Southern Lawmakers Sour on Detroit Deal?

Daily Herald (Arlington Heights, IL), November 19, 2008 | Go to article overview

Southern Lawmakers Sour on Detroit Deal?


Byline: Associated Press

WASHINGTON If its no surprise Michigan lawmakers are behind the pitch for a $25 billion lifeline for Detroit automakers, then it might be just as predictable Southerners would be leading the charge against it.

Southern politicians have spent years luring foreign automakers to build cars in their states, with huge success. South Carolina has BMW. Mississippi recently landed a major plant for Toyota Motor Corp. Alabama boasts plants run by Mercedes-Benz, Hyundai and Honda.

In Georgia, the governor recently began using a Kia SUV in honor of the companys planned $1.2 billion manufacturing facility there.

Its not that Southerners are secretly wishing for the Big Three to collapse. But if those automakers were to falter, the new players are poised to ramp up production and possibly turn the South into the next Detroit.

"In the long run, having fewer competitors or weaker competitors is generally a good thing," said Efraim Levy, a senior auto industry analyst with Standard & Poors. "It would contribute to a greater relative strength in the South."

The regional divide is not black and white. Most Southern states still have a stake in the well-being of the Big Three and would suffer their own losses if the companies dramatically scaled back operations or closed their doors.

Kentucky and Tennessee have large GM plants, for example, and major auto suppliers are scattered across the region. In addition, the foreign automakers could see temporary supply disruptions in a destabilized market.

But just as U.S. consumers have increasingly turned to foreign cars, the foreign makers have made clear their preference for the union-resistant South as a U.S. manufacturing base. Increasingly, the states economic interests and those of their political leaders are realigning accordingly.

In Alabama, the number of auto industry jobs has more than doubled to nearly 50,000 since 2001, according to the Alabama Automotive Manufacturers Association. The vast majority of the positions are tied to new Honda, Hyundai and Mercedes plants. Meanwhile, Delphi Corp., GMs former parts operation, is closing a plant outside Huntsville that once employed about 5,000 people.

In Tennessee, General Motors is planning to slow down production at its 3,500-worker plant in Spring Hill south of Nashville. Nissan Motor Co., meanwhile, has more than 6,500 employees in the state, and Volkswagen is set to break ground on a Chattanooga assembly plant that will provide about 2,000 jobs. …

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