Some of the biggest incentives for manufactures are the outrageously low tax bases in southern states. "When taxes are paid, southern levies are lower than most Northern states. GM's Hamtramck, MIG, plant, for instance, has one of the highest property tax mileages in the United States at 88 mills." (Corbett, 2002) Taxes are some much lower than in say Michigan or New Jersey and southern state officials are very open to negotiations to land the new factories and the plethora of jobs. In other words, land values are low and government incentives are extraordinary so the automobiles industry would be crazy to not migrate south for those reasons alone. "Furthermore, utilities costs are lower. After the products have been assembled, the South's location is superior to the Midwest or the East Coast for delivery." (Corbett, 2002) but there are other incentives.
Not only is the land for the new facilities cheaper than in the north, there are other perks such as much lower utility fixed costs such as power. "Tennessee has some of the lowest industrial power rates in the United States, anywhere from 20% to 50% below other states, Grande points out." (Corbett, 2002) but, these plants are also all going to be completely new so the latest environmentally sound technology can be implemented from day one. Northern facilities are usually older and can not match such advantages. In fact a major concern of the automobile industry is the pollution rates of the northern facilities. "When plants are up and running, there are fewer environmental issues. Activism is not as prevalent. Industry also is relatively new to the South. So new assembly plants do not have to over-compensate for older factories contributing disproportionately to emission totals." (Corbett, 2002)
Couple taxes and low rates of utilities with the added bonus of excellent roads and waterways for final and parts products delivery and again the automobile industry would be crazy to pass up on the perks. "Tennessee is within one day's drive of 75% of all United States markets, and its road system is one of the best in the nation. Other southern states are improving infrastructure. Besides 1-65 and 1-75, which are straight shots to the Midwest,...
Meanwhile, Michigan, for example, is a peninsula state with roadways that generally are in bad shape. The East Coast has fewer major parts suppliers. Components coming from the Midwest and the South add significant shipping costs to vehicle programs" (Corbett, 2002)
Non-of these before mentioned advantages can top the labor pluses. "It's not unusual for about 30% of the workforce to be unionized in Midwestern and Northeastern states and Quebec and Ontario. In southern states, the average is 4% to 5%." (Corbett, 2002) No unions entail no strikes, reduced pay scales and less hassles related to health care expenses. But the automobile industry has long been bothered with the many levels of job classifications resulting from unionized labor forces. "Southern states aren't shy about advertising their lack of unions. "Right-to-work status, non-union status continues to be a big attraction, particularly for foreign manufacturers." (Corbett, 2002)
In conclusion, this report was about the automobile industry migrating south and thus leaving northern and eastern states reeling. Corporate America and especially the automobile industry have become very competitive as the world has become more of a global economy. Companies are constantly on the lookout for new ways to strategically reduce overhead and still increase market share and profitability. In the past, Northern states like New Jersey, Detroit and New York offered the automobile industry high salary and unionized employees often forcing the manufactures to consider moving abroad. When moving was not an option, the automobile industry was constantly closing plants and laying off employees to help balance the books. As recently as 1990's, companies needed to use solutions like labor force reduction to cut the associated cost of labor. This strategy was an always a resource nightmare as 'getting laid off' or 'getting downsized' became all too common buzz words. The automobile industry has found a viable alternative to moving abroad or shutting down facilities.
References
Corbett, Brian (2002). Southern hospitality.…
