Another Incentives Package for Foreigners?

[Mike]

West Point gets Kia plant

By David Irvin
and Julie Arrington
Montgomery Alabama

Kia Motors Corp. announced Sunday night it will set up a $1.2 billion manufacturing plant in west Georgia, creating nearly 5,500 jobs for the Peach State and cementing hopes for continuing economic growth 80 miles away in Montgomery.

Industry recruiting officials in the Capital City remained upbeat about Kia's plans for West Point, Ga., and believe they eventually will generate jobs for Alabama automotive suppliers.

"We've been anticipating this decision and laying plans to make the most of the project going to west Georgia, which we think is a real positive thing," said Ellen McNair, vice president of corporate development for the Montgomery Area Chamber of Commerce.

Along with other public and economic officials, McNair will travel to Korea at the end of the month to talk with existing and potential suppliers. Because Kia's parent company is Hyundai Motor Co., state officials said some Alabama suppliers could double in size when the Kia plant comes online in August 2008.

Troy, Mich.-based ArvinMeritor supplies the Hyundai plant with door modules from its facility in Montgomery. Though the company doesn't currently do business with Kia, management hopes that will change when the West Point assembly plant starts production.

"If we can service them from a current location, that's ideal for us, because it would keep our investment costs lower," said Colleen Hanley, spokeswoman for ArvinMeritor Light Vehicle Systems.

West Point Mayor Pro-Tem Donald Gilliam said the deal itself and the fact that the plant will be built within West Point's city limits will put the textile town of about 4,000 people on the map.

Gilliam said the plant will affect West Point much the way Hyundai affected Montgomery, but, "It's 10 times greater (here) because West Point is such a small city and is dominated by one industry, the textile industry. This is a godsend for the entire area."

But getting the project finished will be a challenge that will take lots of resources and broad coordination from many entities in west Georgia, which is why Montgomery officials are meeting with their west Georgia counterparts this week to teach them about the process.

"The communities right around the Kia plant will be extremely busy trying to meet the promises they made to Kia," McNair said. Ironically, that may open up more opportunities for central Alabama, which can focus exclusively on the suppliers.

Georgia's incentive package includes $75.9 million in job tax credits over five years, $20.2 million for a job training center on the site and $60.5 million to purchase and prepare the site. West Point and Troup County are offering up $130 million in property tax abatements over 15 years.

Georgia Gov. Sonny Perdue arrived in Seoul, South Korea, over the weekend to sign off on the deal. Perdue said Kia's decision to locate in the state "is a testament to the tools, experience and know-how Georgia will deliver to one of the automotive industry's leading innovators."

The plant will hire 2,893 workers when it opens at an average annual salary of $50,000. Another 2,600 employees are expected to work at five supply companies, which have committed to place plants in Georgia near West Point to feed parts and materials to the plant.

Kia President and chief executive officer E.S. Chung said the company, which produces budget sedans and sports utility vehicles, "has entered an aggressive growth phase in the U.S."

The Georgia plant is expected to produce 300,000 to 400,000 vehicles annually.

The arrival of Kia is welcome news for Georgia, which has been hit hard by Ford and General Motors' decisions to shutter their plants in the state as well as job slashing at corporate stalwarts BellSouth and Delta.

"This is the best news that Georgia has heard in a long time," Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University, said.

Dhawan said the pay scale was impressive and that such "premium" blue collar jobs have become increasingly rare.

"The only ones coming online are through the foreign auto plants," he said.

Dhawan noted that auto workers from the Ford plant in Hapeville, Ga., and the GM plant in Doraville, Ga., might be able to put their skills to work at the new plant, although many may have to relocate to do so.

The jobs also provide a boost for Perdue, who is facing re-election this year and has been under attack for lackluster employment numbers.

The Republican governor began courting the automaker with an October 2003 visit to South Korea. In January he hosted Kia's president at the state Capitol.

Mississippi and Tennessee also had been pursuing the plant.

Local officials in Georgia cheered the announcement saying it would provide a major boost.

"Not only will Kia bring jobs, it will drive the creation of an industry cluster that will help ensure future prosperity for the entire area," said Diethard Lindner, chairman of the Development Authority of LaGrange.

The new Kia plant will build two vehicle lines and include an engine assembly line, paint shop training center and visitor center. It will be built on a 3,300-acre site at the intersection of Interstate 85 and Webb Road in Troup County. A new interchange will be built off I-85 to make room for the facility.

A groundbreaking ceremony for the plant is scheduled for April 25.

Kia Motors America reported selling 18,110 vehicles in January, up 6 percent from January 2005. For 2005, Kia's auto sales increased about 2.5 percent to 275,851 from 270,055.

The company has opened a U.S. headquarters in Irvine, Calif., that houses the company's research and development and administrative operations.

The Associated Press Contributed to this report.

 

[don]

what's the big deal? american businesses use the same practices both inside and outside american borders. same with the ports deal. i wonder if any american companies operate ports in other countries.

 

[Bill]

Is there a difference between KIA and when other countries give American corporations incentives to set up operations outside the US?

A global marketplace isn't going away.

 

[Mike]

what's the big deal? american businesses use the same practices both inside and outside american borders. same with the ports deal. i wonder if any american companies operate ports in other countries.

Don, Here we are shoring up foreign countries with incentive packages that may or may not payoff, and on the other hand GM & Ford are about to tank.

Then we wonder why we can buy a foreign car cheaper?

We are subsidizing foreign business with taxpayer money!

 

[Anonymous]

what's the big deal? american businesses use the same practices both inside and outside american borders. same with the ports deal. i wonder if any american companies operate ports in other countries.

Don, Here we are shoring up foreign countries with incentive packages that may or may not payoff, and on the other hand GM & Ford are about to tank.

Then we wonder why we can buy a foreign car cheaper?

We are subsidizing foreign business with taxpayer money!

While we also feed and peacekeep for the world- the rest of the countries set back and reap the benefits knowing the US will always be there to take care of them....

Kind of like Canadas skidoo force Army- eh.....

 

[don]

ot: While we also feed and peacekeep for the world- the rest of the countries set back and reap the benefits knowing the US will always be there to take care of them....

most of the american money that goes into foreign countries is for the benefit of american companies to buy them influence and to channel american tax dollars to those companies. over the decades the usa has done a lot of good but let's not get carried away. 'peacekeeping' is a great way to exercise influence over a country and establish a military presence. most countries that give foreign aid have conditions that include spending that money to buy goods or food from the donor country.

 

[Bill]

what's the big deal? american businesses use the same practices both inside and outside american borders. same with the ports deal. i wonder if any american companies operate ports in other countries.

Don, Here we are shoring up foreign countries with incentive packages that may or may not payoff, and on the other hand GM & Ford are about to tank.

Then we wonder why we can buy a foreign car cheaper?

We are subsidizing foreign business with taxpayer money!

While we also feed and peacekeep for the world- the rest of the countries set back and reap the benefits knowing the US will always be there to take care of them....

Kind of like Canadas skidoo force Army- eh.....

the rest of the countries set back and reap the benefits

Not that this deserves comment especially in the beef portion of this site but..........

You seem to believe that it's all US and no other countries have ever joined in with peace keeping or funding or aid?? Hell Canada was one of the first to send aid to the US when New Orleans was hit! We even beat the US aid to certain areas.

Every country tries to do what they can so maybe you should suck in that puffed out chest Oldtimer.

 

[Cowpuncher]

GM's and Ford's problems are of their own making.

They offered the UAW to creat a "Jobs Bank" some years ago in labor negotiations. Whenever a plant was closed or there were jobs eliminated due to automation, the workers were placed in the bank waiting until another job opened up. Each worker in the bank costs GM and Ford about $130,000 each year and they don't do any work at all. There are around 7,000 workers in the jobs bank that have been there for years.

GM, and probably Ford, are going to have to go through bankruptcy to get out of that deal and also the "legacy costs" of providing medical insurance for tens of thousand of retired workers and their families.

The Japanese, Koreans and Germans that operate plants in this country are not going to make the same mistake.

GM and Ford thought they were invincible.

Both GM and Ford operate car plants all over the world - but in most of those country, medical care is a government program, not an employee benefit.

Most of the income of the major oil companies comes from foreign sources now.

Globalization had been coming since World War II. Shouldn't we have been expecting it here instead of our companies going overseas?

Question of the day, week, or year. Why are American companies expected to pay for medical insurance for their employees. Why not buy them houses, funeral expenses, groceries, etc?

Before you unload on me, I pay for insurance (both medical and life) for my employees.

(Of course, the reason that employers pay medical insurance for employees is that the companies can use the cost as a business expense and it is not taxable to the individual. So, in fact, the federal government actually pays about half the cost.)

 

[Mike]

GM's and Ford's problems are of their own making.

Can you honestly say that Labor Union ties with politicians was not involved in those decisions. GM & Ford have been under the thumb of the Unions for ages. They had little choice but to give in.

That's why the foreign guys are coming south. No Union. But could GM & Ford pack up and move down here without Unions? That would be the scream heard round the world.

 

[agman]

GM's and Ford's problems are of their own making.

Can you honestly say that Labor Union ties with politicians was not involved in those decisions. GM & Ford have been under the thumb of the Unions for ages. They had little choice but to give in.

That's why the foreign guys are coming south. No Union. But could GM & Ford pack up and move down here without Unions? That would be the scream heard round the world.

So is the demise of Ford and GM a union problem or poor management? I believe it is a combination of both. No better example of poor decision making is the investment GM put into developing the Saturn line of automobiles. For the amount of money they invested at that time they could have purchased the entire Toyota Corp.

The market does not discriminate as to size, individual or corporate-either compete or perish.

 

[Econ101]

GM's and Ford's problems are of their own making.

Can you honestly say that Labor Union ties with politicians was not involved in those decisions. GM & Ford have been under the thumb of the Unions for ages. They had little choice but to give in.

That's why the foreign guys are coming south. No Union. But could GM & Ford pack up and move down here without Unions? That would be the scream heard round the world.

So is the demise of Ford and GM a union problem or poor management? I believe it is a combination of both. No better example of poor decision making is the investment GM put into developing the Saturn line of automobiles. For the amount of money they invested at that time they could have purchased the entire Toyota Corp.

The market does not discriminate as to size, individual or corporate-either compete or perish.

Both, Agman. But it was also a factor of labor unions not having enough power to enforce labor protections for workers nationwide and the gap they had with govt. policy that allowed differences in the U.S. If everything were the same across the board, labor issues would not have been an issue, just the poor management and or bad decisions by management as to consumer wants. Geographical differences as well as demographics of the work force had their impacts. Geographical because unions are not strong in the south, demographics because the labor force in the south is younger and cheaper for the companies to pay benefits.

I still say that not completely funding promised retirment benefits is what allows investors to take off with the profits and leave workers holding the bag. That has to do with a lack of enforcement and regulation by the govt. along with a few corporate tricks that Congress hasn't stopped.