Southern states open checkbooks for auto jobs

LIMA — The Lima Auto Task Force received two large reminders Tuesday, of the economic importance of the auto industry, and because of that, why some states are opening up their checkbooks to lure employers.The United States auto industry’s site consultants are showing a preference for Southern states, because of lower operating costs and stronger incentive packages, Marcel Wagner, president of Allen Economic Development Group, told the group Tuesday.The incentives are less tax-credit oriented, Wagner said, and more up-front incentives, including cash, free land, infrastructure improvements and training.“They are looking for up to 50 percent of the value of the project in incentives,” Wagner said. “At times, we sat there with our mouths open.”AEDG and representatives from development groups in Wapakoneta and Piqua attended a recent national meeting of automotive site consultants in Atlanta. Wagner said the group heard about many Southern states creating “deal closing” funds, that provide straight cash to companies or communities to seal an economic deal.A $1 billion Volkswagen project in Tennessee created 2,000 jobs, Wagner said, but came at the expense of $229 million in cash from the state and $219 million in local incentives. A Kia $1.2 billion investment in Georgia created 2,500 jobs, but cost the state $275 million, including $90 million in cash, and $151 million in local incentives, Wagner said.The consultants said they expect very few new assembly plants to be built in the United States in the near future, but see tremendous growth in second- and third-tier supplier businesses.Lima Mayor David Berger, who chairs the task force, said the Lima region can compete for that business, especially with trends of automakers wanting to keep suppliers closer to larger operations.The reason states are competing so fiercely for investment from the industry is evident in a report from Automotive Communities Partnership that Berger shared with the group.The auto industry generated $91.5 billion in state government tax revenue in 2010, 13 percent of state tax revenues, and $130 billion in overall government revenue, the report detailed.Automakers directly employ 313,000 people; another 686,000 are employed in the auto parts sector and another 737,000 people are employed in the dealer network. Directly and indirectly, about 8 million people in the United States depend on the auto industry for their jobs, the report said.You can comment on this story at www.limaohio.com.