Logistics in the Southeastern US

Logistics

Why the Southern U.S. Has Emerged As an Attractive Logistics Location for the Auto Industry

The many cost-based, human resources, locational advantages, supply chain and long-term tax advantages of locating and operating auto industry-specific logistics strategy in the Southeastern U.S. are explored in this analysis. Of the many advantages to auto manufactures of having logistics centers and operations in the Southeastern U.S., the most significant are the long-term tax incentives that drastically reduce operating expense for new ventures, as Mercedes was able to negotiate with the Alabama state government for example (Camp, 1994). The tax incentives are also a central catalyst that fuels the development of auto industry-specific distribution and logistics hubs that (King, 2005).

Cost-Based Advantages of Southeastern U.S. Logistics Centers

The most significant costs for many logistics providers are salaries and benefits, followed by the costs of doing business in a specific region including real estate, taxes and any additional local fees (King, 2007). Salary and benefits costs are often significantly higher in states where're there is a high concentration of unionized workers. In southern states the percent of workers who are unionized is 4%, among the lowest in the country (Corbett, 2002). This translates into a significant cost advantage over the long-term operations of any logistics business. Human capital costs in logistics operations often are increased due to employee churn over time as well. By having a large base of potential employees in the Southeast U.S., logistics providers serving the auto industry can drastically reduce risks that are inherent in a very labor-intensive business that relies on a skilled, stable workforce (King, 2005). As logistics processes and strategies become more attuned to the shrinking time-to-market requirements of the auto industry there is a corresponding need for greater technical expertise skill sets. The Southeastern U.S. has many of the best university-based programs that concentrate on supply chain management, logistics and quality management. These programs are enabling the next generation of supply chain professionals to gain the necessary skills to manage and run logistics operations and the broader supply chain networks.

The immediate tax implications that many Southeastern U.S. states offer are what compels auto manufacturers and their suppliers to invest in facilities throughout this region. From reductions to the elimination of taxes for a start-up period to drastic reductions in tax costs as the state of Alabama did for Mercedes (Camp, 1994), the easing of tax burdens is for many auto logistics services providers and suppliers the pivotal decision point in choosing to locate in the region (Corbett, 2002).

Transportation Advantages of Southeastern U.S. Logistics Centers

The Southeastern U.S. has many inherent transportation and logistics advantages that the regions' state and local governments continue to promote using examples of how their location contributes to greater efficiency and reduced costs. Atlanta, Memphis and Charlotte are considered three of the most valuable logistics centers in the Southeastern U.S. due to their proximity to the eastern seaboard, tight integration to the highway system and critical role of aircraft hubs. Each of these three cities and other hubs like them throughout the Southeast capitalize on a long-standing supply chain infrastructure that has been in place for decades, and is continually being upgraded to support the most advanced forms of electronic transaction support and logistics optimization. For auto industry suppliers the need for creating a unified, highly efficient supplier network that can flex and respond to changes in market conditions is critical to their success (King, 2005).