The Other American Auto Industry
BARNES, FRED
The Other American Auto Industry Plenty of car makers make a go of it in this country— they’re just non-union and not headquartered in Detroit. BY FRED BARNES Drew Ferguson IV is a...
...Thousands of jobs were lost...
...The distinction between foreign and domestic cars is totally gone now,” Democratic governor Phil Bredesen of Tennessee told me...
...The workers have that...
...So far, these investments have paid off handsomely...
...The UAW, of course, is partly responsible for lofty non-union wages, though the threat of a successful UAW organizing drive is remote...
...Our workers like overtime and pay for performance...
...There’s a big difference between a subsidy and an incentive,” says Michael Randle, president of Southern Business and Development and an expert on the southern auto industry...
...It was formerly a Pizza Hut...
...They’re built by Americans...
...For an old textile town, we’ve really done pretty well...
...Nissan got $66 million in incentives...
...He and his wife, whom he met in college, have four kids...
...KIA suppliers will employ thousands more nearby...
...The union lost overwhelmingly at Nissan’s Tennessee plant in 1989, failed in another election there, and lost at the Mercedes plant in Alabama...
...An incentive pays to bring them...
...But there was a problem with the site...
...Two years later, Toyota accepted $125 million to put a plant near Lexington, Kentucky...
...The recession has curtailed car sales temporarily, causing the transplants to slow production...
...BY FRED BARNES Drew Ferguson IV is a 42-year-old dentist whose family has lived in this town, population 3,300, “since God put us here...
...The mayor talked optimistically last week about West Point’s future as he drove me around the town and down the new four-lane parkway past the half-built plant...
...With these [auto] jobs, they buy a house at 28 or 29...
...The town itself has put $80 million into the KIA project...
...But I can’t tell you...
...They’re built here...
...Unlike the timid auto executives, politicians in the right-to-work states are quite candid in crediting the enormous appeal of their non-union status...
...Southern offi cials don’t apologize for luring foreign companies, nor should they...
...Transplant workers have that, just not through a third-party like the UAW...
...The management at the [Chattanooga] plant is largely American...
...If Warren Buffett took $1.2 billion and turned it into $20 billion in 10 years, he’d be called a genius...
...In the election last year, Ferguson ousted Billy Head, who is 30 years older and was a two-term incumbent...
...The efforts are bipartisan...
...Foreign car manufacturers, the so-called transplants, have been setting up shop in the South for a quarter century now, starting with the plant that Nissan opened in Smyrna, Tennessee, in 1983...
...But a member of KIA’s site selection team had picked out the West Point site as he drove between Atlanta and Montgomery, Alabama, home of a Hyundai plant...
...But the transplants should still have little trouble thwarting UAW organizers...
...A year ago, Ferguson was elected mayor...
...The plant manager happens to be a Texan named Don Johnson...
...We have a chance to completely reinvent this town...
...But the high-tech bust of the late 1990s proved to be another job killer...
...With overtime, they can earn $70,000 or more a year at some plants...
...They usually hire younger workers who might not be able to buy a home until their 40s if they worked at Wal-Mart...
...Now we have a remarkable opportunity to turn this old textile town into the largest economic development in Georgia’s history...
...They’re not bringing in parts from Germany...
...I had to buy mine,” he says...
...There’s a simple explanation...
...West Point will have more economic growth in the next 24 months than anywhere else in the country,” Ferguson boasts...
...The latest was Tennessee’s $577 million package for VW this year...
...Ferguson drives a KIA Sorento...
...Government payouts aren’t the only inducement to automakers or even the most important one...
...That included $35 million for buying and preparing the site...
...If you don’t have right-to-work laws, you end up like those guys [the Big 3] are today” in Detroit, Corker says...
...At the height of the tech boom, we had 2,000 jobs, but we lost a lot of those...
...It’s pinched between I-85 and the Alabama border...
...Embarrassed by the success of the foreigners, the Big 3 carmakers and the United Auto Workers (UAW) claim the tax and other “incentives” the transplants get from state and local governments in the South are no different from the subsidies they’re seeking in Washington...
...But when Bredesen and other Tennessee offi cials, including Republican senators Lamar Alexander and Bob Corker, attracted VW with $577 million in tax breaks and other enticements, they drew cheers...
...Three years after Mercedes opened its SUV factory near Tuscaloosa in 1996, it doubled the size and output...
...Son, I’ve got some good news,” he said several years ago...
...But when a VW site selection team made its fi nal visit in May, a UAW local in Michigan was striking against a Big 3 supplier...
...But they are expected to expand again once the economy recovers...
...Ferguson recently hired a second dentist to join his practice...
...Ferguson says the voters in West Point “were ready to take a new direction...
...Randle argues that the “sum of the southern auto industry is so much greater than its parts...
...The companies, in turn, have spent $20 billion in salaries alone to their employees...
...Atlanta is a good hour’s drive away...
...West Point today isn’t the same town Ferguson grew up in...
...And they especially hate strikes...
...Once KIA announced its decision, excitement in West Point bubbled over...
...was criticized for the $250 million package the state gave Mercedes, and the issue contributed to his defeat in the 1994 election...
...But that’s not quite true...
...Georgia’s plan to win over KIA was dubbed Project Pine Tree...
...Just last week, a 2.5-mile, four-lane road that runs along the 2,200-acre plant site was completed...
...This community was able to survive when the textile industry went away,” he told me...
...Now, while much of America wallows in the gloom of a recession, there’s great joy in West Point...
...We survived without a federal bailout,” Ferguson says sarcastically...
...Naturally it’s called KIA Parkway...
...Volkswagen, by the way, has moved its main American offi ce from Auburn Hills, Michigan, to Herndon, Virginia...
...The UAW has no story to tell these people that makes any sense...
...Most Volks wagens are just as American as a Chevy...
...A union workforce doesn’t fi t the business model pursued by the transplants...
...The transplants make money and aren’t asking for help from Washington...
...The UAW might fare better if “card check” is approved by Congress next year, allowing organizers to succeed without the need to win a secret ballot election...
...Why would a worker in Alabama or Texas making far and away the best wages he ever could want to join the UAW...
...KIA donated one of its cars to Georgia governor Sonny Perdue, who is said to drive it occasionally...
...There’s a sense of place here...
...It’s what I call the progressive anti-unionism of the transplants...
...It was one of three fi nalists...
...Nissan added a second plant in Canton, Mississippi, in 2003...
...But VW, with ambitious plans to increase its American sales, obtained an environmental permit that allows it to make 512,000 autos at the site...
...So the UAW is left with a handful of weak arguments about on-the-job accidents, overworked employees, and sweatshop conditions...
...A voice on the assembly line...
...Fear of the UAW probably drove the fi nal decision,” a local business leader told the Detroit Free Press...
...It took him just 35 days...
...The UAW’s problem is that it has little to offer...
...They try harder because their need— especially to raise the South’s standard of living—has been greater...
...Also, nearly all elected officials, Republicans and Democrats, are favorable to business...
...The UAW has been able to force only three elections at the foreign-owned plants...
...If you’re making $50 an hour, what do you need a union for...
...Textile company executives used to live here...
...Workers not only make far more than the prevailing wage in the rural areas where most plants are located but also considerably more than every state’s average wage...
...To meet with KIA’s chief executive in West Point, Georgia offi cials replaced their Fords with a fl eet of rented KIAs to drive around the proposed plant site...
...Workers tend to rate a successful company as a better security bet than a union whose members are losing jobs by the tens of thousands...
...Michigan, though a union state, made an aggressive bid for the Volkswagen plant that wound up in Tennessee...
...And he may be right...
...KIA has come to town...
...High pay...
...The auto plants have a multiplier effect on local economies...
...Michael Randle points to the case of Alabama, which has delivered $1.2 billion in incentives to four automakers...
...We don’t have a culture that values union organizing,” says Haley Barbour, the Republican governor of Mississippi who persuaded Toyota to locate a Prius plant in Blue Springs in northern Mississippi...
...There’s a reason I live in West Point,” he says...
...Fred Barnes is executive editor of THE WEEKLY STANDARD...
...It’s no longer politically risky for a governor to offer transplants costly incentives...
...Right to work,” says another top state offi cial, “is a huge issue...
...The southern auto belt from South Carolina to Texas, home to eight German, Japanese, or Korean plants (plus three more under construction), is right-to-work country...
...There’s also the attraction of a pro-business political community, relatively cheap labor, inexpensive or free land, lower cost of living and of doing business, warm climate, and the big one that the auto companies are wary of talking about—no UAW...
...No doubt, but West Point is located in what might also be considered the middle of nowhere...
...They treat campaigns to capture transplants like military exercises...
...At least that’s Randle’s theory...
...If you’re paying to keep them, it means somebody wants to leave...
...It consists of one factor: They pay well...
...In these states, workers can’t be compelled to join a union or pay dues, and not many are inclined to sign a union card anyway...
...They dislike infl exible union work rules, grievances, an adversarial relationship between management and labor, indeed any intermediary between plant managers and workers at all...
...They feel like they get a better deal without the union...
...In courting transplants, southern states have another great advantage besides right-to-work laws and lucrative incentive packages...
...The auto production numbers in the South are staggering...
...A Honda plant halfway between Birmingham and Atlanta went on line in 2001, and the next year the company spent $450 million to expand it, adding 2,000 more workers...
...The elder Ferguson had the job of buying out all of them...
...A Korean barbecue restaurant opened a year ago, as Koreans began moving into West Point...
...The Korean automobile manufacturer is building a huge assembly plant, which will employ 2,900 workers when it begins turning out cars a year from now...
...It’s still operating...
...Now it turns out 750,000 annually at Mercedes, Honda, and Hyundai plants...
...Drew Ferguson is a believer...
...I love it...
...Job security...
...It was divided among 35 separate landowners...
...To be precise, the family arrived eight generations ago...
...He initially got an inkling that KIA was coming from his father, Drew Ferguson III, a banker in West Point who heads the town’s economic development commission...
...The news was KIA’s interest in West Point...
...Since Tennessee’s Nissan breakthrough in 1983, states in the southern auto corridor have been willing to up the ante to attract the transplants...
...In truth, the transplants don’t have much to worry about from organized labor...
...West Point has entered the auto industry’s alternative universe...
...A few small technology fi rms took up some of the slack...
...A subsidy pays to keep jobs...
...The southern auto industry mocks Detroit...
...No Mercedes, VW, Honda, Toyota, Hyundai (KIA’s parent), BMW, or Nissan plant in the South is unionized...
...says Randle...
...The result: The UAW has failed miserably to organize workers...
...But when the textile industry collapsed in the 1980s, the victim of foreign competition, they moved away...
...Two years ago, Nissan moved its American headquarters from southern California to Cool Springs, Tennessee, just south of Nashville...
...Average pay and benefi ts: roughly $45 an hour...
...When Tennessee offi cials negotiated with Nissan over shifting its headquarters to Nashville, they learned the wife of the top Nissan executive in the United States was a fancier of African violets...
...A dozen years ago, Alabama produced zero cars...
...And they put far more time and ingenuity into charming foreign auto chiefs...
...Georgia offi cials, it turned out, had tried in vain to sell KIA on a fully developed site outside Savannah...
...Alabama’s Democratic governor Jim Folsom Jr...
...So they arranged to have a new type of the fl ower named after her...
...Volkswagen is currently building a plant outside of Chattanooga, which will produce 150,000 cars a year...
...When KIA accepted applications last winter— only online, not in person—43,000 people applied...
...Ferguson went off to the University of Georgia, then on to dental school, after which he came back to West Point...
...says Washington attorney Richard Wyatt, who specializes in labor issues...
...They are better at beckoning business because they’ve been doing it for decades, fi rst to attract textiles and furniture, now autos...
Vol. 14 • December 2008 • No. 14
