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Can Magnolia State offer incentives for large-scale projects?

Mississippi eyeing Alabama’s industrial development success

Alabama has just landed another big one, a $450-million Honda plant to be located at Lincoln, Ala., that is expected to have the largest economic impact of any development in the state’s history. The new Honda plant comes on the heels of several other mega successes for Alabama: a $300-million Mercedes Benz manufacturing facility, a $450-million Trico Steel plant and a $400-million investment by Boeing.

The Honda plant is expected to employ 1,200 to 1,800 initially with total employment climbing to 3,000 within four years. Honda also purchased 75 acres near the plant site on which to build a large training center similar to the one built by Mercedes.

“This is part of the governor’s campaign to end Alabama’s dependence on low-skill, low-wage jobs,” said a spokesman for the governor.

Economic development officials in Mississippi also believe that the state can no longer rely on providing low-wage jobs to attract development. And it is clear that improving the pay scale in Mississippi — not just providing more low-wage jobs — is the key to lifting Mississippi off the bottom of the ladder when it comes to average per capita income.

Alabama didn’t attract four major new industrial developments in the 1990s simply by wining and dining company officials.

“The name of the game is no longer a nice dinner and entertainment,” says Dr. Malcolm “Mack” Portera, president of Mississippi State University (MSU). “The name of the game is, ‘What is your technological base like? Is your work force technologically competent?’ That’s what companies are looking for now. We have to grow that base in Mississippi, and we’re working on that.”

Portera is in a unique position to understand Alabama’s successes because he was involved in efforts to attract the Mercedes plant when he worked in the university system in Alabama. Portera, who worked with Alabama economic development for 18 years before becoming president of MSU 16 months ago, said it takes technological expertise and adequate training programs to provide a technically competent workforce in order to attract major industries that provide high-wage jobs.

“In linking the university system with job creation for the state, the key ingredients were there for the Mercedes Benz and the Honda facilities,” Portera said. “All of the prospective investors as a first priority concern are looking for complete assurances they can be provided with a technically competent workforce. In the case of Mercedes and Honda, both of those companies were looking for assurances they could get a steady stream of people with the skills they need in their manufacturing facilities. So you have to be able to provide a workforce with basic competencies, and one that can be effectively trained. Those companies understand that their number one asset is human resources.”

Mississippi was also in the running for some of the big developments landed by Alabama such as the Boeing plant. Although the state offered a good infrastructure, sources said the state lost out because it couldn’t prove it had the best package including incentives and worker development.

Mississippi lacks one element considered key to the success of Alabama. Alabama has a very aggressive private organization that works closely with state economic development organizations to grow the state’s economy. About 90 companies are members of the Economic Development Partnership of Alabama.

“In essence, what those companies say is that it is in our best interest to grow this economy,” Portera said. “And they put not only their time, but their financial resources into assuring that will happen. Investors in that partnership put as much as $1 million per year in the pool of resources that complement that state partnership.”

Portera recently attended a meeting on the Coast that included members of the Alabama Partnership for Economic Development. They had just returned from a trip to Austin, Texas, San Jose, Calif., and Seattle, Wash. working to attract technology-driven manufacturing facilities to Alabama. The group charters an airplane to meet with prospective businesses, and does an in-depth investigation into what those companies need in order to set up business in another state.

Portera said the third thing necessary to attract companies like Mercedes and Honda is a willingness on the part of the state to make available the incentives that are necessary to attract large investments. For example, in order to attract Mercedes Benz, the government had to extend the infrastructure of the community — water, sewer, and fire protection — 18 miles out the interstate highway.

“That was expensive,” Portera said. “It cost about $30 million, and that $30 million was just one piece of the incentive package that was put together. But the state was willing to make those incentives available to secure that investment. Also, landing a Mercedes Benz plant is what allows you to be competitive in landing a Honda. So when Honda goes looking for plant sites in the South, Alabama can say, ‘We’re good enough for Mercedes Benz, and we’re good enough for Honda.’”

Another important element is a commitment to being on the cutting edge of new technology. At MSU, efforts are being made to double the size of the research and technology programs. A key element of economic development for the future is to grow the state’s capacity in technology and research. Modern manufacturers are looking at states that have significant technological capacity.

The final thing needed to be competitive attracting high-tech industries is an international presence. Alabama has offices in Germany and Japan. The office in Japan has been open for 15 years. Those foreign offices allow Alabama to have early intelligence about investments are planned so that state can then invite those companies to come take a look at locating in Alabama.

In today’s world, Mississippi isn’t just competing against neighboring states like Alabama, but against countries anywhere in the world. It is competition in a world economy. Economic developers say Mississippi workers need to understand the nature of global competition, and strategies that Mississippi workers will have to adopt if they want to compete.

Workers need to understand the importance of the following:

1. The importance of adapting to new jobs quickly because the kinds of jobs change.

2. Life-long learning.

3. Learning to think instead of being trained to operate a device or perform a specific task.

4. The virtues of commitment and quality as they relate to the workplace.

Sources said Mississippi may also benefit from not spreading itself too thinly, and instead focusing on being the best in two or three technologies so it can be “world class” in the development, advancement and commercialization of the products and services that will spin off from those technology.

About Becky Gillette

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