By on August 18, 2017

Toyota Factory Kentucky

The funny thing about job creators is that they don’t always, you know, create any jobs. So, when a business lets slip that it might have 4,000 positions on offer in the near future, every state with an unemployment rate higher than zero takes notice.

Mazda and Toyota’s joint factory — codenamed Project Mitt — is one such example, and now over a dozen U.S. states are simultaneously competing for the opportunity to host the $1.6-billion factory and the thousands of direct and indirect jobs it will yield.

When the Japanese automakers publicly revealed their cooperative venture a couple of weeks ago, they made it clear they had not yet picked a site — sending economic development offices into a frenzy. But what locale will emerge victorious has a lot to do with what the region can offer the manufacturer, including potential tax incentives, tempting job training programs, and investments into infrastructure.

An affordable and abundant workforce is also desirable — an element that distinguishes many states from one another. But no single area has everything on offer, leaving the final decision of where to build up in the air. 

“You have to be able to say you’ve got the workforce, you’ve got the land, you’ve got the transportation systems and rail spurs, community college and education and a place where people want to live,” Kristin Dziczek, director of industry, labor and economics at the Center for Automotive Research, told USA Today in an interview. “Once you’ve got all that, tax incentives come into play.”

For the most part, the Southern United States has the largest idle workforce to draw upon. Prospective employees are also willing to work for less and are less apt to unionize. The South has recently become a popular destination for automakers seeking to build new factories.

However, the midwest remains the country’s automotive hub. While Michigan has lost its governing role in the automotive world, it still remains the country’s seat for the industry. The state contains more engineering centers than anywhere else and houses plenty of parts suppliers. It also hands out significant tax breaks to manufacturers willing to set up shop within its borders.

“Michigan is absolutely the best location in the U.S. for this joint plant to be established, due to our leadership in automotive research & development, especially on mobility issues. We also have a strong pipeline of engineers and professional trades talent,” Gov. Rick Snyder said in a statement.

The downside of heading north is the possibility of unionization. While some Midwestern states, including Michigan, have adopted right-to-work laws, workforces within those states are still seen as being more likely to join the United Auto Workers. Meanwhile, the UAW’s attempts to unionize Southern assembly plants hasn’t met with any success.

If you were to gamble on the outcome, the safe money would be spread around Alabama, Arkansas, Tennessee, or possibly Mississippi. But that doesn’t mean more Northern regions aren’t in the running. USA Today provided an interesting list of most of the competing states, weighting the pros and cons of investing in each — proving they all have something to offer. However, the author later tweeted an automotive site selection expert’s opinion that no automaker would dare build in Illinois.

Toyota and Mazda expect the massive assembly plant to open in 2021. Sorry, Illinoisans.

[Image: Toyota]

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43 Comments on “The Interstate Battle Royale for Mazda and Toyota’s Super Factory...”


  • avatar
    TDIandThen....

    Naive question, why not Ontario or Mexico?

  • avatar
    ash78

    I’d question Arkansas…they’re sort of a no-man’s land, geographically speaking, and don’t have the easy access to East Coast transportations corridors that most of the current Southern plants have. Interstate and rail are extremely important in these cases. That’s a big part why Chattanooga, Greenville, and central Alabama have worked so well. You get lower costs, but pretty good proximity to other places as well.

    • 0 avatar
      jhefner

      Little Rock is a pretty good transportation hub with both north-south and east-west interstates, a major rail presence including a yard, decent airport, and even a waterway; I’d say on par to Jackson, MS. Good recreational opportunities for future employees.

      But I would agree about the rest of state.

  • avatar
    DeadWeight

    There is a thermonuclear arms race by individual states against other individual states to woo such facilities (particularly where 500+ jobs are involved) and it’s a very damaging race, as the most commonly deployed weaponry to win such facilities and jobs are MASSIVE TAXPAYER SUBSIDIES, so much so that we are now seeing individual states paying as much as $500,000 per job, for jobs that pay as little as a median of $16 per hour, to land such facilities and jobs.

    This is incredibly idiotic politicking and public-policy, and creates a race to the bottom as to which state can penalize its domestic taxpayers the most to land, in many cases, relatively low-paying, net-negative sum jobs, and is tantamount to corporate welfare on a financial scale that is mind-numbingly stupid and fiscally reckless.

    • 0 avatar
      DeadWeight

      Actually, nice gives are up to 2 million USD her jobs for tech companies, now – and check out subsidies paid to Nissan in Mississippi –

      “Tens of billions in ‘corporate welfare’ tax deals about to be exposed like never before
      Special deals given by states to companies, including Apple, Google, Facebook, Microsoft and Amazon, can cost as much as $2 million per job.

      One analysis of Mississippi’s deal to land a Nissan auto plant found it four times more expensive as was known, and the costliest deal ever to bring in a foreign manufacturer.

      A new accounting rule, GASB 77, will reveal to taxpayers tens of billions of dollars in spending never before disclosed and should result in a new debate about “corporate welfare.”

      https://www.cnbc.com/2017/07/11/states-pay-as-much-as-2-million-per-job-to-attract-tech-companies.html

      I can hardly wait to see the total subsidies offered to FoxConn if/when they build out assembly facilities in Wisconsin or other states.

      WE ARE NOW LIVING IN INSANE TIMES.

      “Boeing’s $13.2 billion is a bit more than its pretax profits for the last two years. It is also equals a stunning 70 percent of the $18.2 billion of equity owned by Boeing shareholders.”

      • 0 avatar
        DeadWeight

        Discover Where Corporations are Getting Taxpayer Assistance Across the United States

        SUBSIDY TRACKER is the first national search engine for economic development subsidies and other forms of government financial assistance to business.

        Subsidy award entries: 540,000 (341,000 state/local; 199,000 federal)
        Subsidy programs: 974 (836 state/local; 138 federal)
        Parent companies covered: 2,844

        Uncle Sam’s Favorite Corporations (report on federal data)
        Megadeals (largest state and local subsidy awards)
        Inventory of data sources
        Update log
        User Guide  

        Send questions or comments to Good Jobs First Research Director Philip Mattera.

        The Subsidy Tracker site was programmed by Rich Puchalsky of Grassroots Connection.

         
        http://www.goodjobsfirst.org/subsidy-tracker

        • 0 avatar
          dash riprock

          Companies know that the weak link are politicians anxious to show that they are job creators.

          Politicians know that they can easily fool the public by landing one of these factories, as too many of us are not bright enough to ask what are the short term and long term costs of these subsidies.

        • 0 avatar
          56BelAire

          DW, you are dead right on your posts. These companies expect and demand massive tax subsidies in order to build in individual states. Corporate welfare paid by the local taxpayers.

          FB was romancing Utah last year for a huge facility here. Once word got out of the ripoff tax subsidy the public got in an uproar and the politicos voted it down. I think they ended up with a “deal” in New Mexico.

          • 0 avatar
            Lou_BC

            A new study showed that for every $100,000 in donations to a politician, it increased the odds of a favourable vote by 13.9%.
            Corporate welfare is payback for a company’s political investment.

      • 0 avatar
        xtoyota

        Are tax payer really loosing ??? State gives tax free giveaway it cost tax payer NOTHING since if they didn’t give Toyota this benefit tax payer still gets NOTHING because Toyota goes to another State.
        Better to give this benefit because it adds jobs plus other supporting businesses will be started…this will add to the tax base….A PLUS GAIN

      • 0 avatar
        krhodes1

        I’m sure you know more about this than I do, so genuine question. When we hear reports of these huge “subsidies” how much typically is direct things paid for by the state, and how much is just not collecting various taxes once the plant is built? I find the latter to be less of a problem since if you don’t have the plant there you aren’t making any money anyway, but at least you get the revenue from all the salaries paid and the knock-on effect. But I really have no idea what the split typically is other than I assume they are not cutting the company a big check.

        Though also think there is really no need for it when the companies in question certainly don’t need the help.

      • 0 avatar
        ClutchCarGo

        I especially loved hearing Andy Grove complaining that Intel just couldn’t find the engineers they needed domestically, and I wanted to point out that if Intel were paying the property tax other businesses paid then maybe the local schools could hire the kind of teachers that could train the engineers that he’s looking for.

  • avatar
    mojeimeje

    The thing is that they don’t have to build anything in IL, because there is already a vacant former Mitsubishi plant in Normal.

    Indiana would be a good candidate too, especially the southern part where Toyota already has a plant and their plants in KY are just across the river.

    • 0 avatar
      Garrett

      Illinois is so dysfunctional from a fiscal perspective that it even a free factory would be enough incentive to locate there.

    • 0 avatar
      SirRaoulDuke

      My part of southern Indiana, in the Louisville metro area, has a ready site with excellent rail and highway infrastructure. I had to laugh at the USA Today article saying IN’s low unemployment could force “representatives” to demand a higher wage, this is now a right to work state, and most manufacturing jobs in the area don’t pay [email protected], a good $15 an hour job steals talent, period. Ford does have two plants in Louisville, but demand for the jobs is far greater than supply.

  • avatar
    indi500fan

    The “transplants” have been smart enough to spread the wealth around.
    That way you increase the number of Senators and Representatives effectively lobbying your cause in DC. I’d think a state currently without a transplant assy plant has a decent shot.

  • avatar
    SCE to AUX

    “But what locale will emerge victorious has a lot to do with what the region can offer the manufacturer, including potential tax incentives, tempting job training programs, and investments into infrastructure.”

    In other words, government handouts. From reading TTAC, I thought only GM and Tesla took them.

  • avatar
    stingray65

    Take the UAW out of the equation and Michigan, Indiana, or Ohio could all be very attractive locations. But since the UAW is still hanging on, I expect the plant will be way down south in the land of cotton.

    • 0 avatar
      indi500fan

      Indiana does currently have Toyota (Gibson County), Subaru (Lafayette), and Honda (Greensburg) assembly plants plus some large tier 1 suppliers like Aisin and Faurecia (all non-union).

      • 0 avatar
        mojeimeje

        There’s also a GM truck plant in Fort Wayne that is UAW. Also Indiana does have a large supplier base as you said that starts with steel plants (both USW and non union).

    • 0 avatar
      SirRaoulDuke

      Indiana is now right to work. No issue there.

    • 0 avatar
      here4aSammich

      Ohio was the first to attract a foreign automaker, and Honda has numerous plants in the state now. The UAw has never gotten in. I don’t even know if Honda is a target any longer.

      Sadly, our governor was more interested in running for president, so Right To Work never got passed here. Indiana and Michigan both made the change. I can’t see a plant in metro Detroit, but in SW Michigan, I wouldn’t rule it out.

  • avatar
    Garrett

    Surprised Wisconsin isn’t mentioned, given the recent spate of companies deciding to locate close enough to Chicago but without having to be in Illinois — Foxconn and Haribo come to mind.

    If they were going to be exporting production, I would put my money on South Carolina given their port, but since it’s all for domestic consumption, I’m guessing it will be a state where they say “y’all” and “bless her heart”.

    • 0 avatar
      bikegoesbaa

      A manufacturer would be crazy to locate a plant in the rust belt and put up with the UAW or even just the unionized mindset.

      If you really want to take advantage of MI’s skilled R+D talent pool just put your tech center in Michigan and the production plant down South. You know, like Toyota already does.

      There are some advantages to having design co-located with manufacturing, but none of them are significant enough to be worth actually putting the plant in Michigan.

  • avatar
    bikegoesbaa

    Does offering tax breaks to a corporation in order to win a large manufacturing facility actually cost the winning state anything?

    Isn’t the alternative that you don’t get the plant, and the land where it would have been built likely remains undeveloped and far less productive?

    If I’m West Pennsyltucky and my options are:
    (1) Offer tax breaks to win a plant, which will then generate millions in payroll taxes and taxes from supplier plants and other related economic activity.
    -or-
    (2) Do not offer tax breaks, the land stays trees, and I miss out on those payroll taxes and economic activity.

    It seems like (1) does not actually cost me anything, but (2) costs me millions.

    Is there some other type of incentive I don’t know about where states just give manufacturers piles of cash, rather than tax incentives?

    • 0 avatar
      SirRaoulDuke

      The issue is how much does the local tax base get screwed. If you locate a new plant in a populous area, not so much. A rural area, that then draws in new workers and families, yeah you can run into problems with funding for schools, police and fire, etc.

  • avatar
    DeadWeight

    The joint Toyota-Mazda plant will be built in either Kentucky or Texas given Toyota’s already great and long-standing relations in running facilities in both states.

    However, I’m going to take a longshot bet and put a $50 on it still possibly being built EN MEXICO.

    I know that this seems like a crazy bet on the surface (so I need odds, here), but there are a whole host of reasons why Mexico may still ultimately land this facility given recent economic and, especially, political happenings.

  • avatar
    jpolicke

    Utah might be worth looking at. Open land, educated workforce, SLC has an excellent community college, right to work, intersecting north-south and east-west interstates, intersecting rail lines. Struck me as a nice place to live.

  • avatar
    I_like_stuff

    ““Michigan is absolutely the best location in the U.S. for this joint plant to be established”

    BWA HA HA HA HA HA HA HA

    Oh man, I needed a good laugh. Thank you Gov Snyder.

    I’ll go out on a whim and say Boise, Idaho. Cuz why not? Cheap real estate, low tax state, and close to CA’s market.

  • avatar
    kuruma

    Due to sky-high business taxes – what we do know is the factory will not be built in any of the west coast states (California, Oregon, or Washington). Good luck to the state where the factory will be constructed – my money is on Kentucky or Texas also.

  • avatar
    SoCalMikester

    why not an existing recently closed plant, like the mitsubishi one? proven infrastructure, people familiar with japanese assembly/expectations

  • avatar
    Jerome10

    To those mentioning Utah and Idaho…As an Idahoan myself, and someone who worked in the auto industry in the past, this will NEVER happen.

    One of the biggest problems with NUMMI (Fremont California) was the supplier pipeline. Fact is most auto suppliers are going to be in the midwest or south, or Ontario. Shipping parts via truck or train to the west part of the USA means you have a ton of JIT inventory sitting in these transport vehicles. Any issue with quality and you’re looking at massive amounts of quarantined parts and very expensive urgent shipment costs, if necessary.

    So it just won’t happen.

    I’d LOVE LOVE to see it, but I also don’t think it will be a go either, is a new factory smack dab in the middle of Detroit. The City of Detroit. Would be a true signal from city and state leadership they are willing to take business investment from anywhere, and would be great to get some jobs back. But UAW stronghold, and general Detroit dysfunction I don’t think we’ll ever see that.

    My bet….somewhere south or south-ish (kentucky or Texas), or maybe maybe the Ann Arbor area in Michigan near Toyota engineering HQ, but far enough from Detroit to avoid the politics of all that. Mazda also had a plant in Flat Rock in the past. They’ve built in Michigan before.

  • avatar

    It always seems it is a foreign company that comes to America’s rescue.

    GM – what a disgrace!

  • avatar
    Jonathan H.

    Back in ’02 Kentucky bought up a bunch of land trying to score the Hyundai plant that eventually went to Alabama. They held on to the land and upgraded the utilities for future industrial use. It’s near the interstate and near the rail line. I wouldn’t count KY out given that they have the plant Georgetown and is completing the Engineering center building as we speak.

    • 0 avatar
      SpinnyD

      This is true, The land is close to Elizabethtown off of I-65. close to Louisville, KY and close enough to Georgetown,Ky. I don’t think that Toyota will choose it though, Just for the reason that if they choose another state that doesn’t have a Toyota plant they can get 2 more senators and a bunch more representatives in their court. The suppliers will be there in time for the plant opening. I’d love to see Toyota set up another plant in Ky, It would be good for my state.

      Also the Engineering building is pretty much done, They have already moved in a bunch of people, Just a few more things from Erlanger to move in and it will be complete

  • avatar
    MrGrieves

    If I had to venture a guess, I’d say Kentucky is #1 on the list. Toyota already has a large footprint there and access to a decent transportation network. Also it just recently became a right to work state. That removes some headaches in terms of expansion. There is a sizable workforce to draw upon in the area from the Lexington / Louisville / Cincinnati triangle.

    #2 would be Texas. Again, large workforce, decent infrastructure, existing footprint.

    #3 would be Alabama, either central or northern. I live in N. Alabama, and the infrastructure is mostly in place, along with a supplier footprint and existing Toyota facility in Huntsville. The only issue would be we actually have pretty low unemployment here (somewhat less than national average) …there could be challenges finding people.

    Also-rans would be Mississippi, Indiana (Southern… too much UAW sentiment in northern half of the state), or Tennessee. Michigan? Forget about it.

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