The Deal: Big incentives, bigger investment

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Published: November 13,2000

Editor’s note: As the Mississippi Business Journal went to press Wednesday night, Nov. 8th, an official statement from Nissan officials about locating an automotive

manufacturing facility in Madison County was expected Thursday morning, Nov. 9th.

CANTON – As Mississippians prepare for an expected spring 2001 ground-breaking on an almost $1-billion Nissan manufacturing facility in Madison County,

questions remain about the impact – possibly negative – the plant’s opening might have on existing manufacturers in the state.

“We’re very pleased to see the emphasis on manufacturing,” said Jerry McBride, president of the 1,800 member Mississippi Manufacturers Association, which

represents nearly 250,000 manufacturing jobs in the state. “Manufacturing, agriculture and mining are the basis of our state’s economy. As long as those industries are

growing, the service industry will increase also, but we have to have our base industry to continue growth. While we’re pleased that the new automotive plant will

increase the manufacturing jobs in the state, we want to make sure that attention is paid to existing manufacturers, who may need incentives to continue growth in

Mississippi.”

The Nissan plant could pay $22 to $23 an hour – close to $50,000 a year – which more than doubles the state’s most recent per-capita income figure of $20,500.

Last year, 2,800 jobs were lost in the manufacturing sector, which pays an average annual salary of $27,630. In September, of the 1.24 million residents employed in

the state, a total of 241,900 represented manufacturing-related jobs, according to the Mississippi Employment Security Commission.

“The Nissan plant would reverse the current trend,” said Jan Garrick, MESC spokesperson.

Under the new law, the state will invest approximately $73,750 per job, considerably less than the $168,000 per job Alabama spent to attract a Mercedes Benz plant

in 1993.

“When we landed Mercedes and Honda, it was great news for the state, but it presented a real problem for existing manufacturers,” said George Clark, president of

the Alabama Industry and Manufacturers Association.

“Throughout the Southeast, we’ve had problems attracting qualified, trained workers because of the explosive growth in existing industry development and expanding

industries moving into the southeast. Our education system has not kept pace with that growth rate, and it’s a problem that industry and education must work together

on, if we’re going to keep up the pace.”

When big plants move into a local community, workers are attracted from up to 100 miles away, Clark said.

“They suck the best workers into that area, and a lot of people don’t mind driving far distances for well-paying jobs,” Clark said. “When we travel the state to visit

industries, we hear time and again that the biggest problem is the lack of a well-trained workforce. Then, when rumors start to float around about a new plant moving

in, existing industry people just shudder to think what might happen.”

To help existing industries cope when the automotive plants landed in Alabama, the state beefed up its workforce training programs.

“It’s not enough, and we need to do more,” Clark said. “I don’t know what the situation will be in Mississippi, but my guess is that the situation will be overlooked at

first, and it’s going to hurt existing industry until enough pressure is applied to politicians to do something.”

Paul Connor Alexander of the Alexander Development Co. in Phenix City, Ala., an economic development consultant in Alabama and Georgia, said there will be

growing pains.

“It will raise the bar for everyone,” said Alexander. “Nissan’s behind the competition a little bit, and will have to do a lot of things to jumpstart their new product lines

and stay ahead of the curve in terms of manufacturing, modernization and the whole bit, and the state will have to meet the challenge to keep up. When Alabama got

Mercedes, they already had activity in Huntsville, which had already placed a more high-tech demand on the system.”

Demand on labor is a global problem, Alexander said.

“People will drive to work 40 miles easily, and some manufacturers will suffer because of a lack of labor,” he said. “Just like when the cut-and-sews left because of

changes with NAFTA, there will be some displacement. But you end up with available property for suppliers. It’s survival of the fittest.”

If manufacturers cannot meet the demand of salary requirements, for instance, they may be forced to relocate, Alexander said.

“Automotive plants generally require suppliers to locate within an hour radius, then people that supply them create another geographical ring around that plant,” he

said. “All of those suppliers will affect the labor market.”

McBride said he hopes existing manufacturers will become some of the suppliers for the project.

Contact MBJ contributing writer Lynne Wilbanks Jeter at lynne@thewritingdesk.com or (601) 853-3967.

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