Mike Randle, Editor, Southern Business & Development
A Letter to CEOs of Automakers and Their Suppliers
Your industry’s leadership and ingenuity over the last 100 years has transformed the lifestyles of every American and almost all people throughout the world like few industries in history. For example, in 1900 the average American traveled about 1,200 miles in a lifetime. In comparison, my travels by car throughout the South over the last 10 years have taken me on dozens of trips that totaled 1,500 miles in one week.
Right after your industry was born, there were 8,000 cars registered in the U.S., almost all of which were owned by the rich. Today there are 500 million registered vehicles in the world, with nearly 200 million in the U.S.
All of you realize that in the long term your industry looks solid as gold. Why? As populations increase, more cars are sold. That's true with any product that is inherently needed. And in this day and age of the human condition, individual vehicles are still products that are essential to daily life. And then there's the potential market that's called China, a market that is expected to rank second to only the U.S. in vehicles sold as early as 2012.
Experts have estimated that increased capacity over the next 20 years could total 45 million more vehicles than what can be produced today by existing assembly plants. That's a projected 150 new or expanded plants located throughout the world producing 300,000 vehicles a year. One-hundred and fifty new automotive plants in 20 years? Wow! You folks have some work to do.
On the other hand, in the short term there's no question some of you are dealing with situations where plant closings are inevitable. But we also know that none of those plant closings will likely happen in the American South. No, if plants close they will be in New Jersey, Ohio, Michigan and Ontario. In fact, just in the last couple of years there were nine expansions of your assembly plants in the U.S. in markets outside the South and 18 expansions and two new assembly plants announced in the South. Those were the highlights of your industry from late 2001 to today. Lowlights will soon come. But, again, they won't be here in the American South.
As for the executives reading this who work for Ford, GM and DaimlerChrysler, you are dealing with a decreasing U.S. market share as foreign automakers enjoy a market share that's increasing in this country. I don't have to remind you that every major foreign-owned assembly plant announced in the U.S. in the last 10 years has been announced in the South.
Many of your plants in the Great Lakes region are obsolete. You demanded and got concessions from the UAW in recent negotiations to close a few. It's our suggestion that the next go around with the UAW include an agreement that enables you to close a few more in the Great Lakes, while at the same time, opening up a couple or three new facilities in the Southern Auto Corridor.
As for the executives reading this who work for Nissan, Mercedes, BMW, Honda, Hyundai and Toyota (as well as Mitsubishi, Kia, Daewoo, Volvo and VW, who have had their site search teams in the South), you have already seized an opportunity by placing your major North American operations in the South. I know you are pleased with your decisions. Every one of you have either expanded your existing operations in the last 10 years or announced new ones in the South over the same period.
The South offers all automakers a better work force choice. The South offers all automakers a more cost effective region in which to operate an assembly plant. The South offers better energy options. The South offers, generally, better incentives. And finally, the South offers automakers something they can't get anywhere else in the United States: state governments with an entrepreneurial spirit. One thing you must remember and remember it well: We invented the industry that is known as industrial recruitment. Unfortunately for the "big three," that invention wasn't sold on the market by Southern economic developers until after they chose Detroit as their home base.
In the next 20 years of this nation's automotive industry, we challenge the "big three" to rethink their business model (we know you already are). We invite you to look to a warmer business climate that your major competitors -- foreign automakers -- have already found. Fact is, as your plants in the Midwest become even more obsolete, we challenge you to look to the South. We also invite your UAW workers, many of which have been card-carrying members for 40 years or more, to relocate to the South if the assembly plant where they currently punch their time cards closes. We need their expertise.
The final point of our argument that the South will eventually unseat the Midwest as the center of the automotive universe centers around this: Five automakers -- GM, Ford, Chrysler, Honda and Toyota -- lost production for as many as three days as a result of the massive snowstorm that struck the North during the week of February 17, 2003. Almost all of those plants also lost production in the great summer '03 blackout. All of those plants that were closed due to weather or power loss were located outside the South, except for two plants in Kentucky. Yes, we have a warmer business climate down here and the reliability of our power providers ensures additional warmth. That being the case, come on down!