Listed below are 85 American-made automobiles. Each vehicle listed is built with union labor. But regardless of how you may feel about the labor movement in general, the fact remains that foreign automakers producing in the U.S. predominantly assemble their automobiles in low-wage states like Alabama and Kentucky, where American-owned automakers (Ford and General Motors) predominantly produce in high-wage union states like Michigan.
This author has nothing against any state in our great country. We are all part of America and deserve jobs just like anyone else. The point I am trying to make is that this is one of many relatively unknown facts that give foreign-owned automakers huge cost advantages over American-owned automakers. Consider the following:
In 1997, the state of Alabama granted huge subsidies to Mercedes in exchange for a plant that would employ 1,500 people. What were the details of this huge incentive package? $300 million in tax breaks, $253 million in direct incentives, $60 million in Alabama taxpayer money to send fellow Alabamans to Germany for training, and a promise to buy 2,500 of the new Mercedes SUV’s at $30,000 each. Based on just the initial $300 million grant alone, those 1,500 jobs will cost Alabama taxpayers $200,000 per job. Apparently Alabama, not Mercedes, will be paying those salaries for years to come. With deals like these, it’s no wonder foreign automakers have stepped up production in the U.S. We’ll even pay their workers’ salaries for them!
In 1987, Toyota constructed an auto plant on part of the 1,500 acres of free land given to them in Georgetown, Kentucky. The auto plant was built by a Japanese steel company using Japanese steel. The U.S. government granted a “special trade zone” so that Toyota could import auto parts from Japan duty-free. Financing was handled by Mitsui Bank of Japan. Total federal and state grants and incentives exceeded $100 million. These subsidies, of course, were courtesy of your tax dollars.
Tennessee gave Nissan $11,000 per job for their Smyrna plant built in 1980. South Carolina coughed up $79,000 per job to convince Germany’s BMW to build their plant in Spartanburg in 1992. Were you aware that our government was using your money to create jobs? Or are these merely job announcements where you and I foot the bill? Job announcements do make for great rhetoric for state governors’ re-election campaigns. How many years will it take a factory worker in Alabama to pay back the $200,000+ in tax money that the government gave away? A conservative answer would be “several.”
This is not to say that American companies are not granted incentives to build plants here. The most recent is $100 million in incentives for Cadillac to build their next plant in Michigan. It is my opinion that we should not be imitating the Third World by using public money to bid for jobs. But when given the choice between foreign investment (Toyota, Mercedes, Nissan) and American investment (General Motors and Ford), American investment is much better for America.
The deal Alabama gave Mercedes makes the deal Michigan gave GM seem rather frugal. The point here is that these huge incentives that are offered to foreign companies are rarely offered to our own companies here at home. Such incentives allow foreign companies to save hundreds or even thousands of dollars in costs per automobile. And American companies acquire more of their parts from domestic sources, so more jobs are created in the automotive parts industry in America.
America needs more American investment, not more foreign investment.
-- Roger Simmermaker
