Is Nissan's headquarters move good for Tennessee?
Auto leader Nissan has announced it's pulling up stakes from California, and moving its U.S. headquarters to a more modest location:
The Nissan Motor Company said Thursday that it would sell its North American headquarters outside Los Angeles and relocate to Franklin, a town of 46,000 people 15 miles southwest of Nashville.
"We're coming to Tennessee," Nissan's chief executive, Carlos Ghosn, announced to a room packed with state and local politicians at the State Capitol.
Over the last 15 years, the South has been positioning itself (pdf) as "the new Detroit," luring first "branch plants," then major production centers (Mercedes in Alabama, BMW in South Carolina), and now headquarters of international auto companies.
Why are the global auto giants coming South? In an industry where labor costs are big, Nissan wasn't shy in admitting that cheaper labor was a major factor:
Nissan's decision to move to Tennessee, where Mr. Ghosn said the cost of doing business was 44 percent less than in California, comes as automakers are cutting costs in a tough North American business climate.
In addition to low wages, the car makers are moving South because Southern states pay them to:
To entice Nissan to Tennessee, the state is providing a tax-incentive package, but state officials would not say how much the tax breaks would be worth.
That's probably wise, given the price tag to taxpayers of other subsidies to auto corporations. Mississippi recently gave Nissan $363 million to open a plant near Canton, M.S.
The give-aways to Nissan come just after Tennessee made some of the deepest health care cuts in history to its TennCare program, throwing hundreds of thousands off the rolls and launching a wave of protests across the state targeting Gov. Phil Bredeson and Sen. Bill Frist.
Chris Kromm is executive director of the Institute for Southern Studies and publisher of the Institute's online magazine, Facing South.