Auto plant no fast lane to progress

Published 12:00 am Tuesday, January 30, 2018

By Alexander Jones

Politics NC

Toyota followed Mercedes and Volvo on the road past North Carolina.

The loss of another plant has not been well received. Something close to despair has pervaded the political air since Toyota announced its choice. But we can’t let the conventional wisdom become universally accepted as fact.

Over the past few years, the North Carolina economic policy community has become very invested in getting an auto plant. Pat McCrory’s Commerce team described “transformational projects” as their top priority. The Cooper administration has followed suit. Even incentives skeptics on the right and left softened their positions in the event of a large investment. This type of project was venerated as a “crown jewel,” in the words of economist Mike Walden.

The pro-auto plant coalition includes some thoughtful people, and their case is not wholly without merit. There’s some evidence that auto plants stand apart from other incentives recipients, enhancing economic welfare. A large plant creates spinoff jobs (although other companies do the same thing). And the prospect of rural revitalization is quite attractive.

But we need to get a grip. The states with auto plants continue to suffer from below-average living standards. Whatever the impact of specific plants, it is not a strategy that has brought systemic success to those states.

It’s a bit of a stretch to call Southern auto jobs “good jobs.” As a disturbing report in Bloomberg Businessweek illustrates, auto parts plants in this region are low-paying and often appallingly unsafe. Yes, manufacturing plants create three new jobs for every production job — but new economy industries like IT and biotech create five. It makes more sense to push the economic frontier, not chase after medium-technology industries.

Which has certainly been the experience of our own state. We emerged as an economic powerhouse in large part by distinguishing ourselves from the stagnant South. Where they chased smokestacks, we built banks. Instead of low wages and minimal regulation, we emphasized good education and public investment. This “high road” model worked for Raleigh and Charlotte. It’s condescending to say it couldn’t work for rural North Carolina, too.

Alexander Jones is an original contributor to PoliticsNC.