What can you learn about the merits of the proposal from the State of NC to Toyota/Mazda for its proposed new manufacturing project.

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What can you learn about the merits of the proposal from the State of NC to Toyota/Mazda for its proposed new manufacturing project.

The biggest merits of the Toyota/Mazda plant for the state of North Carolina are the creation of 4,000 direct and thousands of indirect jobs. North Carolina is very eager to welcome this plant to the state, as car assembly plants usually pay above-average wages and provide spin-off jobs at suppliers and service companies. Overall, the merits of getting Toyota and Mazda to manufacture in the U.S. will lead to the creation of jobs, saving on costs of deliveries. Additionally, sourcing goods from local manufacturers is beneficial for the environment, U.S. manufacturers have higher standards of safety and quality control to uphold and manufacturing in the U.S. makes companies pay U.S. taxes, which in turn is beneficial to the U.S. economy.

OVERVIEW

North Carolina has been trying to get a big investor to build an auto plant for years. The state has so far created four "mega-sites" which have the sole purpose of accommodating a big manufacturing operation and "expanding state incentive funds to provide more money to lure transformative projects". So far, North Carolina has been unsuccessful in landing such a project, with car manufacturers choosing sites in the southeastern U.S. as their investment points instead.

In November, the Randolph County Planning Board voted to have 370 acres added to the original 1,500-acre mega-site south of Greensboro that is currently under consideration for the Toyota/Mazda plant that should be announced at the beginning of 2018. According to rumors, Alabama and North Carolina are the finalists in the running for the car plant, which should host the joint factory between Toyota Motor Corp. and Mazda Motor Corp. The factory is rumored to be worth $1.6 billion.

NORTH CAROLINA'S EFFORTS

North Carolina has four mega-sites to offer to Toyota and Mazda. However, the site that has been speculated to be in consideration is in Randolph County and amounts to a total of 1,870 acres.

Additionally, the state so far has no plants, while Toyota already manufactures engines in Huntsville, Alabama. Putting a plant in North Carolina would give Toyota "two more senators and 13 more congressional representatives to press for its interests when national legislation is considered" and "give it even more friends in Washington D.C.".

On top of that, the recent allegations regarding Roy Moore's sexual misconduct could give North Carolina the advantage: "North Carolina economic development officials are intimately aware of the backlash associated with anti-business, hardcore social legislation. The state recently emerged from the clouds of HB2. So I think they are uniquely positioned in North Carolina to make the case to Toyota and Mazda about the ramifications of electing such a polarizing figure to the Senate". And even though Roy Moore ended up losing the race, the scandal could still hurt Alabama's chances, as explained by candidate Doug Jones: "Does the idea of Senator Roy Moore make it more or less likely that Toyota or anyone else would see Alabama's image in such a negative way that they would cross Alabama off their list, and move on to another state?"

Finally, North Carolina scores over Alabama in (lack of) union participation percentages. Toyota is a company that is known to be sensitive to union pressures. North Carolina has a 3% union membership, while Alabama ranks at 10%. Moreover, in Alabama, "the presence of Boeing and Airbus have inflated wage pressures a bit".

OTHER INFLUENCES

Toyota's current production plans when it comes to North America could be potentially disrupted "if negotiations among the United States, Mexico and Canada to amend the North American Free Trade Agreement fail, and U.S. President Donald Trump decides to exit the trade pact". The existing agreement allows "tariff-free trade in vehicles and components."

MERITS

Toyota and Mazda consider the plant to have such a big potential economic impact on the state that finally gets the project that they initially asked for proposals with more than $1 billion in incentives. The project is considered as "one of the biggest potential job-creating bonanzas in the country" as it will create more than "4,000 good-paying direct jobs and thousands of other indirect jobs". The project is valued at $1.6 billion and the factory, which should begin working in 2021, will manufacture 300,000 vehicles a year. Toyota and Mazda's plant is projected to manufacture a new crossover model for Mazda and Corolla models for Toyota.

Recently, the car industry in North Carolina has been expanding "with a substantial operations' presence of parts-makers and suppliers". Getting this project would further help the expansion.

As previously mentioned, another potential consequence of Toyota choosing North Carolina is two-fold, and can be considered both negative and positive. Toyota may like to expand their connections in Congress and "doing this new facility in North Carolina would add 13 additional members of Congress looking out for the company's interests" as companies like "Toyota and Mazda want as many friends on Capitol Hill as possible". Toyota especially is a company that "will be involved in a lot of lobbying for trade policy, immigration policy and of course different legislation affecting electronic vehicle production."

Additionally, in the U.S., it’s "easier for foreign automakers to build cars locally because the state will offer incentives. This, in turn, creates jobs, and the pricing advantage over imports is nothing to scoff at."

The overall merits of having the production in a certain state and keeping it U.S.-based that aren't tied to a specific industry are as follows:
1. It creates jobs
2. U.S. manufacturing enables companies to save costs on deliveries
3. Sourcing goods from local manufacturers is beneficial for the environment
4. U.S. manufacturers have higher standards of safety and quality control to uphold
5. Manufacturing in the U.S. makes companies pay U.S. taxes.

CONCLUSION

Merits of the Toyota/Mazda plant for the state of North Carolina are numerous, but the biggest one is the immediate creation of 4,000 direct and thousands of indirect jobs. On top of that, the plants would likely lead to above-average wages and spin off jobs at suppliers and service companies. Finally, Toyota and Mazda would pay U.S. taxes and North Carolina taxes and uphold higher standards of safety and quality.
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