Dean Barber

Even a Blind Hog: Handicapping Amazon HQ2

In Corporate Site Selection and Economic Development on September 12, 2017 at 10:59 pm

First, there was Foxconn. Then there was Toyota-Mazda. And now there is Amazon.

The very thought of three billion-dollar-plus, corporate-site-search projects happening within a few months of each other is pretty much unheard of for both economic developers and site selection consultants.

For the uninitiated, economic developers represent locales, whether they be states, cities, counties or regions. Site selection consultants represent companies in the quest to find the best place for future operations.

(I was once an economic developer, but have gone over to the dark side. I am a consultant.)

Politics of the Day

Wisconsin won the Foxconn project, of which various reports place the value between $7 billion and $10 billion. I get the impression that the project was more “site confirmation” than true site selection, with politics a leading factor.

Foxconn may be a forerunner of things to come, with politics playing an increasing role on where some mega-projects ultimately locate. I believe the Trump administration’s hardline position on NAFTA being renegotiated is why both Ford and Toyota have reversed courses on projects in Mexico, although neither company will admit to that.

Based on the politics of the day and history, I have ventured what can only be viewed as an educated guess on where a $1.6 billion joint venture project between Toyota and Mazda will land. Apparently, my conjecture/analysis in two blogs got enough traction that my friend Andy Levine interviewed me this past week for his latest podcast, Episode 27 of The DCI Blog.

Widespread Speculation

Having worked my share of automotive projects, I had at least some foundational knowledge to fall back on. So it came as quite a shock when an economic developer in Oklahoma City suggested that I write a blog, handicapping the $5 billion Amazon project.

I protested, “You know, I really don’t know anything about it, just what I read.”

“Neither does anyone else, and that hasn’t stopped them,” he said. Good point. There has been widespread speculation in the press on what city Amazon will choose as its second, equal-footing headquarters, which it calls HQ2.

And then I remembered my grandfather saying, “Even a blind hog will find an acorn on occasion.”

The worst that can happen is that I am wrong. And I probably am wrong, so let’s just do it, and have a little fun in the process. Are you with me?

Something Entirely New

Maybe we should first acknowledge that we don’t fully understand Amazon, what it is about or how it operates. It might be one reason why your local shopping mall is being torn down.

“Amazon wins games by changing the way the games are played then being the only ones who understand the new rules,” wrote former Amazon employee Ryan Boudinot in an article for GeekWire and who called HQ2 “something entirely new in the history of global capitalism.”

Boudinot says Amazon constantly pits one idea against another in a process called A/B testing. The concept can be seen on its website itself but also through what Boudinot calls a “cutthroat” corporate culture.

“When the announcement came that Amazon would open not a satellite office, but a doppleganger HQ, my first thought was, “They’re going to A/B test the entire company.”

HQ2 will be “be a full equal to our Seattle headquarters,” Amazon CEO Jeff Bezos said in a prepared statement. Somehow, Hunger Games comes to mind.

Think Big

Amazon tells us in its Amazon HQ2 RFP that this will be one big project, again $5 billion big, creating up to 50,000 jobs. The executives, managers, software engineers, legal staff, accountants and administrative workers employed at HQ2 will be making an average annual wage of $100,000 or more a year.

Amazon currently employs about 40,000 people in Seattle, where since 2010 it has paid nearly $26 billion in wages and spent $3.7 billion on buildings and infrastructure. The company estimates it has had an indirect economic impact of $38 billion on Seattle.

Big requires big. Only big cities need apply. The company states it is looking for metropolitan areas with more than 1 million people, “has a stable and business-friendly climate,” and can “attract and retain strong technical talent.”

The New York Times is picking Denver. My friend and frequent business partner on projects, Tim Feemster, thinks Dallas has a real shot at it. Denver or Dallas, both exhibiting good levels of tech talent, could very well be the choice.

Think East and Extending Hours

But I think it will be “NFL” city, a major market east of the Mississippi River, probably in an eastern time zone to give the company greater band width in terms of time of day business hours and extending its company’s capability to manage its business in Europe and other parts of the world.

That leaves Boston, New York, Philadelphia, Baltimore, Washington, D.C., Charlotte, and Atlanta, all eastern time zone cities.

Cleveland, Indianapolis, Cincinnati, Pittsburgh, and Detroit, all good cities, are not making my first cut, only because I think Amazon will be looking at more high-growth metro areas outside the Midwest. It should be noted that Indianapolis and Detroit have good levels tech talent.

So I’m breaking it down to an NFL city, eastern time zone, and tech talent, I am going to refer to CBRE’s fifth annual Scoring Tech Talent Report.

Think Talent But Also Costs

So now I am looking at New York, Washington, D.C., Atlanta, or Boston. Why not Toronto? Big city, with 183,00 tech jobs. Maybe, but I think of the politics of the day and the Wrath of Khan. Excuse me, I meant the Wrath of Trump. The president would have a field day if HQ2 located in Canada.

I am throwing out Boston and Washington, D.C., for two reasons – the high cost of real estate (although Amazon is no stranger to that in Seattle) and an arguable brain drain when it comes to talent.

The website Recode attributes Real Capital Analytics that the average office price per square foot in Boston is $550, and Zillow in stating the average home price is $560,300, while in Washington, D.C., the office price is $595 per square foot and $382,900 for the average home.

Brain Drain

And while both cities produce a significant number of tech graduates, they have a hard time employing them locally. According to CBRE, from there were 56,623 tech degrees awarded in Washington, D.C., from 2011 to 2015, but 40,270 tech jobs added during the same period.

That is a deficit of 16,353, meaning those graduates probably left the area. Of course, you could rightly argue that those people would stay should Amazon come to town with high-paying jobs.

In Boston, there were 31,400 tech degrees awarded from 2011 to 2015, with 11,790 tech jobs added, a deficit of 19,610. Again the dynamics would certainly change with Amazon’s HQ2. More tech graduates would remain in the city to fill the needed jobs.

I am throwing out New York, which may be a big mistake on my part. The primary reason is because I don’t think “the City” will offer the financial incentives expected or needed by Amazon, and the fact that New York remains a high cost place to do business in terms of taxes, real estate and, well, just about everything.

71 Streets

So that leaves me with Atlanta, with a metro area population nearing 5.8 million and where 71 streets have a variant of “Peachtree” in their names.

In terms of CBRE’s tech talent measure, Atlanta ranks No. 5, behind New York and Washington, D.C. to be sure, but still very good. Atlanta added 22,634 tech degrees from 2011 to 2015, but added 43,180 tech jobs, proving that the talent will flock to the city.

Atlanta has The Georgia Institute of Technology, commonly referred to as Georgia Tech, one of the top research universities in the country. The school provides a technologically focused education to more than 25,000 undergraduate and graduate students in fields ranging from engineering, computing, and sciences, to business, design, and liberal arts.

As large cities go, Atlanta reasonably priced place to do business. Office price per square foot averages $239, while the median home value stands at $212,200, according to Zillow.

In Good Company

Atlanta has Hartsfield–Jackson International Airport, seven miles south of the city’s central business district. The airport serves 150 U.S. destinations and more than 75 international destinations in 50 countries, averaging 275,000 passengers a day. Atlanta is within a two-hour flight of 80 percent of the United States population.

The Atlanta metro area is no stranger to corporate headquarters. Twenty-six companies there are among the 2017 FORTUNE 1000, of which 15 companies are also ranked in the 2017 FORTUNE 500. In fiscal year 2016, these 26 companies generated revenues of $373.9 billion.

Finally, Georgia has historically proved to be a business-friendly state that is willing to go big after the big projects. By and large, its elected officials understand that financial incentives are a necessary reality in today’s world. For that very reason, I am not counting Georgia out in hunt to win the $1.6 billion Toyota-Mazda project.

So there you have it, my choice for the Amazon HQ2 project. Chances are that I am wrong, but I then again I might be right. Are you listening, Amazon? Hey, I can help you with site selection. Honest.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Dallas. BBA helps companies and communities. (Send us your RFPs.) Mr. Barber is available as a keynotes speaker and can be reached at dbarber@barberadvisors.com or at 972-890-3733.

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How Disaster Reveals Our True Selves

In Corporate Site Selection and Economic Development on August 31, 2017 at 7:56 pm

Within hours after the Boston Marathon bombing on April 15, 2013, the slogan “Boston Strong” appeared as a hashtag on Twitter and rapidly spread around the world.

It was an expression of Boston’s unity following the tragedy, but it is also very much an American expression. Whenever and wherever disaster strikes, come hell or high water, Americans come together.

And so we watched on our TV screens this great coming together as Hurricane Harvey inundated Houston and the nearby region. A flotilla of small boats and inflatable rafts were launched by first responders and citizen volunteers to rescue those trapped in their homes. Helicopters plucked people from rooftops and chest-high waters.

NBC Nightly News anchor Lester Holt, who spent five days in Texas covering the storm, told GQ Magazine that Hurricane Harvey showcased the best of us.

“I think that when something of a magnitude of a Katrina or a Harvey happens, that we see our true selves—we revert to who we are. And we are a good people who know when it’s time to check all our differences at the door and come together—and I’ve seen it time and time again at natural disasters that people focus on one another because in one way or another they’re all saying to themselves we’re together in this. I have nothing but admiration for the people here. Their self-reliance was apparent.”

Here in Texas, where I live, self-reliance and compassion for others is part and parcel of the brand. We saw Houston Strong, Beaumont Strong and Port Arthur Strong. The storm personified true grit.

My friend, David Dodd, founder and president of the New Orleans-based International Public Private Partnerships in Resilience Center, Inc., agreed that resiliency is cultivated in Texas. Dodd’s firm specializes in economic recovery and resilience, born from leading economic recovery efforts after the devastation wrought by Hurricanes Katrina and Rita.

“Texans are proud—true Texans say, “the State of Texas”. There is meaning behind that. Don’t forget that Texas was its own country. (Republic of Texas, March 2, 1836, to February 19, 1846.) They know that and they feel they are separate and apart from everybody else,” said Dodd, who grew up in Louisiana on the border with Texas, and whose father’s business was in Texas.

“The upside of that pride is that they are going to take care of their own. They are not going to let that mental image of their state as being the greatest place in the world collapse. They are going to do whatever it takes to help their neighbors, if only to uphold that image. The result is still good.”

The Worst Natural Disaster

But tough, tough days lie ahead. Hurricane Harvey is the most costly natural disaster to ever befall the United States, said Dr. Joel N. Myers, founder, president and chairman of AccuWeather in a prepared statement Wednesday.

“This is the costliest and worst natural disaster in American history. AccuWeather has raised its estimate of the impact to the nation’s gross national produce, or GDP, to $190 billion or a full one percent, which exceeds totals of economic impact of Katrina and Sandy combined.

“The GDP is $19 trillion currently. Business leaders and the Federal Reserve, major banks, insurance companies, etc. should begin to factor in the negative impact this catastrophe will have on business, corporate earnings and employment. The disaster is just beginning in certain areas.

“Parts of Houston, the United States’ fourth largest city will be uninhabitable for weeks and possibly months due to water damage, mold, disease-ridden water and all that will follow this 1,000-year flood.”

The National Weather Service announced that a gauge in Cedar Bayou, near Mont Belvieu, Texas, recorded a preliminary rainfall of 51.88 inches.  Experts say it may be weeks before floodwaters recede in some locations.

Prior to Harvey, there were nine weather/climate disaster events this year with losses exceeding $1 billion each across the U.S., resulting in the deaths of 57 people, according to the National Centers for Environmental Information (NCEI). At least 28 people have died in Texas due to Harvey and that number could rise.

Not counting Harvey, the U.S. has sustained 211 weather and climate disasters since 1980 where overall damages/costs reached or exceeded $1 billion The total cost exceeds $1.2 trillion, according to the NCEI.

An Investment With a Return

Economic developers have thought that communities should invest in infrastructure, education and workforce training in order to attract and retain corporate investment. Dodd says they should also think the same way about resilience.

“If you had a bridge and you knew that bridge could go out in the next 20 years, wouldn’t you go ahead and invest in strengthening that bridge? That’s the way communities need to look at resilience. It is an investment that has a return,” he said.

On a personal note, if I were advising a corporate client on a location analysis project and we were looking at an area prone to natural disasters, be it a hurricane, a tornado, or an earthquake, I would be asking questions about community preparedness. I would want to know about special building codes, or nearby shelters, evacuation routes, etc.

Facing the Facts

Some communities do not want to face the facts. I know one that wanted to run from the fact that they have had some past disasters. They didn’t even want to talk about it.

When a community leader learned that prospect companies were asking about disaster preparedness and recovery, he pushed the economic development organization to face the issue head on. Today that same community has a brochure outlining what it has done to become more resilient in the face of a disaster. It was a smart move.

A Silver Lining

The thought that something good could come out of tragedy, especially where there has been loss of life, may seem strange or even callous. But the fact is that we learn from disasters, and sometimes they even present us with opportunities or spark ideas.

“There is in every cloud a silver lining,” said Dodd. “This gives a community the opportunity for a reset. Ironically, it is sometimes easier to do that after a major disruption such as a natural disaster for a community to look at where it is and rebuild in the image that it wants to.”

And in that recovery and rebuilding process, that reinvention of place, a community can and should become more resilient.

Joplin, Missouri

The EF5-rated multiple-vortex tornado struck Joplin, Missouri, late in the afternoon of Sunday, May 22, 2011. It reached a maximum width of nearly 1 mile during its path through the southern part of the city.

It left death and destruction in its wake, killing 161 people, injured some 1,150 others, and causing property damage amounting to $2.8 billion. It was the deadliest tornado to strike the U.S. since 1947, and the seventh-deadliest overall. It also ranks as the costliest single tornado in U.S. history.

In the aftermath of the storm, Joplin Strong emerged.

“We had contingency plans about what happens if our chamber building were to burn down or if it were hit by a tornado, but we never anticipated what happens if 500 of our businesses are destroyed or are substantially damaged or 4,000 of your houses are gone,” said Rob O’Brian, president at Joplin Area Chamber of Commerce & Joplin Regional Partnership.

Much of the response was not unlike seat-of-the-pants flying.

“We had to think about what are the needs were and how to address those needs, things that economic development organizations think about day in and day out on a normal scale. We just had to do it much faster,” O’Brian said.

A Marathon

O’Brian agrees with Dodd that a disaster can change a community’s vision about itself and its future.

“When a disaster happens, it brings a lot of focus and a lot of energy to the forefront. People start talking about recovery and rebuilding and how we can do it and how we can do it differently. They start thinking about how we can raise the bar and end up with a better community for ourselves,” said O’Brian.

“In the heat of the moment, it seems like it will be a far stretch to get there. But within days, people were talking about business opportunities, better housing, and building their businesses back in a better way. You do get there over time. But it is a marathon, although the first initial weeks when everybody is scrambling to address immediate needs, it feels like a sprint. You just preserve and keep working on it every day.”

Ideas Revived

Some ideas that had been discussed and essentially shelved prior to the tornado were revived.

“We had energy and we had momentum, and people came forward saying this was our opportunity. It changed some of the vision and brought focus to bringing those projects, talked about for years, to fruition and all with the idea of coming up with a better community,” O’Brian said.

And a better community has resulted. In June, the Kansas City University of Medicine and Biosciences officially opened a second campus in Joplin. It was Missouri’s first new medical school in 44 years. KCU broke ground on the facility last year on the site of Mercy Hospital Joplin, a temporary facility constructed in the aftermath of the tornado. The land and hospital were donated to the school, along with $30 million in local funding. No public dollars were used.

There are probably lessons to be learned here for Houston.

New Orleans

I look at New Orleans today, still in recovery mode 12 years after Hurricane Katrina.

About 100,000 fewer people live there today than the nearly half-million who had lived there before the storm. In some neighborhoods, like the Lower Ninth Ward, many residents never returned, but newcomers have arrived.

New Orleans now has a growing tech industry, with companies such as Electronic Arts, Gameloft, High Voltage Software, inXile, iSeatz, and Turbosquid having opened studios there in recent years.

It is also is a whiter and more expensive city. Gentrification and a growing cosmopolitan atmosphere has sparked debate within the city as to its historic culture is being lost.

Of course, it is for the people of New Orleans to decide the future of their city. But if income, education and corporate investment are all rising, and I believe that they are, I would hope that opportunities for all are rising, too.

There are probably lessons to be learned here for Houston.

Their Strength is Our Strength

Wherever disaster strikes, Americans reveal their true selves, their true grit. They may not know they have this wellspring of resilience deep within them, but they find it. Knocked down, they find a way to get back up and rebuild their lives. They soldier on.

We mourn for the dead and empathize for those who have lost so much from Hurricane Harvey. They have demonstrated courage and compassion, and given the rest of us faith in ourselves and our fellow man. Their strength is our strength. We are with them.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Dallas. BBA helps companies and communities. (Send us your RFPs.) Mr. Barber is available as a keynotes speaker and can be reached at dbarber@barberadvisors.com or at 972-890-3733.

Where Will the $1.6 Billion Toyota-Mazda Plant Land? Part 2

In Corporate Site Selection and Economic Development on August 23, 2017 at 12:24 pm

In my last blog, I said both political and business factors will determine what location is chosen for a future assembly plant operated jointly by Toyota and Mazda.

For the dozen or so states competing, this is red meat and bidding war has resulted. The prize is 4,000 good-paying direct jobs, three or four times that in indirect jobs, and a capital investment of $1.6 billion.

The fact that this search was publicly kicked off at a time when President Donald’s Trump administration is pushing for wholesale changes to the North American Free Trade Agreement is no coincidence. The first round of negotiations between the United States, Canada and Mexico ended on Sunday.

Said President Trump at a raucous rally of supporters in Phoenix Tuesday night: “I think we’ll probably end up terminating NAFTA at some point.”

Trump’s threat to pull out of NAFTA probably comes as no surprise to Toyota. The company operates two manufacturing facilities in Canada and one in Mexico, with a second, a $1 billion plant, now under construction in Guanajuato.

As I previously stated, Toyota has a history of building political capital. The fact that the company has 10 manufacturing facilities in eight states is indicative of its political acumen that spreading the wealth is a good strategy. It is the basis for my analysis, which essentially is educated guesswork.

My gut tells me that Project Mitt, as it is being referred to, will go to a state that has no or maybe only one OEM assembly plant. There is a certain appeal to being The Big Fish in a little pond.

I also think Southern states will have an edge over Midwestern states for reasons of taxation, regulation and proximity to ports. But when you mix politics and site selection factors, you are capable of getting a bit of a strange brew. It’s one that JLL, hired in an advisory role, will have to taste.

So here is my quick-and-dirty, state-by-state analysis, with accompanying news reports, much of which are hopeful thinking to say the least.

Alabama

A state where I lived for more than 20 years, I cut my teeth on economic development working primarily on automotive projects. I learned that well-coordinated teams win projects and I was lucky enough to frequently be a member of those teams.

We had a spate of success, successfully recruiting not just the OEMs to the state, but many Tier One and Tier Two suppliers as well. Those experiences as the basis for my consultancy today, so I have very fond memories of Alabama.

Alabama has three auto assembly plants –Mercede-Benz in Tuscaloosa, Honda in Lincoln, Hyundai in Montgomery. Between the three of them, they turned out more than 1 million vehicles last year.

Toyota also has an engine manufacturing plant in Huntsville. Auto-making experience is a given for Alabama, but the state may be hard-pressed to come up with the number of workers than the Toyota-Mazda project will require.

Report: Official says north Alabama may have edge in state’s bid for Toyota-Mazda plant  Birmingham Business Journal, Aug 21, 2017

Arkansas

Arkansas was a finalist for the Toyota factory that opened in Blue Springs, Miss., in 2011. Arkansas Economic Development Commission spokesman Jeff Moore said the state “certainly has interest” again. That would be a “duh” statement.

Toyota-owned Hino Motors recently announced plans to expand its operations in Marion to include 563,000 square feet of manufacturing and office space. Hino makes axles and related parts for different Toyota models.

There is no other OEM assembly plant in the state, which is good, but Arkansas’ biggest drawback may be geography. It may be just too far away from the bulk of its suppliers.

Report: Arkansas submits proposal for $1.6 billion Toyota-Mazda auto plant KATV Aug 18, 2017

Georgia

Georgia makes a lot of sense. Kia’s assembly plant in West Point, near the state line with Alabama, opened in 2009. As such, it is one of the newer assembly plants in the country, employing about 3,000 people, and it’s the only one in the state.

The state’s training program, Georgia Quick Start, has improved the skill sets of more than 1 million employees in 6,500 projects. It’s considered one of the best in the country.

There are more than 500 Japanese companies in the state that employ about 30,000 people. The fact that Georgia has five interstate highways that extend more than 100 miles is a plus. Interstate 75, running north to south, is the longest at 355 miles.

Georgia crafted its largest incentive package ever in 2015 in its bid to win a Volvo, only to have the project choose neighboring South Carolina.

Report: Will Georgia make a play for a Toyota-Mazda factory? Atlanta Journal Constitution, Aug 4, 2017

Illinois

While state lawmakers recently approved the expansion of EDGE tax credits, they also last month passed a 32 percent personal income tax hike. To say that Illinois would be a surprise if chosen is an understatement.

A two-year budget impasse has severely hurt the state’s business climate and reputation. Moody’s Investors Service recently affirmed Illinois’ current rating with a negative outlook, saying a downgrade remains possible in the next two years.

According to Moody’s, Illinois owes over $250 billion in unfunded pension debt, far higher than the $130 billion the state says it owes. For the past three years, Illinois has lost more residents than any other state. 114,144 Illinoisans left for other states from July 2015 to July 2016.

Rivian, a privately-funded startup with research facilities near Detroit and San Francisco, bought the former Mitsubishi plant in Normal, which was shut down last year. The company reportedly has a working prototype for an electric vehicle inside the 2.4-million-square-foot plant. When it comes to actual production, well, I believe it when I see it.

One more thing, Illinois is not a right to work state, unlike all its neighboring states. To be blunt, I’m not sure why Illinois would be in the running for this project.

Report: DeKalb, Rochelle are possible sites as Illinois pursues 4000-job Toyota-Mazda plant Chicago Tribune, Aug 10, 2017

Indiana

Toyota has a 19-year-old assembly plant in southern part of the state that builds the Sequoia sport-utility vehicle and Sienna minivan and is undergoing a $600 million expansion.

The company earlier this year announced it would invest $600 million and hire 400 new workers at the Gibson County plant as part of its plan to expand production of the Highlander SUV. That factory has 5,000 workers.

The auto industry employs more than 100,000 people in Indiana, which include Honda, Subaru and Chrysler. The fact that Toyota is already there and that automotive has such a strong presence in the state may preclude Indiana from being chosen.

A site just east of New Carlisle in St. Joseph County could be under consideration, according to The South Bend Tribune. 

Report: Indiana is vying for a Toyota-Mazda plant that will hire 4,000 people  Indianapolis Star, Aug. 21, 2017

Iowa

While Iowa isn’t known for automotive manufacturing, Debi Durham, director of the Iowa Economic Development Authority Toyota, said Toyota has asked the state for information on specific sites that could house a new assembly plant.

Iowa Gov. Kim Reynolds said the state is “extremely competitive” in its hunt for the Toyota-Mazda plant. I am not sure how she would know that, as that would be the call of the project team.

“We are going to do everything we can ― up to a limit. You have to know where you draw a line,” Reynolds said. “But we’re competitive. This would be great for the state of Iowa.”

The Hawkeye state can point to state rankings showing a lower cost of doing business, but the fact remains that it is distant from most existing suppliers. That is not to say that new supply chains cannot be built by Toyota, but I think Iowa is a stretch because of geography.

Report: In Iowa’s hunt for Toyota factory, this site leads the packDesMoinesRegister.com, Aug. 22, 2017

Kentucky

Gov. Matt Bevin told auto executives that a shovel-ready 1,550-acre site in central Kentucky, south of Elizabethtown near Interstate 65, is an ideal location for the investment.

Bevin pushed successfully for a right-to-work law and other business-friendly measures this year, and pledged to compete aggressively against rival states.

Toyota already has an 8-million-square-foot factory in Georgetown, Ky., that makes more than 500,000 Camry, Lexus and Avalon vehicles per year, as well as 600,000 engines.

Toyota is investing $1.3 billion into the 8,200-job facility, which draws from 350 suppliers and commodities vendors, 100 of them in Kentucky.

While there are certainly efficiencies of using an existing supplier network, the fact that Toyota is already in Kentucky, which also boasts two Ford factories in Louisville and General Motors’ Chevrolet Corvette plant in Bowling Green, may dissuade it from locating there.

Report: Kentucky to make big push for $1.6B Mazda-Toyota factory The (Louisville) Courier-Journal, Aug. 9, 2017

Michigan

No foreign automaker operates an assembly plant in Michigan, the traditional home of the nation’s auto industry. Being home court for the Detroit Three auto companies and the UAW certainly has not created great appeal in the past/

But the union threat is not what it was and Michigan, of all places, became a right-to-work state in 2012. Last month, Gov. Rick Snyder signed a package of bills into law last month that allow companies that expand or relocate to Michigan to receive up to a 10-year, 100 percent abatement on the personal income-tax withholdings of new employees. It applies to companies that bring up to 3,000 jobs to the state at average wages in the region.

The Toyota Motor North American R&D Purchasing and Prototype Development Center, the company’s largest research center outside of Japan, officially opened in May in Ann Arbor. The facility employs 1,600.

While Michigan’s business climate has drastically improved, possibly more so than any other state, it may be a long shot for Toyota to have an assembly plant there. Legacies tend to linger.

Report: Michigan’s bidding for $1.6-billion Toyota-Mazda plantDetroit Free Press, Aug 18, 2017

Mississippi

The Toyota plant in Blue Springs, Miss., opened in 2011 as the sole U.S. assembly location for the Corolla, which the future Toyota-Mazda partnership plant will produce in addition to Mazda crossover models.

About half of the 1,700-acre Blue Springs site, remains vacant, with roads and sewers already in place awaiting further investment. With existing supply chains in place for the Corolla, it would only make sense for the project to locate there.

However, Blue Springs, which employs 2,000 people, may not have the capacity to employ an additional 4,000 people, which is what the joint project is calling for.

Again, I look at Toyota’s history of seeking greener (or at least different) pastures for political purposes. I will say the same for Texas, as I did for Kentucky and Indiana.

Report: Mississippi in the running for new auto plant Jackson Clarion Ledger, Aug 8, 2017

North Carolina

I like the line that I used in my last blog – “Ever the bride’s maid and never the bride.” It’s precisely why I am predicting that North Carolina will win the prize.

The Tar Heel state has no automotive assembly plants to compete with for talent, although it has been in the hunt for them for years. That very void and the fact that North Carolina really wants to win this project is what may prove to the difference maker for Toyota, which would gain political capital from the swing-state’s congressional delegation.

North Carolina has about 26,000 workers at 300 automotive suppliers in the state, which gives Toyota a buildable base from which to work. The tech-savvy Research Triangle will be viewed as a plus, especially in a coming age of autonomous cars.

There are four mega-sites in North Carolina that I identified in my last blog. The 1,774-acre Greensboro/Randolph Megasite, southeast of Greensboro, may be the best. We shall see.

Report: NC’s lack of automaker plant presence may boost chances at landing Toyota-Mazda project Winston-Salem Journal, Aug 13, 2017

Ohio

A strong manufacturing workforce; centrally located; a plethora of automotive suppliers — all logical reasons why Ohio should be in the mix.

Also, Toyota has existing assembly plants in neighboring Indiana and Kentucky and the R&D center in Michigan. Ohio just makes sense, as it would be close to existing and potentially new suppliers.

But like Illinois, Ohio is not a right-to-work state. While that didn’t scare off Honda, which operates a non-union assembly plant in Marysville, it might prove to be a stumbling block for Toyota.

Ohio isn’t saying whether it’s trying to land the Toyota-Mazda plant, which doesn’t mean anything. Staying mum is a defensible strategy.

Report: Could Southwest Ohio win 4000-job Toyota-Mazda plant?Cincinnati.com, Aug 17, 2017

South Carolina

From a pure standpoint of manufacturing environment and business climate, it’s hard to beat South Carolina.

And in recent years, some of the world’s best manufacturers – BMW, Mercedes-Benz, Volvo and Boeing among them — have beat a path there.

But it’s South Carolina’s very success that may hamper its ability to lure Toyota there. Those are big companies that I just named with a big presence in a small state. Toyota/Mazda/JLL may like what they see in South Carolina (I certainly do), but they may come to view the field as being just too crowded.

The onus on the state will be to prove just the opposite.

Report: South Carolina among states chasing 4000-job auto plant  Charleston Post Courier, Aug 9, 2017

Tennessee

Tennessee has been biding its time, waiting, watching, and getting ready.

Hoping to lure the Toyota plant that eventually went to Blue Springs, Miss., the state acquired property dubbed the Memphis Regional Megasite. The 4,100-acre site is situated 32 miles east of Memphis along Interstate 40.

Tennessee has spent more than $140 million on the Memphis Megasite, building roads and water and sewer lines.

“There will be a lot (of) people fighting hard for that plant, and we intend to be at the lead,” Tennessee Gov. Bill Haslam told the Associated Press.

Critical to the Toyota-Mazda team’s thinking is whether the site, or rather the surrounding region, offers a sufficient labor pool in terms of quantity (numbers) and quality (skills.) Tennessee must prove its case to prevail.

To be sure, Tennessee has a strong and growing automotive sector that includes three major assembly plants and automotive operations in 86 of its 95 counties and employing some 130,000 people. There are more than 900 automotive suppliers in the state.

Nissan’s North American headquarters is in Franklin, and with an assembly plant in Smyrna. At its Spring Hill site, General Motors produces the Cadillac XT5 and the GMC Acadia, as well as 4-cylinder and 8-cylinder engines. Volkswagen has more than $1 billion invested in its Chattanooga assembly plant that employs more 3,200 workers, turning out Passats.

Report: Gov. Bill Haslam wants Tennessee to land new Toyota-Mazda plantChattanooga Times Free Press, Aug 8, 2017

Texas

Last but not least is my home state. Within a year or two, I figure those Japanese executives who are based at Toyota’s new North American corporate headquarters in Plano, north of Dallas, will learn to swagger. (We call it walking.)

You see, you don’t just move to Texas. Texas moves into you. Having said that, I would be surprised if Texas were chosen with its investment here, which includes an assembly plant in San Antonio, which opened in 2006.

The San Antonio plant, the sole producer of Tundra full size pickups, in addition to Tacomas, has been running overtime to keep up with demand since April 2015. Built with a production capacity of 200,000 vehicles a year, the plant has been producing more than 230,000 for the last two years.

Texas is an unlikely choice because Toyota wants to spread the love and its clout, my overriding premise. However, if there is one state capable of pulling a rabbit out of a 10-gallon hat, it is Texas. I cannot count Texas completely out, only because it continues to surprise me.

Report: San Antonio officials announce bid to win $1.6 billion Toyota factorymySanAntonio.com Aug 4, 2017

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Dallas. BBA helps companies and communities. (Send us your RFPs.) Mr. Barber is available as a keynotes speaker and can be reached at dbarber@barberadvisors.com