Automotive in the Rural South
More than any Industry in the Region's History, Automotive is the Rural American South's White Knight
By Lee Burlett
If you want to set up your automotive shop in the South, look to its rural regions for a location. That's where most automotive concerns invest in the South. The reasons why the rural South is so attractive to the automotive industry are obvious to site selection consultants who assist the major players. But if you're not a major player, but dreaming of becoming one once you establish a foothold in the Southern Auto Corridor, you may need some convincing data that clearly shows a rural location is indeed a solid location choice.
Over the years every Southern state government as well as the federal government have gone to great lengths to improve the economies of the South's rural regions. Billions have been spent. Hundreds of millions of dollars in increased incentives, advertising grants, improved infrastructure, worker training and public relations work have gone into building up and improving the fortunes of the people and governments of the Rural American South just in the last 10 years. The efforts have helped dramatically.
What may eventually empower the rural South like never before is an industry rather than an effort or government subsidized program. If the Southern Automotive Corridor is indeed a permanent, sustainable region, then automotive-related investments and job generation could have a greater economic effect on the rural South than any industry since the textile surge experienced throughout much of the early and mid-20th century. Of course, much of that business no longer exists in the rural South. In contrast, the automotive industry is flourishing in the rural South.
In an article published in Industry Week in February 2003, Albert W. Niemi, dean of Southern Methodist University's Cox School of Business, said the South's rise in automotive manufacturing is "irreversible" now. That sounds like a ringing endorsement for a sustainable industry for decades to come.
Further supporting the notion that automotive is a sustainable industry is Garel Rhys, director for the Centre for Automotive Industry Research at Cardiff University in Wales. Mr. Rhys predicts that in the next 20 years there will be a need for 150 to 200 new or expanded automotive assembly plants worldwide. That's an additional 45 million vehicles units, an incredible number. If indeed 150 new or expanded assembly plants are built in the next 20 years expect the Southern Auto Corridor to get its fair share.
We asked Lindsay Chappell, the Mid-South Bureau Chief for Automotive News if the South's automotive industry alone can transform the rural South's economy in coming years. "Yes," Chappell said. "In fact, it's already happening. Automotive companies will continue to look to smaller markets for land and available work forces in the South."
In calendar years' 2002 and 2003, there were 187 automotive-related announcements of 50 jobs or more that occurred in the Southern Auto Corridor. Of those 187 new and expanded automotive industry investments, 111 were made in a rural South location. The adjoining chart shows how many of those deals occurred in states in the Southern Auto Corridor and how many of those same investments landed in a rural South location.
Significant Automotive Announcements Made in the South 2002-2003
Source: Southern Business & Development
By studying the chart, you'll find some states with large numbers of automotive deals and some with very few. Remember, the automotive announcements found in the chart are from projects announced in calendar years' 2002 and 2003. Georgia turned an impressive amount of auto supplier projects in 2001 as did Mississippi that aren't included in this chart.
As you can see, about 60 percent of major automotive announcements in the South made over the last two years by automakers and automotive suppliers were made in a rural location. But many of those that occurred in urban and suburban locations in 2002 and 2003 were expansions, as opposed to new projects. Almost all of the new projects, or those supplying foreign automakers in the Southern Auto Corridor, have been built or are being built in rural locations in the South.
The Rural South and the Automotive Industry are Perfect Matches
The automotive industry and the rural South have developed a successful relationship that continues to grow. Assembly plants built by foreign automakers in the last 20 years clearly define that relationship. Toyota's huge assembly facility in Georgetown, Ky. and other massive plants like Mercedes' in Vance, Ala., Honda's in Lincoln, Ala., Saturn's in Spring Hill, Tenn. and Nissan's in Smyrna, Tenn. represent some of the largest capital investments ever made in the rural South.
Automotive parts suppliers especially appear to have developed a love affair with the South's rural regions. As indicated above, more automotive investments made in the South have been made in rural areas of the region as opposed to metros in the last two years. Of course, the vast majority of those investments have been made by suppliers. That's a significant finding by virtue of the fact that of the South's 23 major assembly plants in operation or being built, only seven can accurately be described as being located in the rural South.
What the automotive industry has found in the Rural American South is a productivity level that is nothing short of outstanding. Supporting that productivity is the renowned work ethic that is so apparent with rural South labor.
And let's not fool ourselves about cost factors either. We know you won't admit it, but if the cost factor isn't the No. 1 site search factor for those in the automotive industry (and virtually every other industry sector, for that matter), then it is clearly No. 2. There is no place in the U.S. that is more cost effective to operate an automotive enterprise than in the rural South.
Suppliers and automakers alike know that the rural South is where incentives can be maximized, buildings and land purchased or leased at prices that can't be found anywhere else (many times they are free) and the cost of labor is lower than that found in the South's metro areas.
All in all, the rural South and the automotive industry have a bright future ahead of them. We invite your automotive establishment to be a part of that future.