Dean Barber

What Will Volvo Do?

In Site Selection on April 6, 2015 at 1:36 am

Sometimes determining what I should write about in my blog, which targets an audience comprised of both economic developers and corporate executives, is the hardest part.

But by taking a cue from my former career as a journalist, a business editor of a daily newspaper, I usually have no shortage of topics from which to choose. I typically, but not always, write about news that directly impacts a business audience.

And in doing so, my aim is not so much for readers to necessarily agree with my conclusions and assessments. Rather, I just want them to think about this stuff, most of which I think is pretty important.

Many Choices

Now I had a lot to choose from this past week. Initially, I thought I would be writing about the historic drought that has been plaguing California and the mega-drought that could be on the horizon for much of this country. (And I will do that soon.)

Or I could write about the Texas Enterprise Fund and how a new and apparently thoughtful governor wants to bolster it and make it better, all the while reducing business taxes. (And I will do that soon.)

Or I could write about how another governor, who apparently does not consider himself the chief economic development officer of his state, ignored the pleadings from corporate residents such Cummins, Eli Lilly, Angie’s List, Salesforce, Inc., the NCAA and the State Chamber of Commerce and then paid the price for it.

(Yet another governor would avoid making the same blunder, listening to a corporate constituent in his state called Wal-Mart.)

Or I could write about Volvo, which announced last week that it would build a $500 million assembly plant in the United States and not in Mexico as has been the recent trend.

Or I could take elements from some of the aforementioned news stories and intertwine them in such a way that will not have our heads explode. Ok, let’s try that. I promise to be careful.

Volvo Picks the U.S.

First let’s look at the Volvo announcement. The company announced plans Monday to build its first factory in the United States, 60 years after it started selling cars in the country.

Despite its long-term presence in the U.S., Volvo has remained a small player. Last year its U.S. sales fell by 8 percent to just 58,000 units — representing a mere 0.4% of the market. Volvo sold 466,000 vehicles in 2014, a record amount of cars globally.

The plant to be built in the U.S. will be Volvo’s fifth factory, and will join existing plants in Sweden, Belgium, China and Malaysia. The announcement comes in the wake of a two-year turnaround of the Swedish brand’s fortunes since it was sold by Ford in 2010 to China’s Zhejiang Geely Holding Group Co.

Volvo CEO Haakan Samuelsson said the brand needs to prove viability, which is why the company needs a plant in the U.S.

“Volvo Cars cannot claim to be a true global car maker without an industrial presence in the U.S. Today, we became that,” Samuelsson said in a statement.

Four States in the Running

If you take press reports to heart, (I don’t but there’s often a kernel of truth to them as insiders will leak information), South Carolina, North Carolina, Georgia and Kentucky could be viewed as front runners for this future assembly plant.

Now here’s where things could, and I emphasize could, get a little dicey for Volvo and these four presumed favorites. And I mention this only because of the recent fiasco regarding Indiana’s unnecessary and backward “religious freedom” law and the corporate community’s response to it.

For had it not been amended, which was only done because of the furor that resulted, the law would have provided legal cover to discriminate against gay people. So why would major corporations want to weigh in on such a hot topic? One word – talent.

They are worried, and I believe rightfully so, that these “religious freedom” laws, and apparently about 20 states have them, will make it more difficult for them to attract top talent.

This is exemplified by a letter signed jointly by six CEOs to Indiana Gov. Mike Pence asking him to reconsider the Religious Freedom Restoration Act. (He didn’t.)

“We not only disagree with this legislation on a personal level, but the RFRA will adversely impact our ability to recruit and retain the best and the brightest talent in the technology sector,” the letter said.

“Technology professionals are by their nature very progressive, and backward-looking legislation such as the RFRA will make the state of Indiana a less appealing place to live and work. We cannot remain competitive without a talented workforce.”

Gay-Friendly Volvo

Now let’s go back to Volvo. An organization called Gaywheels.com apparently has done the research and has come up with a list of gay-friendly manufacturers that sell vehicles in the U.S.

By their definition, to be considered gay-friendly, an automaker must, at a minimum, “have a policy that prohibits workplace discrimination on the basis of sexual orientation.”

If Volvo, which has advertised in gay-oriented magazines, has made the gay-friendly list (and it did) because of its enlightened internal policies, the same cannot be said for the states where it is supposedly looking to build a new plant.

South Carolina passed a “religious freedom” law in 1999 that prohibits any state laws that “substantially burden” a person’s ability to follow their religious beliefs. As such, the law gives legal defense for businesses to discriminate.

What One CEO Did

Now how does Volvo senior management feel about that South Carolina law? Might they have the same concerns of let’s say Bill Oesterle back in Indiana.

Oesterle, the CEO of Angie’s List and a life-long Republican, has rejected the proposed fix to Indiana’s “religious freedom” law as inadequate and has called off a major expansion of its Indianapolis corporate campus. The proposed 1,000-job expansion would have included $18 million in incentives from the state and city.

In Georgia, state legislators expect a “religious freedom” bill to be back for the 2016 legislative session. Only the fear of backlash (news generated in Indiana) kept the bill bottled up in committee this time around. Now what would “gay-friendly” Volvo think about such a law?

Kentucky passed its “religious freedom” law two years ago to ensure that government action would not interfere with religious belief. It was vetoed by Gov. Steve Beshear before legislators overrode his veto. Now I wonder if Volvo knows about that Kentucky law?

But we must not forget progressive North Carolina, which has become a battleground in the fight for voting rights. Just when Indiana’s law was gaining notoriety, North Carolina lawmakers introduced matching Religious Freedom Restoration Act bills in the state House and Senate that could pose an even greater threat to civil rights than Indiana, according to some legal scholars.

But I’m sure Volvo knows all about what’s happening in North Carolina and is monitoring the situation carefully. Just like it is in South Carolina, Georgia and Kentucky.

Volvo’s Own Words

The following words come from the Volvo Group’s website. This is the company speaking:

“The Volvo Group hires and treats its employees in a manner that does not discriminate with regard to gender, race, religion, age, disability, sexual orientation, nationality, political opinion, union affiliation, social or ethnic origin. Workplace diversity at all levels is encouraged.”

Well, that’s good to know. Let freedom ring.

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 Plano, Texas. He can be reached at dbarber@barberadvisors.com or at 972-767-9518. If you liked what you read here, invite me to speak at your next meeting.

Advertisements
  1. Dean:

    What is the potential loss of business by a state who does not protect religious freedom?

    Gregg Motley
    Vice Chairman and
    Chief Lending Officer
    American Bank of Baxter Springs
    620-856-2301 – Work
    877-856-2301 – Toll Free

    • Greg, I would ask the question differently — what is the potential loss of business by a state that provides legal cover for businesses to discriminate? There is no definitive answer to that, but it is apparent that many major corporations — and I named some of them — do not like these “religious freedom” laws. And at least one CEO cancelled a project in Indianapolis that cost that city 1,000 new jobs.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: