Gov. Cooper weighs in on incentives
We lost another car maker to Alabama but now gain the chance to get it right next time. In the early 1990s, when Mercedes chose Alabama over North Carolina, policy makers blamed our lack of financial incentives. We now have generous incentive programs in place, but they didn’t get us the win.
Early reporting on the recent Toyota-Mazda decision points instead to Alabama’s well-developed automotive supply chain. Alabama has hundreds of small- and medium-sized parts suppliers and specialized engineering firms that have long served Mercedes-Benz and enable neighboring states, like Tennessee, to lure their own multinational car makers.
Car makers like Toyota and Mazda rely on lesser-known companies to design and deliver critical systems like drive trains and seating modules. Other behind-the-scenes companies produce parts components that make cars lighter, smarter and more comfortable. These suppliers are responsible not only for some of the most sophisticated manufacturing skills, product and process innovations in the industry, but some, like machinery manufacturers and machine shops, also extend support to a range of advanced manufacturing industries.
What can we do to strengthen our automotive supply chain and create quality job opportunities in the process? First, we need to complement incentives by bolstering existing supplier firms and recruiting others through the use of sector strategies. Our state already has a robust set of specialized firms in automotive parts and related industries, including aerospace, truck manufacturing and even technical textiles. With the right assistance and enhanced visibility, these firms can expand their capabilities, adding more value to the regional automotive industry and helping North Carolina gain equal footing with neighboring states.
Second, we can ensure existing and newly established suppliers are well connected to the state’s manufacturing extension network. North Carolina is home to the nation’s oldest industrial extension service and can boast great success in supporting thousands of small- and medium-sized manufacturers since the mid-1950s. Extension agents have been instrumental in helping North Carolina-based firms acquire new technology, update workforce skills and connect with new markets and customers.
Recent research suggests that publicly funded extension support has a greater impact when helping manufacturers access new markets or better serve downstream customers by offering specialized services and product design assistance. This enables suppliers to not just compete on the basis of lower costs or reduced pricing of standardized products. Rather, this focus on top-line performance helps distinguish firms as industry innovators and essential problem solvers.
Third, and related, we need strong bipartisan support for sector strategies that can guide the development of the state’s automotive industry. In recent decades, North Carolina has experienced robust employment and establishment growth in biopharmaceuticals, aerospace, non-woven textiles and clean technology, among others. This growth was driven by financial incentives combined with forward-thinking and sustained public investments in sector organizations, including the N.C. Biotechnology Center and N.C. State University’s Textile College. In biomanufacturing for example, North Carolina-based suppliers and specialized service firms not only benefit from industry-wide support from sector organizations, they are often included in targeted recruitment deals, helping to expand their own customer base.
Equally, the Biotech Center and other sector organizations also draw in strategic partners, including our community colleges, thus ensuring manufacturing workers in North Carolina contribute to the state’s industrial and innovative capacity. These partnerships have also helped workers displaced from declining manufacturing industries apply existing production knowledge and acquire additional skills to secure jobs in high-growth sectors.
North Carolina is a logical location for automotive manufacturing. We now have the land. We also have the talent. We also have much better basketball and – joking aside – we have a strong manufacturing legacy to build on and defend. To stay in the running, we need to decide if we are ready to commit to building an advanced automotive sector. If so, let’s turn Alabama’s victory into one for us as well.
Allison Forbes is a graduate student and Nichola Lowe an associate professor in the Department of City and Regional Planning at UNC-Chapel Hill.