6,769,134 6,724,058 13,493,192 50% 50%2007 7,562,334 8,897,981 16,460,315 46% 54%2006 7,761,592 9,287,389 17,048,981 46% 54%2005 7,659,983 9,784,346 17,444,329 44% 56%2004 7,482,555 9,816,018 17,298,573 43% 57%2003 7,555,551 9,411,891 16,967,442 45% 55%2002 8,042,255 9,096,397 17,138,652 47% 53%2001 8,352,000 9,120,378 17,472,378 48% 52%2000 8,777,723 9,033,950 17,811,673 49% 51%1999 8,637,708 8,777,020 17,414,728 50% 50%Source: Wards Automotive Yearbooks, http://wardsauto.com/data-center (accessed March 23, 2015)8 THE DRIVE TO MOVE SOUTH ADVANCESoptimistic that sales in the next few years would be very closeto,orevenexceed,thisnumber.Furtherscrutiny ofU.S.vehiclesalesdata,goingasfarbackas1931,re-veals that car sales clearly outnumbered truck sales until about the 1980s.Truck sales gradually began gaining on car sales and, by 2000, both types of vehicles were on par witheachother.Sincethen,afteraslightburstinthe mid-2000s,whentrucksalesreachedashighas57per-cent of total vehicle sales, they declined in importance to 54 percent of total sales in 2014.Section IITheautomobileindustrycontinuestothriveinthe SLC states with a dozen or so manufacturing facilities and several thousand parts suppliers successfully oper-atinginstatesrangingfromasfarnorthasVirginia, tothedeepSouthinAlabama,toasfarwestasTexas. While some of these operations belong to the Big Three Americanmanufacturers(suchasFordsKansasCity Assembly Plant, in Claycomo, Missouri, that opened in 1951,andcurrentlymanufacturestheF-150truck,or GeneralMotorsCorvetteassemblyplantinBowling Green, Kentucky, that began operations in 1981), they alsoincludenewerfacilitiessuchasKiasfirstNorth AmericanproductionfacilityinWestPoint,Georgia, that began production in 2009, and Volkswagens first North American manufacturing facility that began op-erations in 2011 in Chattanooga, Tennessee.Anotablearrayofautomotivemanufacturingfacili-ties has come online across the SLC states in the last 30 or so years.14A more recent development that requires attentionisthefactthat,notonlyaretheseforeign automanufacturerslocatingtheirmanufacturingop-erations in the South, they are increasingly locating or relocating their corporate offices in Southern states too. Several examples of this trend include: November2005:NissanMotorCompanyannounced thatitwasmovingitsNorthAmericanheadquarters and nearly 1,300 jobs from Gardena, California, to Wil-liamsonCounty,asuburbanareasouthofNashville, Tennessee.15Nissan already had an American manufac-turingpresenceinSmyrna,Tennessee,somovingthe companyscorporateheadquarterstothestatewasnot unexpected. April2014:Toyotaannouncedthatitwasestablishing anewheadquartersinNorthDallas(Plano),Texas,for itsNorthAmericanoperationsbycombiningitsthree separate North American headquarters for manufactur-ing(fromErlanger,Kentucky),sales(fromTorrance, California),andmarketingandcorporateoperations (fromNewYork,NewYork)ataunified,1million square-foot state-of-the-art corporate campus.16While Toyotas Texas move is forecasted to have a $7.2 billion economic impact over the next decade in the region, the incentive deal struck by the state and city stipulates that 2,900newemployeesmustmoveintothenewcorpo-rate campus by 2017, and an additional 750 move to the location within the following year.17 December2014:Stateeconomicdevelopmentrumor millswereworkingovertime,churningstoriesthat fiveSLCstates(Florida,Georgia,NorthCarolina,Tex-asandVirginia)werefrontrunnersfortherelocation ofMercedesBenzs(MBUSA)entiredistribution,mar-ketingandcustomerserviceoperationsintheUnited States.18Clinchingthisblue-chip,world-renownedcom-pany,currentlylocatedinMontvale,NewJersey,was heraldedasamajorboonforanyoneofthesestates.In January 2015, Mercedes confirmed that it would be mov-ing its corporate operations to Atlanta, Georgia, by 2017. May 2015:Porsche Cars North America now maintains itsU.S.headquartersata$100million,28-acrefacility inAtlanta,Georgia,atthenortheastcornerofHarts-field-Jackson Atlanta International Airport. 19The new Porsche facility, the companys largest investment out-sideofGermany,willemploy400workers,including 100 jobs that will be new to Georgia, and feature a tech-nical training center; classic car restoration and display area;businesscenter;restaurants;andaPorscheExpe-rienceCenterwitha1.6-miletesttrack.Whenfully operational,Porscheexpectstohost30,000visitorsa year at the facility.When the Porsche North American headquarters opened in May 2015, economic developers inthestatecitedthefacilityasthemosttangibleevi-dence of plans to create a bustling aerotropolis in the immediatevicinityofthebusiestairportintheworld, Hartsfield-Jackson Atlanta International Airport.20While the presence of manufacturing facilities in multiple Southernstateshasbeenagrowingtrendduringthepast 30 years, the location and relocation of foreign auto compa-ny corporate headquarters is a more recent phenomenon, one that reaffirms the SLC region as a magnet for the au-tomotivesectorinallspheres.Theincreasingnumberof automobile-relatedjobsintheregion,frommanufactur-THE DRIVE TO MOVE SOUTH ADVANCES 9Employment Labor Income Value Added Economic OutputDirect Impact 7,654 $677,399,093 $1,018,047,851 $12,537,202,953Indirect Impact 13,444 $732,815,429 $1,111,684,452 $2,938,875,640Induced Impact 9,679 $362,442,766 $677,761,174 $1,158,262,928Total Impact 30,777 $1,772,657,287 $2,807,493,477 $16,634,341,520Source: BMWs Impact in South Carolina: Two Decades of Economic Development, December 2014, http://scbiznews.s3.amazonaws.com/BMW_SC_Economic_Impact_2014.pdfTable 5 Economic Impact of BMW in South Carolina ing,financing,marketing,distribution,customerservice, logistics, shipping and corporate services, only further con-tributes to the growing awareness and prowess of the region asthedominantautomotiveclusterintheUnitedStates.The following provides a sampling of information from aroundtheregionontheprogressoftheautomotive sector.Whilenotacompletelistofalltheautomobile-related, manufacturing operations in the SLC, it reflects a sample of the industrys diverse operations in the region.BMW in South CarolinaTheJune24,1992publicationoftheSpartanburgHer-aldJournalincludeda20-pagespecialreportincluding the banner headline that screamed Its Official, with the BMWlogoinsideoftheO.21Thissignaledtheintro-duction of BMW to South Carolina, with its first North Americanmanufacturingfacility,a1.5millionsquare-footfacilityinGreer,GreenvilleCounty,withplansto hire2,000workersbytheyear2000.Thefinancialin-centive package assembled by state and local government officialsforBMWinvolved$130millionandincluded fundingforhighwayexpansion,runwayexpansionat nearbyGreenvilleSpartanburgInternationalAirport, $10 million for job training and a change in state law that wouldallowBMWtopayaflatfeeforservices,suchas waterandsewer,over20years,savingthecompanyan estimated $50 million.At that time, public officials were criticizedbysomeasprovidinganoverlygenerousin-centive package to the company.In September 1994, the first BMW produced at the South Carolina manufactur-ing plant, a BMW 318i, rolled off the assembly line.Fastforward20yearsto2014andthelateststudyon BMWseconomicimpactinthestaterevealsstaggering results.Continuing similar reports completed in 2002 and 2008, Professor Doug Woodward, with the Darla Moore SchoolofBusinessattheUniversityofSouthCarolina, releasedhisDecember2014studyonBMWseconomic impactinthestate.22Accordingtothe2014report,the total annual economic impact of BMW in South Carolina (direct, indirect and induced) amounted to $16.63 billion, anincreasefromthe$8.8billionin2008,andoverfour times more than the $4.1 billion amount reached in 2002. Table 5 provides essential details from the 2014 study.Asevidentfromthereportandotherresearch,BMWs 20-year tenure in South Carolina has resulted in the com-pany far exceeding its initial commitment to create 2,000 jobsandinject$600millionincapitalinvestmentsinto thestate.By2014,thecompanyhadhired7,654direct employees and invested $6.3 billion.BMWspivotaldecisionthatitsSouthCarolinaplant wouldbethemajorfacilityintheworldmanufacturing the extremely popular X-series sports-utility-vehicles (or SUVs) has proven to be a huge boon to the state.The X-seriesvehiclesareinhighdemandacrosstheglobe,and the different models in this series are almost exclusively manufactured at the South Carolina facility, a testament to the confidence the company had in workers at the lo-cation.Given the intense demand for the X-series, BMW has made repeated investments to expand the line at the Greer facility.For instance, in 2008, BMW injected $750 milliontoadd1.5millionsquarefeettoexpandproduc-tionoftheX-series,adecisionmadeattheheightofthe Great Recession.(As noted earlier, this capital allocation The decision by BMW to expand operations at its manufacturing facility in South Carolina at the height of the Great Recession, when the economy was in free fall and the Big Three were on the verge of being shuttered, was a huge boost to the business confidence of the state.Thisisanexampleofanexpandingautomotiveindustryin the SLC region in contrast to the unfortunate developments in oth-er areas of the nations automotive sector.10 THE DRIVE TO MOVE SOUTH ADVANCESstandsinstarkcontrasttothemassivelayoffsandcash hemorrhagingthatthenationsBigThreeautomakers wereexperiencingatthattime.)Thisinvestmentwas followedbyanother$900millioncapitalinflowtoen-hanceproductionoftheseriesin2012.Finally,further reinforcingtheworldwidedemandfortheX-series,in March2014,BMWannouncedyetanother$1billion financialcommitmentovertwoyearsatitsGreerloca-tion.This expansion will add 800 new jobs at the facility, bringingthetotalworkforceto8,800people,astagger-ingnumberforanautomotivefacilitybyanystandard. With the latest 2014 investment, BWM will add a brand newmodel,theX7,totherosterofotherX-seriesvehi-cles manufactured at the facility.23Whilethecompanyproduced2.6millionvehiclesatits South Carolina facility between 1994 and 2014, the ongo-ingcapitalinvestmentswillenablethefacilitytoreach anannualcapacityof450,000passengervehicles,are-markable production level in the space of two decades.In March 2015, 21 years after producing the first vehicle at its Greer plant, BMW announced that the production of its 3 millionth vehicle, a custom-built, metallic gray X5-M, was headed to a customer in Kristianstad, Sweden.In fact, in February 2015, the U.S. Department of Commerce confirmedthatBMWisthelargestU.S.automobile exporter of passenger vehicles based on their value.Re-affirmingtheSouthsstrengthsinfacilitatingseamless transportation strategies, some 70 percent of the BMWs manufactured at the Greer plant are exported worldwide from the Port of Charleston.Most analysts of the blossoming automobile sector in the SLCregionfrequentlycitetheroleplayedbythemany autopartssuppliersthathavelocated,relocatedandex-panded their operations to service vehicle manufacturing operations like BMW in South Carolina.Research indi-catesthatbecauseofBMWspresenceinthestate,some 40companieshavelocatedinSouthCarolinatofunc-tion as part of its supplier system, employing more than 20,000people.24Beyondthein-statesuppliernetwork commandedbyBMWin11SouthCarolinacounties, there are multiple suppliers in other parts of the country and overseas.OneofthemanysuppliersthatlocatedtoSouthCaroli-na in the wake of BMWs arrival (specifically to Duncan in Spartanburg County) is DAA Draexlmaier Automotive of America.25Draexlmaier, headquartered in Vilsbiburg, Germany,transferreditsNorthAmericanheadquarters toSouthCarolinain1997,andbeganproductionofin-jection-molded parts, electrical systems and interiors for BMW.ThecompanysprogressinSouthCarolinahas beensteady.In2011,Draexlmaierannounceda$22.35 millionexpansionatitsDuncanfacilitythatwasfore-castedtogenerate150newjobsoverthefollowingfive years.Inearly2014,Draexlmaierindicatedthatthean-nouncedBMWexpansionshadenabledthecompanyto add about 250 jobs at its South Carolina location, exceed-ing the previously forecasted numbers.InApril2015,BMWannouncedtheconstructionofa newdistributioncenterinanotherSLCstate:Texas, specifically at the Port of Galveston.26The automakers new vehicle distribution center, over 44,000 square feet of processing space in two buildings, will be launched to better serve BMW and MINI dealers in four states: Tex-as, Arkansas, Oklahoma and Louisiana.Once the center isfullyoperationalatthePortin2016,BMWplansto importandprocessapproximately32,500vehiclesan-nually, with a workforce of 40 employees.The director of the Port of Galveston, Michael J. Mierzwa, noted that, This project helps the Port achieve its mission of being theeconomicengineforthecityofGalvestonandthe local region.27Toyota in the SLC RegionEversinceToyotaestablisheditsfirstwholly-owned manufacturingfacilityintheUnitedStatesin1986, inGeorgetown,Kentucky,thecompanyhassteadi-lyexpandeditsmanufacturingfootprintacrossthe BMWs X-Series, one of the most popular luxury vehicle lines in the world, is mostly manufactured at the Greer, South Carolina plant. Photo courtesy of BMW Manufacturing News Center.THE DRIVE TO MOVE SOUTH ADVANCES 11country.Toyotasmanufacturingfacilitiesaresit-uatedinCalifornia,Texas,Mississippi,Alabama, Tennessee,Illinois,Missouri,Indiana,Kentuckyand WestVirginia.Asdemonstrated,theSLCregionis very well represented (seven of the 10 states with man-ufacturingoperationsareintheSLC),adevelopment that was further reinforced in April 2014 when Toyota announcedthatitwasconsolidatingitsNorthAmer-icancorporateoperationstoabrand-newfacilityin Plano, Texas.The companys dominance in global ve-hicle sales also was solidified in 2014 when it beat out Volkswagen and General Motors to remain at the top with 10.23 million vehicles, a ranking Toyota secured forthethirdyearstraight.28Thefollowingenumer-atessomeofthepromisingdevelopmentsrelatedto Toyotas operations in the SLC states:AlabamaIn February 2014, Toyotas plant in Huntsville commem-oratedtwosignificantmilestones:(1)theproductionof 3 million engines since its inception in 2003.29 The plant produced a record 540,000 engines in 2013, and is the only Toyotaplantgloballytobuildfour-,six-andeight-cyl-inderengines;and(2)theplantinaugurateditssecond six-cylinder engine production line, one of the reasons it isabletocreate125morejobs.Whilethis$150million expansionincreasestotalemploymentatthefacilityto 1,200, it brings total investment to $850 million.30MississippiInFebruary2015,ToyotasBlueSpringsplantalso reachedamilestonewhenthefacilitybuiltits500,000th car, a red Toyota Corolla.31Importantly, the Mississippi plant,whichbeganmanufacturingtheCorollainOcto-ber 2011, reached the half-million production mark faster than any of the companys other U.S. manufacturing sites. The company has invested more than $880 million at its 2millionsquare-footplantwhich,in2014,builtmore than 180,000 Corollas.Officials note that the facility has the capacity to increase annual production to as much as 200,000, if the need arises.Demand for the Corolla in the United States has been striking and, in 2014, the company sold 339,000 Corollas.Companies across the spectrum often cite the importance of a well-trained workforce as critical in their relocation andexpansiondecisions.AnumberofSouthernstates do very well in terms of customizing and training work-erstostaffthedemandingpositionsinmanufacturing. Mississippi,likemanySLCstates,promotesgreatercol-laborationbetweencompaniesandtechnicalcollegesto ensuretheavailablepoolofworkershavetherequisite skills to fill these manufacturing jobs.In this connection, NortheastMississippiCommunityCollegesBoonev-illecampusenteredintoapartnershipwithToyotato promoteinternshipsforstudentsinterestedinacareer inmanufacturing.Thisinternshipprogramcombines threedaysofclassroominstructionwithtwodaysof work experience at the Toyota manufacturing facility.32KentuckyToyotasoperationsinthestateexperiencedsometur-bulencein2014whenthecompanydecidedtoclose downitsmanufacturingheadquartersinErlanger,in thenortherncornerofthestate,closetoCincinnati, Ohio, and consolidate these operations with other cor-porateoperationsinPlano,Texas.33While1,600jobs fromToyotasErlangerfacilityarescheduledforre-location as part of this consolidation, 300 of these jobs, allproductionengineers,willberelocatedtothecom-panysmassivemanufacturingfacilityatGeorgetown, near the center of the state.These engineers will begin productionofthecompanysluxuryvehicle,theLex-usE350,producingnearly50,000bytheendof2015. Toyotaalsowillhireanadditional750newworkers toassistintheproductionoftheE350.This$531mil-lionexpansioneffortinGeorgetown,atanew,nearly 310,000square-footplant,marksthefirsttimethat Lexus will produce cars in the United States.Since the Lexusbrandfirstlaunchedin1989,productionofthe Kentuckyisnowrecognizedasamanufacturingstate foralotofreasonsincludingautomotive.Wearecur-rentlythethirdlargestmotorvehicleproducerinthe country.With the upcoming expansion of the Lexus op-erationinScottCounty,Kentuckylooksforwardtobe-comingnumbertwosoon.ThefocusofKentuckyon economicexpansioninthemotorvehicleindustryhas many suppliers of parts looking for a home in the Blue-grassstate.Kentuckywelcomesitsgrowingimpacton the state and national economy with positive movement putting people to work and making our state and nation stronger.~ Representative Brent Yonts, Kentucky 2014/2015 Vice Chair, SLCs Economic Development, Transportation and Cultural Afairs Committee12 THE DRIVE TO MOVE SOUTH ADVANCESTexas is part of a transnational region that stretches from Dallas to Mexico City.It boasts eight automotive assem-bly and parts plants, seven commercial and military ve-hiclemanufacturingplants,andnineheavyequipment manufacturers.Additionally,theOriginalEquipment Manufacturer(OEM)plantsinthisregionemploymore than 130,000 workers, with strong clusters of suppliers in both Dallas-Fort Worth and San Antonio.The bi-nation-al nature of our region allows manufacturers to take ad-vantage of the efciency of the United States intermodal and supply chain infrastructure.~ Representative Eric Johnson, Texas Alumni, Class of 2014, SLC Center for the Advancement of Leadership Skillsseries has taken place in Japan exclusively.The expan-sionattheGeorgetownfacilitytoaccommodatethe new Lexus E350 will supplement the 7.5 million square-footplantthatToyotaalreadyoperatesinKentucky, thelargestofthecompanysplantsinNorthAmerica and the largest production plant outside of Japan.In the 30 years since Toyota began operating in Kentucky, the companyhasinvestednearly$6billionandcurrently employs some 8,200 workers.While the company cur-rentlymanufacturestheCamry,AvalonandVenzaat itsGeorgetownfacility,bytheendof2015,theLexus E350 will join these other models.Anotherimportantautomobile-relatedmoveinvolved GovernorSteveBeshearlaunchingtheKentuckyAu-tomobileIndustryAssociationinApril2014.34During the unveiling, the governor indicated that he wanted the statetobeascloselyidentifiedwiththeautoindustry asDetroit.ComprisingKentuckysautomanufactur-ers, suppliers and supporting businesses, the Association aims to create a unified voice for an industry that is pro-foundlyimportanttothestateseconomichealthand growth.InJune2015,GovernorBeshearreleasedthe resultsofthefirstin-depthstudyoftheeconomicim-pactofKentuckysautomotiveindustryconductedby the University of Louisville.35Among the results: Theautoindustrycontributed$14.3billiontoKen-tuckys gross state product (GSP), $1 out of every $13 in the states economy is linked to the industry; Automanufacturersandsupplierscontributed$6.1 billion to payrolls annually; Automotive-relatedbusinessesdirectlyemployed85,552 workersatmorethan470establishmentsacrossthe state; when the indirect and induced effects of the auto-motive sector are factored, approximately 1 out of every 18 jobs in the state is supported by the industry; Onaverage,theannualwageofamanufacturingem-ployee in the automotive sector is $58,280; Intermsofstateincomeandsalestaxes,theindustry contributed$488millionannually,or$1outofevery $14 in state taxes sprang from the automotive industry; One-fifthofthestates$5.9billioninexportsin2014 were tied to the auto industry; Existingandnewemployersinthestatesautomotive sectorhaveannounced$5billionininvestmentsover thelastfiveyearsalongsideannouncing20,000new jobs;andFord,GeneralMotorsandToyotaeachhave developed deep roots in Kentucky, which now produc-esaboutoneofeveryninepassengervehiclesmadein the United States.TexasToyotasdecisionlastyeartoconsolidateitsoperating staff from across the United States to function under one roofinPlano,thefirsttimeinthecompanysU.S.histo-ry,wasoneofthecompanysmostsignificantmovesin its60yearsofoperatingintheUnitedStates.36InJanu-ary 2015, the company broke ground on its $350 million NorthAmericanheadquartersinWestPlano,agargan-tuan property of 100 acres that can accommodate nearly 4,000corporateemployees.Beyondtheoperationsand corporate staff in Plano, Toyota also operates a very suc-cessfulplantinSanAntoniothatmanufacturespickup trucks.Since 2003, Toyota has invested $2.2 billion in the Lone Star plant, which has produced more than 1 million Toyota pickup trucks to date.West VirginiaTheautomakersenginemanufacturingplantinBuffa-lo,PutnamCounty,justoutsidethestatecapitalcityof Charleston,hasplayedadominantroleinthestatesecon-Kentuckysautomotiveindustrysupportsmorethan 135,000high-payingjobsandbringsbillionsofdollars intooureconomyeachyear.Tosaythisindustryisim-portanttoourCommonwealthseconomywouldbean understatement.~ Senate President Robert Stivers, Kentucky 2014/2015 Chair Elect, Southern Legislative ConferenceTHE DRIVE TO MOVE SOUTH ADVANCES 13Source: http://nissannews.com/en-US/nissan/usa/channels/Plant-Fact-Sheets/releases/more-than-31-years-of-manufacturing-in-america?la=1Figure 6 Nissans U.S. Production Growth: 2009 to 2014omy ever since the first engine rolled off the line in 1998.37 Toyota invested $1.3 billion in this facility, alongside em-ploying 1,300 direct employees with an annual payroll of $127.7 million, including benefits.In the 17 years since it opened,thefacilityhasannouncedeightexpansions,in-cluding one in early 2014.In fact, in November 2014, the facilityslatestexpansionroundincludedanothertrans-mission line to produce engines.Nissan in the SLC RegionWhile Nissan sold its first automobile in the United States in 1958, the company did not establish a manufacturing fa-cility in the country until 1983.38Not only was Nissan one oftheearliestforeignautomakerstosetupanassembly operation in the United States, the companys progress and growth in the ensuing decades have been most impressive. Moreover,Nissanhasmadeitaprioritytoincludeparts and components produced domestically for as much as 85 percent of the vehicles it sells in North America by 2015, agoalthatwillpropelthelocalandregionaleconomies forwardatthelocationsofthesepartsmanufacturing facilities.39Some32yearsafteropeningitsfirstmanu-facturingplantinSmyrna,Tennessee,Nissanoperates majorU.S.manufacturingfacilitiesinCanton,Mississip-pi;andDecherdandSmyrna,Tennessee.Thesefacilities combined have the capacity to produce 1.14 million vehi-cles, 1.65 million engines, 1.4 million forgings and 456,000 castingsannually.Evenduringandintheaftermathof the Great Recession, Nissans production record has been stellar, as demonstrated by Figure 6.TennesseeSinceJune1983,whenNissanbeganproductionatits locationinSmyrna,Tennessee,theautomakerhas progressively grown.By June 2014, with numerous pro-ductionexpansionsatthesite,thefacilitywastouted asthetop-producingautoplantintheworld.40Infact, strong demand for vehicles produced at the plant pushed thecompanytoaugmentproductionandhiringand,by 2014,thefacilityhadmorethan8,400employees.41In fact,basedonthe648,000vehiclestheNissanSmyrna plant assembled in 2014, the site was ranked as the highest producingautomotiveassemblyplantinNorthAmeri-ca.Reaffirmingthefacilitysprowessasthecompanys top-performingmanufacturingsitewasthefactthat,in December 2012 and in fall 2013, Nissan moved production oftheRogueandLeaftoSmyrnafromJapan.Another new model at the Smyrna plant is the Infinity QX60 (the luxury crossover which replaced the Infinity JX35) with production of this model beginning at the facility in 2012.14 THE DRIVE TO MOVE SOUTH ADVANCESFact Sheet: Nissan Decherd Company Investment: $1 billion Workforce: More than 1,600 Facility Size: 1.1 million square feet Production Started: May 1997 Engines for Nissan and Infnity:- 4 cylinder Altima, Rogue, Frontier, Pathfnder, Infnity QX60- 6 cylinder Maxima, Altima, Pathfnder, Infnity QX60, Frontier, Xterra, NV- 8 cylinder Titan, Armada, NV Cargo- eMotor Assembly LEAF Annual Capacity:- 1.4 million engines- 1.4 million crankshaft forgings- 456,000 block castingsSource: Nissan News, www.nissannews.comFact Sheet: Nissan Smyrna Company Investment: $5.8 billion Workforce: More than 8,000 Facility Size: 5.9 million square feet Production Started: June 1983 Models Produced:- Nissan Altima- Nissan Maxima- Nissan Pathfnder- Infnity QX60- Nissan LEAF- Nissan Rogue Annual Capacity: 640,000 vehicles Vehicles Produced: More than 10 millionSource: Nissan News, www.nissannews.comNissanssuccessinTennesseeformorethan30years isdueinlargeparttoourabilitytorecruitandretain aqualityworkforceofmorethan12,000employees working the companys operations in Smyrna, Franklin and Decherd,~ Jose Munoz, Executive Vice President, NissanNissansDecherdfacilitysforwardmomentumwas boostedsignificantlywiththepartnershipthecom-panystruckwithGermanysDaimlerAG(theparent company of Mercedes) in 2010.43In June 2014, this part-nershipwasfurthersolidifiedthroughtheopeningof anewInfiniti-MercedesengineplantinDecherdand theannouncementofajointly-ownedassemblyplant tobetargetedforconstructioninMexico.Adjacent tothepowertrainfacilityinDecherd,Nissan-Daimler builtanew$319million,300,000square-footInfinity engineproductionplantthatbeganoperatinginJune 2014.This new facility, with an initial workforce of 177 workers, will ramp up to about 400 workers with the ca-pacity to build 250,000 engines annually (present yearly production is about 162,000 engines).The cars that will deploy the engines manufactured at this new site are the Mercedes C250 sedan that currently is manufactured at thecompanysonlyU.S.plantinVance,Alabama,and the Infiniti Q50 sedan that currently is manufactured in JapanandsoldinmarketsoutsideNorthAmerica.By Tennessee and a number of SLC states have devoted a great dealofresourcesandattentiontoexpandingthequality of the workforce available for employment by companies likeNissan.Inatrendthatisincreasinglynoticeablein manystatesacrossthecountry,economicdevelopment agenciesconsistentlypromotegreatercollaborationbe-tween the states technical and community college system andcorporationstoensurethattheavailableworkforce meetstheexactingspecificationsofthecontemporary manufacturing arena.In recent years, Tennessee has been a national leader on this front, through such initiatives as the Tennessee LEAP: Drive to 55 and Tennessee Promise, and the benefits of these investments are apparent in the steady progress of companies like Nissan.In this vein, in December 2014, Nissan teamed with the Tennessee Board ofRegentstobuilda$35millioneducationandtraining facility adjacent to the Smyrna assembly plant.42The new facility, expected to be completed in 2015, is an extension of the Tennessee College of Applied Technology in Mur-freesboro and will prepare workers for jobs in advanced manufacturing, including robotics, engineering and man-ufacturingmaintenance,fieldswithdirectbenefittothe automotive sector.Nissans second major manufacturing facility in the state is in Decherd in Franklin County, in the southern part of the state.For nearly 18 years, this facility has been build-ingreliable,high-qualityengines(4-,6-and8-cylinder and electric motors for the LEAF) for the entire range of Nissan models and the Infinity QX60.THE DRIVE TO MOVE SOUTH ADVANCES 152015,automotivemetalstampingpartsmakerUnipres USAannouncedgrowthatitsoperationinPortland, Tennessee.44Theenlargementwillincludeaugmenting the current manufacturing facility by 32,000 square feet, amovethatthatwillhousetwonew2,500-tontransfer pressesandone600-tonblankingpress.Overthenext five years, the extension will generate an additional 435 newjobs,supplementingthe600-700workersalready employed at the facility.The company, which has had a presence in Portland since 1987, and is among the largest employers in Sumner County, attributes this expansion to its growing relationship with Nissan; specifically, the company makes parts for the Nissan Rogue.Along those lines,inMarch2015,TennesseeGovernorBillHaslam announcedtheopeningofa$160million,1.5million square-footsupplierparkacrossfromNissansSmyrna facility.Not only will this park support more than 1,000 newlycreatedsupplierjobs,itwillreduceNissansin-boundandoutboundlogisticscostsandbetterintegrate theautomakerssuppliers,alldevelopmentsthatleadto higher productivity, better efficiencies, improved quali-ty and lower costs.45MississippiWhenNissanopenedamanufacturingfacilityinCan-ton, Mississippi, in 2003, it was considered monumental: itwasthefirsttimeanautomakerhadopenedaplant inthestate.Sincethatyear,NissansCantonoperation has been a major force for economic development in the stateandhascontributedsignificantlytoreshapingthe statesimage.TheNissanplantinfluencedToyotasde-cisiontoopenamanufacturingfacilityinBlueSprings, Mississippiin2010.AsMississippiGovernorPhilBry-ant commented on a visit to the Canton site in November 2014: Ive had celebration after celebration in this plant. Until 11 years ago, we had never made a car in Mississippi. Sincethen,2.9millionvehicleshavebeenbuiltatthis plant.Not too bad.46InApril2014,attheNewYorkInternationalAuto Show,NissanannouncedtheproductionoftheMurano crossovervehiclewouldbeginfall2014atitsfacilityin Canton.47TheninthNissanbrandbuiltatthisfacili-ty,theMuranoeventuallywouldbesoldintheUnited States and in more than 100 foreign countries.As sched-uled,productionoftheMuranobeganinNovember 2014, the latest iteration of growth and expansion at the facility.In fact, since 2011, Nissan Canton has added the One of the things weve obviously placed a big bet on in this state is automotive.One of the reasons weve done that is not just for all the jobs at the original equipment manufacturing plants, but all the supplier jobs that come with it.~ Tennessee Governor Bill Haslamin February 2015 speaking at an expansion announcement of auto parts maker Unipres, USA in Portland, Tennessee.TheautosectorisTennesseesleadingadvancedin-dustry.Itdrivesoureconomyandtheinnovationin educationandworkforcedevelopmentwhichkeeps Tennesseethenumberonestateinthenationinauto-motive manufacturing.~ Senator Mark Norris, Tennessee 2007/2008 Chair, SLCs Economic Development, Transportation and Cultural Afairs Committee; 2010/2011 Chair, Southern Legislative Conference; and 2014 Chair, The Council of State Governments2016,theenginesbuiltattheDecherdfacilitywillbe-ginappearingintheInfinityQ50sthatareboundfor theUnitedStates.WhileDaimler/Mercedesdesigned theengine,manufacturingandassemblingwillbeNis-sans sole responsibility, ensuring that the end product is high-quality enough to be used in luxury sedans like the Mercedes C250 and the Infiniti Q50.Alongsidetheactualmanufacturingplants,therole playedbythemultitudeofautopartssuppliersremains critical in not only advancing the operations of the man-ufacturingfacilitybutalsotheeconomicpotentialof the region and the state.In this connection, in February Mississippihasseentremendousgrowthintheauto-mobileindustryandtheindustryssuppliers.Starting withNissan,thenToyotaand,mostrecently Yokohama Tire Company, we have been able to attract these man-ufacturers that have not traditionally set up shop in the South. Theyareattractedtoourpro-businessenviron-ment and the fact that we are a right-to-work state.I ex-pecttoseemoreautoindustrygrowthinMississippiin years to come.~ Speaker Philip Gunn, Mississippi 2014/2015 Vice Chair, Southern Legislative Conference16 THE DRIVE TO MOVE SOUTH ADVANCESNV Cargo van, Frontier midsize pickup, Xterra midsize SUV,Sentracompactand,mostrecently,theMurano crossover,doublingtheplantsworkforceinlessthan fouryears.Thelatestexpansionrelatedtobuildingthe Murano crossover required a $250 million investment by Nissan, and resulted in creating 500 new jobs with an ad-ditional500employeesoverthenextfewyears.Atthe time of the initial Murano production launch, the com-panyindicatedthatitstillhadmorebigplansforthe Canton location, including increasing the plants produc-tion capacity to 507,000 vehicles per year by 2017.In January 2015, Nissans big plans came to light with the announcementthatthecompanywouldbuildtheTitan pickuptruckattheCantonlocation.48Specifically,Nis-san indicated that the 2016 Titan XD full-size truck would be manufactured at this Madison County location.While the Titan is not one of the companys best sellers, fighting to stave off the more dominant Ford F Series, Dodge Ram andChevroletSilveradointhecompetitiveU.S.truck market, the company is committed to creating a more vi-able full-size truck produced at the Canton facility.As is usually the case, the presence of a manufacturing fa-cilityattractsasurfeitofautopartsuppliercompanies and, in November 2014, a supplier park opened across the NissanCantonfacility.Jobsatthissupplierparkwere estimatedtoamounttoanother800jobs,aconsiderable boost to the local and state economies.Mercedes in the SLC RegionAlabamaExpertsstudyingandreportingontheautoindustryin the South often cite the 1993 decision by Mercedes to lo-cate its first U.S. manufacturing plant in Vance, Alabama, as a transformative event for the entire Southern region.49 Thismovesignaledthataworld-classglobalbrandlike Mercedeshadtheconfidencetoestablishamajorpres-enceintheSouth.Alabamassuccessfulprocurementof theplant,overthebidsof30otherstates,advancedthe THE DRIVE TO MOVE SOUTH ADVANCES 17produceditsmillionthMercedesin2007,thecompany produced 2 million vehicles in July 2014.52In 2010, Mercedes announced a $2.4 billion, five-year ex-pansiontoelevatethefacilitysproductioncapacityto 300,000carsperyearby2015.53Anadditional1,400em-ployees are scheduled to be hired at the facility during the final phase of the expansion.Once the plant reaches this goal, it will be the third largest Mercedes manufacturing facilityintheworld.InJune2014,thenewC-ClassSe-dansandCoupesbeganrollingofftheVanceassembly lines, at that time, the fourth model to be produced at the facility.InSeptember2014,Mercedesannouncedthat the company would be hiring an additional 200 workers for production jobs, in addition to the previously sched-uled1,400hiresunderthe2010-2015expansioneffort.54 AmajorimpetusfortheexpansionattheVanceplant was Mercedes decision to start building a fifth model, the ML-Coupe, at the site in late 2015.AsofSeptember2013,thepresenceofMercedesinAla-bamaattractedanestimated130autopartscompanies servingMercedes,Honda,Toyota,HyundaiandKIA. Onesuchautopartsmanufacturingcompany,Nurem-berg,Germany-basedBoltaWerkeGmbH,produces Mercedes started it all.If not for Mercedes coming here in the 1990s, we wouldnt have been able to recruit Air-bus, Boeing, or other high-tech industries to the state.~ Alabama Governor Robert Bentley, September 2014Fact Sheet: Mercedes Alabama Company Investment:- Original: $400 million- Current (2015): $4.4 billion Workforce: More than 3,200 (1/2012) Facility Size: 3.2 million square feet Production Started: 1997 Models Produced:- M-Class Sport Utility- R-Class Sports Tourer- GL-Class Luxury SUV- C-Class Sedan and Coupe Annual Capacity:- 174,000 (current)- 300,000 (expected by 2015) Vehicles Produced: More than 2 million (7/2014) Community Impact:- Exports more than $1 billion in fnished product to 135 countries annuallySource: MBUSI, www.mbusi.comdriveofanincreasingnumberofforeignautomakersin subsequentdecadestoestablishtheirU.S.manufactur-ing presence in Southern locations.When the Mercedes projectwasannounced,italsowasnotedthatAlabama was offering the company a multi-year, $253 million in-centive package, a number considered shocking by 1993 standards.50Alabamaofficialsreceivedcriticismfrom many quarters regarding the extent of the incentive pack-age,thoughwiththepassageofmorethantwodecades, the presence of Mercedes in Alabama has changed the per-ception of the state.In fact, three other major automakers (Honda, Toyota and Hyundai) all have set up major man-ufacturing operations in Alabama along with hundreds of automotive parts suppliers.These positive economic out-comescomprisebillionsofdollarsineconomicimpacts andthousandsofemployeesinthesector.Aneconomic impactstudy,commissionedbyMercedestocommemo-rateits20-yearanniversaryinthestate,documentedan annual economic impact of $1.5 billion and 22,000 direct, indirect and induced jobs in the region.One-third of the valueofthestatesannualexportsstemsfromMercedes automobiles.AccordingtoMercedes,15percentofthe passenger cars it sells in the United States are made in Al-abama.51Productionisincreasing;whiletheautomaker InafewshortyearsAlabamawentfrombeingknown as the Sock Capital of the World to being the epicenter for aerospaceanddefenseindustrieswiththesecondlarg-estresearchandtechnologyparkintheUnitedStates andabooming$6.6billionautomotiveindustry.With world-class auto builders like Mercedes, Hyundai, Honda and Toyota, automobiles have become our states num-ber one export making Alabama 5th in vehicles manufac-tured in the United States and 2nd in vehicle exports. With aburgeoningskilledworkforce,best-in-classworkforce training, and one of the most business-friendly environ-ments in the nation, Im confdent that the auto industry willcontinuetobeanintegralandthrivingpartofAla-bamas economy.~ Speaker Mike Hubbard, Alabama 2012/2013 Chair, Southern Legislative Conference18 THE DRIVE TO MOVE SOUTH ADVANCESspecially-molded plastic parts and chrome-plated surfac-es for premium automotive manufacturers.It announced itsfirstU.S.productionfacilityinTuscaloosa,Alabama, inSeptember2013.55Atthattime,BoltaWerkeGmbH indicatedthatitwouldinvestnearly$40millioninthe Alabamafacilityandcreatemorethan350jobsby2016. The auto parts company will primarily supply Mercedes inVanceandVolkswageninChattanooga,Tennessee, with critical auto components.GeorgiaAlongsidenewsofMercedesprogressinAlabama,the companyannounceditwouldrelocateitscorporateop-erations to Atlanta, Georgia, from Montvale, New Jersey, homesince1972.Bylate2014,fiveSLCstates(Florida, Georgia,NorthCarolina,TexasandVirginia)wereru-mored to be front runners for the relocation of Mercedes Benzs(MBUSA)distribution,marketingandcustom-erserviceoperationsintheUnitedStates.56Securing MBUSAwastoutedasamajoraccomplishmentforany one of these states.In early January 2015, Mercedes con-firmedthatitwouldmoveitscorporateoperationsto Atlantaby2017.Economicdevelopmentprofessionals citedthisdecisionasoneofthebiggestbusinessrecruit-mentsfortheAtlantametropolitan-areaindecadesand, possibly,themostprominentintermsofbrandpow-ersinceUPSrelocationtoGeorgiafromConnecticutin 1991.57WhileMercedeswillinvestabout$100million and set up a 200,000 square-foot customized corporate fa-cilityatitsnewsite,therelocationwillgenerateabout 1,000directjobs.TheaveragepayforMBUSAhead-quarters employees is expected to be more than $78,000.58 In turn, the state offered about $23 million in incentives intheformoffive-yeartaxcredits,exemptionsandde-velopmentfunds,and10yearsoftaxabatementsfrom local governments.59Officials in Georgia noted the pres-enceofMercedesonlyNorthAmericanmanufacturing facilityinnearbyVance,Alabama,andthefactthatthe German automaker uses the Port of Brunswick in Geor-gia to ship Mercedes vehicles, as two additional factors in Mercedes relocation decision.StephenCannon,presidentandCEOofMBUSAcom-mented that the incentives were relatively unimportant comparedtoworkforcedevelopment,lowerbusiness costs,qualityoflifeandgeography.Furthermore,the Mercedes manufacturing operation in Alabama is only athree-hourdrivefromthemetropolitan-Atlantaarea; the companys Sprinter van factory is in nearby Charles-ton, South Carolina; and the Port of Brunswick, Georgia, aportthathasemergedasarealpowerhouseintheau-tomobile transshipment market in recent years, also is a six-hour drive away.60Anotherfactorcitedbyexpertsisthenumberofauto partssuppliersstrategicallyclusteringaroundAtlanta.61 AtlantasproximitytodifferentGermanautomakers, including Mercedes in Vance, Volkswagen in Chattanoo-ga, and BMW in Greer, allows auto parts manufacturers tosupplymultiplecompanies,whilediversifyingtheir clientele.Meanwhile, the relative distance from the pro-ductionfacilitieslimitscompetitionforskilledlabor. Around 250 auto-related companies operate in the Atlan-ta area, employing more than 20,000 individuals.South CarolinaInOctober2014,Daimler,theparentcompanyofMer-cedes, indicated that it was scouting North American sites fortheproductionofitsMercedesSprintervanseries.62 SouthCarolinasautomobileindustryisavitalcom-ponent of South Carolinaseconomy,withanannu-aleconomicimpactofover$27billionandmorethan 57,000peopleemployedbytheindustrysmanufactur-ers and suppliers.The industry has an unparalleled mul-tiplier efect that spills into other parts of the economy andprovidesSouthCarolinasworkforcewithexcellent opportunities for quality work and better livelihoods.~ Representative Brian White, South Carolina Charlestonisanexcellentlocationforournewplant. The region has very highly skilled workers, a dense net-workofreliablesuppliers,andanoutstandinglogistics infrastructure that includes good transport connections to the nearby harbor.~ Volker Mornhinweg, Head, Mercedes-Benz VansIncentivesplayedarelativelyminorrole[inMercedes move to Georgia].The general lower-cost climate, qual-ityoflife,geographyandworkforcedevelopmentwere more important.~ Stephen Cannon, President and CEO, Mercedes-Benz USATHE DRIVE TO MOVE SOUTH ADVANCES 19This was not the first time that Daimler expressed inter-est in setting up a North American manufacturing facility to build the Sprinter van.In 2002, there was widespread speculation that the Sprinter van would be built in Pool-er,Georgia,ata$750millionfacility;however,thedeal nevermaterialized.Duringthepastthreeyears,strong demand across the United States has led Ford, Fiat Chrys-ler and Nissan to introduce new or completely redesigned commercial vans.63This development renewed inter-estatDaimlerregardingamanufacturingfacilityinthe United States.In March 2015, after an exhaustive search for locations in Alabama, Georgia and Louisiana, Daimler announcedthatitwouldspend$500millioninCharles-ton,SouthCarolina,tobuildamanufacturingplantfor itsnext-generationSprintercommercialvan.Thein-vestment will create 1,300 new jobs.Construction of the 8.6 million square-foot plant will begin in 2016.Volkswagen in TennesseeVolkswagen AG, one of the most recognizable auto com-paniesintheworld,establisheditsAmericanpresence in1955,andcurrentlyoperatesitsU.S.corporatehead-quartersoutofHerndon,Virginia.64Thecompanyhas approximately 6,000employees in the United States and sells its vehicles through a 1,000-strong dealer network.InJuly2008,Volkswagenannouncedplanstobuilda$1 billion assembly plant in Chattanooga, Tennessee.65The companyselectedtheTennesseesiteafterconsidering sitesintwootherstates:AlabamaandMichigan.Inre-turn,stateandlocalofficialspulledtogetherafinancial incentivepackagetotaling$577.4million,spreadout over30years,includingtaxbreaks,infrastructureup-gradesandworkforcedevelopmentassistance.66When the first Volkswagen Passat, a mid-size sedan and current-ly the only model manufactured at the facility, rolled off thecompanysChattanoogaassemblylineinApril2011, it was produced at one of the most eco-friendly automo-tive facilities in the world.The 100,000th Passat rolled off the assembly line on June 1, 2013, a little over two years after the first Passat.Given that the size of the financial incentive package for Volkswagen was one of the largest in U.S. industrial his-tory,therewasagreatdealofscrutinyassociatedwith assessing the economic impact of the facility on the city, state and the entire region.In June 2013, the University ofTennesseesCenterforBusinessandEconomicRe-search (CBER) released a study that demonstrated that the Germanautomakerexceededoriginalforecastsforboth outputandemploymentattheplant.Accordingtothe study, Volkswagens investment in Chattanooga resulted in a $643 million annual economic impact in the region.67 Of the $643 million, Volkswagen workers secured $159.2 millioninsalariesandbenefits,theremainderflowedto indirectemployees.Intermsoftaxrevenues,stateand localgovernmentsextracted$53.5million,with$31.2 million of that amount going to the state government.In total,thefacilityemployed2,415workersdirectlywho earnedanaverageof$50,000peryear,includingover-time,benefitsandbonuses;thisemploymentnumber surpassed initial projections of 2,000.Furthermore,thecompanysoperationscreatedanaddi-tional9,985jobsatsuppliersandrelatedbusinessesfora total count of 12,400 full-time jobs.In fact, the report tal-lied17partsandcomponentsuppliersthathadmovedto thevicinityspecificallytoservicetheVolkswagenop-eration.ByJune2010,asupplierparkinChattanooga, comprisingtwobuildings,each223,200squarefeet,at-tractedanumberofsuppliersincludingChattanooga Seating (front and rear seats); Faurecia-EMCON (front and rearexhaustsystem);MagnaExteriors&Interiors(front andrearfascia);MTEK(headlinersanddoorpanels);and ThyssenKrupp(frontandrearaxle,cornermodule).68InJuly2014,Volkswagenannouncedthatitwouldadda $600millionproductionlineatitsfacilityinChattanoo-gaandhire2,000moreworkerstoproduceanewSUV Fact Sheet: Volkswagen Chattanooga Plant size: 1,400 acres Employment: more than 3,200 direct; more than 9,500 indirect Financials:$1billioninvestment;$379millioninlocal constructioncontractsawarded;$307millioninlocal supply contracts awarded annually Economic efects: $12 billion expected income growth in Tennessee; $1.4 billion in total tax revenue in state Sustainability: frst and only LEED platinum certifed au-to plant in the world; solar park with 30,000 solar panel with a capacity of 9.5 million watts; advanced painting process reduces CO2 emissions by 20 percent; eco dry scrubber system water efcient process in paint shop avoids water consumption of 20,000 gallons a day.20 THE DRIVE TO MOVE SOUTH ADVANCESdesignedfortheAmericanmarket.69WhileVolkswagen expectstohavetheseSUVsreadyforsaleby2016,these vehiclesalsoareexpectedtoboostthecompanysgoalof selling 800,000 Volkswagens in the United States by 2018. (Bycomparison,in2012,thecarmakersmostsuccessful year,Volkswagensold438,000cars).Importantly,Volk-swagen will build a new North American research, design andengineeringcenterinChattanoogathatwillhouse 200 engineers.The automakers decision to establish a re-search center is significant because, as Tennessee Governor Bill Haslam noted, Nowhere in the South has an automak-er established a research and development center.70InApril2015,VolkswagenannouncedthatitsChatta-nooga facility would expand another 130,153 square feet inadditiontotheaugmentationthatbeganinJanuary 2015.FollowingtheJuly2014announcementrevolv-ing around building the new SUV, the automakers latest growth strategy would entail a body shop expansion at an addedcostofnearly$18million.(Thiswouldbeontop ofthe$600millionChattanoogafacilityexpansionan-nounced last year).Honda in the SLC RegionSinceopeningitsfirstU.S.manufacturingoperationin 1982,Hondanowoperates11manufacturingfacilities acrossthenation,adevelopmentthatenablesthecom-pany to support thousands of jobs at these facilities and thenumerouspartssuppliersservicingthefacilities.71 In SLC states alone, Honda operates manufacturing op-erationsinLincoln,Alabama(establishedin2001with an investment through 2014 of $2.2 billion); Tallapoosa, Georgia (established in 2006 with an investment through 2014of$230million);Timmonsville,SouthCarolina (established in 1998 with an investment through 2014 of $325 million); and Swepsonville, North Carolina (estab-lished in 1984 with an investment through 2014 of $250 million).**These facilities engage in a range of manufac-turingoperations.HondasLincoln,Alabama,location isthecompanyslargestlighttruckproductionfacility intheworldandthesolemanufactureroftheOdys-seyminivan,PilotSUV,Ridgelinepickuptruck,Acura MDX and the V-6 engines that power all these vehicles. While Hondas facility in Tallapoosa, Georgia, is a trans-missionplant,theoperationinSwepsonville,North **HondasaeronauticsoperationalsothrivesinNorthCarolinaat two locations: Greensboro (an investment of $140 million) and Bur-lington (an investment of $42 million).Carolina, builds power equipment while the companys Timmonsville,SouthCarolina,locationmanufactures all-terrain vehicles.Ninety-sevenpercentofallHondaandAcuravehicles soldintheUnitedStatesin2014weremanufacturedin NorthAmerica,thehighestpercentageofanyinterna-tionalautomaker.Infact,thecompanyhasmaintained this high local auto production rate75 percent or high-erover the past decade, a considerable accomplishment andmajorboosttothelocalandregionaleconomies around the Honda facilities across the United States.An-otherimportantachievementreachedbyHondaisthe numberofvehicleexportsfromtheUnitedStates;since 1987, Honda has exported 1.1 million automobiles.Since 2013, Honda has exported more vehicles from the United States than it imported from Japan.In April 2015, Alabama Governor Robert Bentley attend-edtheopeningofanew$71.4millionstate-of-the-art automatedengineassemblyfacilityatHondaslocation inLincoln,Alabama.72WhileHondasLincolnfacility, which opened in 2001, employs more than 4,000 workers atthe3.7millionsquare-footfacility,withthecapacity to produce as many as 340,000 vehicles and engines each year,therecently-announcedexpansionatthefacility will employ an additional 250 employees working in two shifts.Infact,inthepastthreeyears,HondasAlabama facility has made capital investments that exceeded $510 million while creating an additional 450 jobs.General Motors (GM) in the SLC RegionMissouriDuringtheGreatRecession,GMsmanufacturingplant in Wentzville, Missouri, (some 40 miles west of St. Louis) was reduced to a single shift, and employment plummet-edtolessthan1,000workers.Therewasrealconcern thattheplantwouldhavetobeshuttered.73However, matching the startling turnaround in the auto industrys fortunes across the United States, this GM plant also has experiencedarenaissance.By2013,GMalreadyadded OEM[OriginalEquipmentManufacturer]jobshavea ripple efect on the economy, and supplier jobs are good paying jobs too.~ Mike Downing, Missouri Department of Economic DevelopmentTHE DRIVE TO MOVE SOUTH ADVANCES 21morethan1,300employeesandinvested$513millionat theWentzvillefacilitytobuildanassortmentofvehi-cles.In September 2014, GM announced plans to add 750 workers to the facility by March 2015 to staff a third shift, amovethatwouldboostemploymentattheplantfrom 2,600 to 3,350.Strong demand and sales for GMs Colora-do and Canyon smaller pickup trucks, Chevrolet Express and GMC Savana full-size vans facilitated this growth in the years following the Great Recession.Importantly, the expansions at the GM plant in Wentz-ville also attracted new parts suppliers to either relocate orexpandtheircurrentoperationstothefacility.GM contractswithabout300supplierstoproducethenear-ly3,000partsfortheWentzville-madepickups.For instance,Faurecia(aFrenchcompany)hired180new workerstomakeseatsfortheGMplantspickupsata locationincloseproximity.WhileFaureciahasad-ditionalproductionsitesatotherMissourilocations (Riverside and Dexter), the company now has employed 1,070workers.OtherpartssupplierstotheWentzville facility that have seen a surge in business include Wain-wright Enterprises (tool-and-die) in St. Peters; Pittsburgh GlassWorks(glassproducts)inOFallon;GroundEf-fects(bedliners)inWentzville;andEngineeredPlastic Components(heating,ventilatingandair-conditioning equipment) in Columbia.GeorgiaInlate2013,GMannouncedthatitwouldhireap-proximately1,000high-techworkerstostaffanew informationtechnologycenterinRoswell,asuburbof Atlanta.74Thesepositionswouldincludesoftwarede-velopers,projectmanagers,databaseexperts,business analysts and other IT professionals.The Atlanta-area In-novation Center would be the third of four centers GM expectstooperateatlocationsacrossthecountry.GM alreadyoperatessimilarfacilitiesinAustin,Texas,and Warren, Michigan.TennesseeInmid-2014,GMannouncedthatitsSpringHill,Ten-nessee,locationwouldbetheassemblysitefortwonew crossoverutilityvehiclesforCadillacandGMC.75Prior tothis2014announcement,GMindicatedthatitwould add$167milliontoapreviouslyannounced$183million pledge to expand the Spring Hill facility with the two new vehicles.This decision would add or retain up to 1,800 jobs.Volvo in South CarolinaInMay2015,Volvoofficialsdeclaredthatthecompanys firstNorthAmericanmanufacturingfacility,a$500mil-lion investment, would be built in Berkeley County, South Carolina, some 30 miles outside of Charleston.76South Car-olina edged out Georgia, North Carolina and Kentucky to secure this major plant, cementing the regions reputation as the automotive hub of the United States.Though Volvo had been importing cars into the United States since 1955, it took six decades for the company to shift from operating as an automotive importer to a manufacturer, a step designed todoubleglobalsales,bolstermarketshareintheUnited States, and raise profit margins.While the models to be built in South Carolina have not beenspecifiedyet,the100,000orsocarstobebuiltan-nually at the facility will be sold in the United States and exportedthroughthePortofCharleston.Construction willcommencein2015andvehiclesareexpectedtoroll offtheassemblylinein2018.Intermsofjobs,thefa-cilityisexpectedtoemploy2,000overthenextdecade andasmanyas4,000inthelongterm,possiblyby2030. EconomicimpactanalysiscarriedoutbytheCollegeof Charleston finds that more than 8,000 direct, indirect and inducedjobswouldbecreatedasaresultofthisproject andthattheplantwouldcontribute$4.8billionintotal economic output annually.SouthCarolinaofficialslinedup$200millioninincentives fortheautomaker,comprising$120millionineconom-icdevelopmentbonds,$30millioninstategrantsandan additional$50millioninincentivesfromastate-owned utility company to power the plant.Some of the economic development bonds will be used to build a new interchange onInterstate26,constructroadwaysonthepropertyand provide$25milliontoBerkeleyCountytosupportjob-trainingefforts.SouthCarolinasstate-runjobtraining program,SCReady,willoffercustomizedtrainingpro-grams for the technicians that will be working at Volvo.Section IIIAlongside the detailed analysis outlined in Section II of a number of the auto companies operating in the SLC, Sec-tion III presents cursory details on additional automaker operations.The information contained in Section III in-cludesdetailsonautomotivepartssupplieroperations, tiremanufacturersandtractormanufacturers.Once 22 THE DRIVE TO MOVE SOUTH ADVANCESagain, these details reinforce the significant economic im-pact wielded by these automobile companies in advancing the economic fortunes of the state, region and nation.Ford in MissouriIn March 2015, Ford began the official production start of thecompanysall-new2015F-150truck,nowinits67th year of production.77Ford announced the creation of 900 newjobstobuildtheF-150atitsKansasCityAssembly PlantinClaycomo,Missouri(justoutsideKansasCity). This was in addition to the 1,200 new jobs that the compa-ny announced for building the all-new Ford Transit van, avehiclethatpreviouslywasexclusivelymanufactured overseas.Both these developments aided Missouris rep-utation as a major player in the automobile sector.In fact, Fords Kansas City Assembly Plant now has the largest ca-pacity of any Ford plant in the world and employs more than 7,000 workers.ThoughthestatesGeneralMotorsandFordfacilities experiencedsomeofthesamestructuralchallengesex-periencedbyautomakersinotherareasofthecountry, the focus on reviving the sector during the Great Reces-sion appears to have paid off in Missouri.In the last five years, Missouri has seen a surge of more than $2 billion in investments by auto manufacturers and suppliers.Since 2010,some61automotivesuppliershaveaddedoran-nounced plans to create more than 4,619 new jobs, retain 220 existing workers and plough in more than $613 mil-lion in capital investments.InJune2015,Fordannouncedthatitwouldberamp-ingupproductionatitsKansasCityAssemblyPlantto meet demand for the redesigned F-150 pickup truck and othervehiclesbyshorteningthetraditionalsummer shutdown from two weeks to one.78With the addition-alweekinoperation,Fordindicateditwouldproduce almost an additional 40,000 vehicles.This was the third consecutiveyearthatForddecidedtocurtailitsusual summer shutdown.Kubota in GeorgiaJapanese tractor manufacturer Kubota announced in Oc-tober 2014 that it would expand its operations in Georgia, creating650newjobsatitsmanufacturingfacilityin Gainesville.79EstablishedinGainesvillein1988,Kubo-tas North American headquarters gradually enhanced its manufacturingoperationsfrombasictractorequipment such as backhoes and front loaders, to an extensive array of tractors and tractor implements, including lawn trac-tors,gardentractors,general-usesubcompacttractors, mid-mount mowers, all-purpose residential tractors and itsRoughTerrainVehicleseries,thecompanysentry intotheutilityvehiclemarket.80Thecompanysrecent $100millioninvestmentwillincludetheacquisitionof 180acresofland,alongwiththeexpansionofKubotas currentmanufacturingfacility.Kubotaemploysnearly 2,200 workers in Georgia.Automotive Parts Suppliers in the SLC RegionAlongside the economic effects of manufacturing facili-ties in the South, hundreds of auto parts suppliers dotted acrosstheregioncontributetotheclustereffect,de-finedbyMichaelPorterofHarvardBusinessSchoolas geographicconcentrationsofinterconnectedcompa-nies and institutions in a particular field.81As elaborated byPorter,theconcentrationofcompaniesinindustries relatedbyskills,technologies,commoninputsandthe manufacturersofcomplementaryproductsleadstoa tremendousboostinproductivityandefficiencies.Both GeorgiaandSouthCarolinaeachareestimatedtohave 250 auto parts suppliers operating across the state.82The following highlights a fraction of the auto parts sup-pliersthathaverecentlylaunchedorexpandedtheir operations in the SLC region: May2015:GeigerAutomotive,aGermanautoparts manufacturerspecializinginplastics,announcedthe Since KIAs arrival in Georgia, the companys track record hasbeenexceptional. Thesizableeconomicimpactof KIAsGeorgiaoperationsextendsfarbeyondthemore than 10,000 jobs the company and its suppliers have cre-ated.KIAspresenceherereinforcesGeorgiascommit-menttoproactivelypromotetheautomobileindustry inthestateandtheregion,leveragingmultiplecom-petitive advantages.These advantages extend from the workforcedevelopmentprogramstothemultimodal transportation options to being a key player in the auto-motive cluster in the South.~ Senator Jef Mullis, Georgia 2014/2015 Chair, SLC Economic Development, Transportation and Cultural Afairs CommitteeTHE DRIVE TO MOVE SOUTH ADVANCES 23openingofaU.S.factoryinSuwanee,Georgia.This Geiger facility will create 120 new jobs.83 March2015:WabcoHoldings,aBelgianautoparts manufacturerspecializinginadvancedair-discbrakes and energy-efficient air compressors for trucks and bus-es, indicated that it would relocate to a new $17 million facility in Dorchester County, South Carolina.The ex-pansion and relocation is expected to create more than 50 new jobs while retaining 175 positions.84 December2014:M-TEK,theJapanesecompanythat manufacturesanassortmentofautoparts,including doortrippanels,rearshelves,trunktrims,dashinsu-latorsandplasticinjectiontrimsfornumerousNorth Americanautoassemblyplants,announcedthatit wouldbuilditsNorthAmericanheadquartersinMur-freesboro, Tennessee.85M-TEK, which has operated in Tennesseeformorethan30years,willbuilda63,800 square-foot, two-level building that will involve an in-vestment of $13.4 million and employ 250 workers. September2014:VictoryIndustrialParkpurchaseda former Philip Morris plant site in Concord, North Car-olina, for $68.5 million with the objective of converting the site to an electric battery manufacturing operation.86 Animprovementinbatterytechnologyhasenormous implications for the electric car industry, including op-erations in the SLC states. June2014:SouthKoreanautopartssupplierKMIN indicatedthatitwouldopenitsfirstU.S.plantin ChambersCounty,Alabama.87KMINspresencein Chambers County added to the more than half a doz-enotherautopartssuppliersthatarelocatedinthe vicinitytoservicetheKIAmanufacturingfacilityin nearby West Point, Georgia. This $17.3 million initial investmentisforecastedtoallowthefacilitytohire 200 workers in three years. May 2014:Another South Korean parts supplier, Jinsung TEC, announced the opening of a $10 million facility in Hall County, Georgia, to supply the Caterpillar plant in Athens, Georgia with specialized equipment.88Tire Manufacturing in the SLC StatesAlongsidetheadvancementsintheautomobilesectorin the Southern states, an equally important corollary devel-opmenthasbeenthegrowingimportanceoftheregion asthelocusfortiremanufacturingintheUnitedStates. As documented in the November 2013 SLC Regional Re-source, Tire Manufacturing: Southern States Roll to the Top, thelocationandexpansionofanumberoftiremanu-facturingcompaniestotheregionhasbeenasignificant developmentinrecentyears.Tireexportdataclearly demonstrate the increasing dominance of the SLC region, withSouthCarolinastireexportssurpassingstatesthat dominated these numbers in prior decades, such as Ohio. SouthCarolinatopstiremanufacturinginthecountry withthestatesBridgestone,ContinentalandMichelin plantsproducingnearly99,000tiresadayin2014.Fur-thermore,twoSLCstatesrankedsecondandthirdin tire production, with Oklahoma producing 88,000 tires a day,followedbyNorthCarolinaproducing75,000tires a day.89In the past few years, whether it is Yokohama in Mississippi, Hankook in Tennessee, Giti in South Caroli-na, or Toyo in Georgia, the draw of the Southern region asthelocusofautomotiveactivityhasresultedinthe South emerging as the Tire Hub of the United States.ConclusionTheAmericanautoindustryhasmadesignificantim-provements from the doleful days of the Great Recession when truck and car production numbers and vehicle sales slumped 43 percent and 36 percent, respectively, between 2007 and 2009.Both production and sales figures in 2014 nowexceedlevelsreachedbeforetheGreatRecession. AutomotiveNews,amajornewssourcecoveringtheauto industry, reported in January 2015 that North American car and truck production rose 6 percent to 17.56 million vehiclesin2014,accordingtopreliminaryestimates,a numberthatexceededpreviousestimates.90Giventhe precipitous decline to 8.8 million units produced in 2009, the 2014 numbers represent a vast improvement.In fact, the2014numbers,rankedasthethird-largestyearever, weresurpassedonlybylevelsreachedin2000and1999. Theindustryconsensusforecastfor2015isthatsalesof U.S.lightvehicleswillhoverbetween16.9millionand 17.0 million,91 a massive improvement from the 10.6 mil-lion units that were sold in 2009.BolsteringthisrecoveryoftheAmericanautoindustry was the financial assistance provided by the federal gov-ernment to General Motors and Chrysler, assistance that tooktheform$80billiontothetwocompaniesandthe myriadautopartssuppliersassociatedwiththecompa-nies.Not only did this emergency assistance stave off the furthereviscerationoftheU.S.economy,itresuscitated theailingAmericanautoindustrytoaleveloffinan-24 THE DRIVE TO MOVE SOUTH ADVANCEScialsecuritynotexperiencedindecades.Bythefourth quarterof2014,theAmericanBigThreeautomakersall wereinpositivefinancialterritory,adevelopmentthat strengthenedtheirfinancialstatuswhileconsolidating their share of the U.S. auto market.The growing strength of the domestic auto industry is in-creasingly reflected in contributions to the nations GDP, with an increase from 2.2 percent as a percent of GDP in 2009,to3.6percentin2013.Therealsohasbeenanin-creaseinthenumberofemployeesintheautomotive sector, as a percent of total employment, in the years fol-lowingtheGreatRecession.(In2010,theautoindustry percent of total full-time and part-time employees in the United States was 0.99 percent; by 2013, the number had improved to 1.07 percent).The major driving force behind these gains has been the continued strong showing by nearly a dozen foreign au-tomakersdomiciledintheSLCregion.FromPorsche locatingitsNorthAmericanheadquartersinAtlanta, Georgia,toMercedesinitiatingmultipleexpansionsat itsoperationsinVance,Alabama,toVolvorecentlyan-nouncingthatitsfirstNorthAmericanmanufacturing facility would be situated in Berkeley County, South Car-olina,thedrivetomoveSouthhasbeenremarkable. Assemblyoperationscontinuetoprosper,generating billionsofdollarsineconomicimpactandemploying thousands of workers.In addition, several thousand auto partssuppliershaveestablishedmanufacturingfacilities to serve these automakers across the South, creating tens ofthousandsofmorejobs.Finally,ahostofindustries andservicesrangingfromlogisticscompaniestores-taurantstotransportationcompaniestoservicestations servetheautomobilesector,cascadingintomorejobs and positive economic flows.In terms of the overall economic impacts, the results have beenstunning.Forinstance,BMWs20-yeartenurein SouthCarolinahasresultedinthecompanyfarexceed-ing the initial commitment to create 2,000 jobs and inject $600 million in capital investments: by 2014, the company had hired 7,654 direct employees and invested $6.3 billion inthestate.Similarly,Mercedes20-yearanniversaryin Alabamapromptedresearchonthecompanyseconomic impact in the state.According to this study, Mercedes in Alabamainjectedanannualeconomicimpactof$1.5bil-lionand22,000direct,indirectandinducedjobsinthe region,anastoundingnumberbymoststandards.Even intermsofthestatesexports,one-thirdofthevalueof the states annual exports involved Mercedes automobiles.Whenresearchersexplorethefactorscontributingto thisdrivetomoveSouthalongsidetherobustexpan-sion of the automotive sector in the region, a number of preconceivednotionsaredispelled.Forinstance,there istheperceptionthattheautomakersweredrivento locateorexpandexistingoperationsintheSouthpri-marily for the incentive packages offered by states. For example,the$130millionmultiyearincentiveSouth CarolinaofferedBMWin1992;orthe$253million multiyearincentivepackageprofferedbyAlabamato Mercedes; or the $577.4 million 30-year incentive pack-ageTennesseeprovidedtoVolkswagenin2008,were criticizedasexamplesofstatesgivingawaythestore toattractthesecompanies.However,thesecriticisms have been discredited by the fact that the economic im-pact generated by the activities of these automakers and alliedautopartssuppliersexceededthesumofthein-centive packages multiple times over.A December 2014 studybytheUniversityofSouthCarolinaontheeco-nomicimpactofBMWinSouthCarolinacalculateda totalannualeconomicimpactof$16.63billion,which wellexceedsthe$130million1992incentivepackage. Similarly, a June 2013 study released by the University of Tennessee demonstrated that Volkswagen in Tennessee exceeded original forecasts for both output and employ-ment at the plant.According to the study, Volkswagens investmentinChattanoogaresultedina$643million annualeconomicimpactintheregion,whichsurpass-es the 30-year cost of the states incentive package to the automaker in a single year.It also is important to stress thatautomakersarenotguidedintheirlocationdeci-sions by the extent of the incentive packages offered by states; their location decisions are motivated by a num-beroffactors.WhenMercedesannouncedinJanuary 2015 that the company was moving its global headquar-ters to Atlanta, there was a great deal of speculation that themultiyear,$23millionincentivepackagecorralled bystateandlocalgovernmentswasanoverridingfac-tor.However, as Steve Cannon, CEO of Mercedes-Benz USA stated, If you make a decision to relocate based on THE DRIVE TO MOVE SOUTH ADVANCES 25incentivesthenyouhaveyourprioritieswrong...Tax incentivesmeanalmostnothingwhenyouaremaking a decision for the next 50 years and beyond.They have zero impact on the business case.92In addition, the presence of a Mercedes plant in Alabama, aBMWplantinSouthCarolina,andaNissanplantin Mississippicreatesamanufacturingreputationinthe South,promptingmanyotherautomakersandother advancedmanufacturingcompaniestolocateinthere-gion.AsAlabamaGovernorRobertBentleynotedat the Mercedes facility in Vance in September 2014, Mer-cedes started it all.If not for Mercedes coming here in the 1990s, we wouldnt have been able to recruit Airbus, Boe-ing or other high-tech industries to the state.93Someofthemajorreasonsforthelocationandexpan-sionofexistingautoplantsintheSouthinclude:the ability to construct new manufacturing facilitiesincor-porating all the latest technologiesmore efficiently and effectively at a Southern location, as opposed to reconfig-uringolderassemblyplantsintheMidwest;economies ofscalecreatedbytheclust