It’s hard to overstate the importance of foreign automakers' investments in the southern United States. One auto assembly plant will employ 3,000 to 4,000 workers and scores of engineers and executives. An average line worker at the Honda assembly plant in Lincoln, Alabama (in operation for five years) will make roughly $65,000 a year. So, it’s no wonder that southern states are doing everything they can to continue to attract investment from foreign automakers, and from their suppliers, to keep building the region's industrial growth.
There's another question though, which I discovered while reporting my “Detroit South” series… Will the trend of foreign automaker investment in the region continue?
Some economists claim the south, which is lightly populated compared to midwestern and northeastern states, has already exhausted much of its available labor supply staffing the plants that have been built since the mid-1990's. Those economists say there just aren't enough available workers for more assembly-plants. One warning shot was fired last year by Honda. The automaker approved construction for its newest assembly plant…in Indiana, rather than in any of the southern states.
Economic development officials in the south say their "labor problem" is real, but they also say it's something that can be overcome. They point to what is called "in-migration" of people from other parts of the country to the south in search of jobs in the auto industry. To these development officials, the region's newest plants – like the Toyota facility in San Antonio, Texas and the new Hyundai plant in the Montgomery, Alabama area – are evidence that automakers can have an "if you build it, they will come" outlook, in terms of attracting new workers. Plus, they add that commutes are much easier in southern states than they are in the Midwest, where the traffic volumes on roadways are heavier.
Of course, midwestern states haven't been standing still on this issue either. As the large US automakers -- GM and Ford -- downsize their workforces, they are creating a large pool of unused workers who already have the skills demanded by foreign automakers. Economists point to this group of workers as a key element for midwestern states trying to attract investment from foreign automakers.
It remains to be seen though, whether the likes of Toyota, Nissan, and all the rest are ready to build new plants in the Midwest, or whether they'll remain committed to their "southern strategy."
What are your thoughts on foreign automaker investment in the U.S.? Do you welcome it in any region? And, which region do you think will be most successful in attracting future investments?
Comments
To Mike Randle: Mike, I think I used a poor choice of words in the series by saying that the South was "lightly populated." A better choice would have been to say that the South has "lower population density" (compared to midwestern automaking states). According to the 2000 Census, Ohio, Michigan, Illinois and Indiana each have at least 169 people per square mile (Ohio is the most "dense" of the four at 277/sq mile). Alabama, which is certainly the heart of the southern auto industry, has 87 people per square mile, and Mississippi has just 60/square mile.
I agree with the two previous comments. I truely believe that the south is eager to have this opportunity to change to a industrial economy from its past Fabric & Agricultural based economy. As mentioned the layed off Ford & GM workers will be welcomed to the plants needing trained workers. The availablity of cheaper homes & easier commutes will be a basis for happier, healthy individuals.
Jeff:
Hey, I really appreciate you interviewing me for the Detroit South story. But there's something you missed from the two-hour interview you did with me. You mentioned in your comments that the South is "lightly populated."
When I was born, 50 years ago, the South had 55 million in population, the Northeast 57 million and the Midwest had 54 million people.
Today, the Northeast holds 63 million, the Midwest 62 million and there are 119 million people living in the South, or roughly the total number of people living in the Northeast and Midwest combined. Jeff, those people had to come from somewhere. Many came from up North looking for better opportunities down here. That is the inmigration factor you mentioned economic developers told you about.
There's nothing "light" about the American South's' population. The growth in population is the single-largest driver in its economic development. While that population increase has helped diversify the region, both economically and socially, it will also be the source of problems in the future.
I grew up in a small town southwest of Detroit; River Rouge. It was a small industrial town bordering the Detroit River with a steel mill located on the river front. I recall in my neighborhood many men from the south that came north to Detroit to work in the Ford, GM, Chrysler factories and in the steel mill. As I look back there were few in the neighborhood that actually had white collar jobs. The southerners were hard working people that came to Detroit with virtually nothing!