Michigan just can’t seem to win these days. The Detroit Lions are cruising to an 0-16 season. The Wolverines just finished their worst season in four decades. And oh yea, the Big Three automakers are in total collapse and Sen. Carl Levin (D) just lost the battle for a congressional bailout.
Of course, Detroit’s collapse isn’t limited to city or state. The whole Great Lakes economy is in peril, and so it’s no surprise that Members of Congress from Cleveland to Flint to Janesville, WI fought hard – and are still fighting – for a rescue package.
On the other side of that fight were mostly southern Republican senators led by Mitch McConnell of Kentucky, Bob Corker of Tennessee and Richard Shelby of Alabama. It’s understandable that a cadre of conservatives from right-to-work states would oppose government bailout of unionized Rust Belt companies.
But a few other factors are at work here. As you probably know, those Southern states lured foreign car companies in the 1990’s and have built successful, lucrative and forward-thinking auto manufacturing operations.
Georgetown, KY is home to a sprawling Toyota Camry plant. Smyrna, TN is the base of Nissan’s U.S. operations. Greer, SC has a successful BMW XM plant. And probably most impressive of all, Tuscaloosa County, AL has a major Mercedes-Benz factory that is the hub of a state that reportedly churned out 800,000 vehicles last year.
On top of the assembly-line production, South Carolina’s Clemson University now offers the nation’s first Ph.D. in automotive engineering. And, as Joel Kotkin notes in must-read Forbes piece, “The fact that the region will likely be producing the majority of the most low-mileage and low-emission cars certainly cannot hurt their future prospects.”
Indeed, the region that has historically been economically backward and depressed is now offering a shining example for Detroit.
It started with generous financial incentives. According to Newsweek’s Ben Gross, “Alabama, for one, has forked over nearly $1 billion over the past decade on such incentives. But in return, Alabama has attracted $7 billion of investment for automakers and suppliers.”
To sweeten the deal, adds Gross, these Southeastern states also have the luxury of “arge tracts of undeveloped land with road, rail, air and sea access; fewer snow days; and federally subsidized power from the Tennessee Valley Authority.”
But if you ask me why the South has been most successful at building a thriving auto industry, it’s because they’ve escaped the grips of the United Auto Workers. “I don’t need anyone to speak my mind for me. And I certainly don’t want to pay someone to do it for me,” a worker at the Nissan plant in Smyrna, TN told the Washington Post for their article about the “North-South Divide” on the bailout.
Sounds like the fiercely independent Scots-Irish of Jim Webb’s “Born Fighting.” Foreign auto makers deserve credit for identifying this ethos and capitalizing on it.
In the early 20th century, hundreds of thousands of poor Southerners traveled North on the “Hillbilly Highway” looking for work in Detroit. Decades later, it’s Detroit that is falling down and the Southern economy that is flush with auto jobs. Maybe the next trip the Big Three executives should make is not to Washington, but on a fact-finding mission down South.
U.S. Auto Industry by State (CNN.com)
Metro Areas that Reliable on Jobs Linked to the Big Three
Union Membership by State
JEK
18 December 2008 at 2:57 AM
You are allowing your conservative anti-union bias to distort your commentary. While I do not believe that the Union is blameless, I do not put the majority of the blame on them. You quote experts who site a number of reasons why the foreign plants are successful. Then you insist it is the Union’s fault without even evaluating management. What gives? Have you ever thought that maybe one reason why they have unions is the nature of American management and the conservative ideology that infects most business schools?
1# Germany has powerful unions in Germany and Japan has them in Japan and does not have companies going bankrupt. Pay is quite comparable to the US union wages. One huge difference has nothing to do with pay. It is legacy cost such as retirement and healthcare for an older workforce. Hmm, national healthcare sure looks better now.
2# If you do not design high quality cars which are appealing, people will not buy them. Clearly the American car companies have not had appealing cars and when they made money hand over fist during the 1990’s they did not eliminate debt or invest properly.
3# The Japanese have designed higher quality cars for many years and developed a better reputation. When GM negotiated Union permission for flexible rules for the Saturn plan, they blew it. They did not reinvest their money from the SUV’s into Saturn and they did not improve quality fast enough. This was not the fault of the union. It was short term thinking on management’s part.
4# You also underestimate the role of big government (!) in the positioning the plants. Essentially you are condemn the proposed LOANS while you applaud the SUBSIDES that the foreign companies receive from Southern states. Hello big government and pure tax payer subsidies.
5# You also fail to talk about the Japanese executives making substantially less then American executives which results in less worker friction and less demands from people working at the plants. I would argue that is a direct result of the conservative business culture of the US which overvalues managers and undervalues workers. No wonder the workers unionized – management never listened.
6# You talk about the Hillbilly trail- well I am pretty sure you would find that the United Auto Workers and the United Mine Workers were largely founded by the same group when they became tired of conservative American management. I would also like to point out that you don’t see much of a biotechnology industry in the Southern states or much in the way of innovative technology such as alternative energy. The northern states have many positive things going for them as well and maybe Michigan and other midwestern states needs to take advantage of them and diversify their economy. Ironically, Massachusetts (Taxachussets to people who don’t comprehend northern culture) may have higher taxes, for example, but it also has cutting edge industry and the people who are willing to pay the higher taxes because they like the salary and amenities it provides. Do read Albion’s Seed for a salient and non-ideological comment about Massachusetts and taxes. “Albion’s Seed” is a classic book for anyone interested in American regional culture and politics.
Anyway, I guess I would urge you to let the maps talk to you. Don’t talk back to the maps. While I find your maps interesting I find your commentary lacking.
Best regards,
JEK