THE SOUTHERN OFFICE OF THE COUNCIL OF STATE GOVERNMENTSPO Box 98129 | Atlanta, Georgia 30359 ph: 404/633-1866 | fx: 404/633-4896 | www.slcatlanta.orgSERVING THE SOUTHSOUTHERN LEGISLATIVE CONFERENCEOFTHE COUNCIL OF STATE GOVERNMENTSTIRE MANUFACTURING: SOUTHERN STATES ROLL TO THE TOPA REGIONAL RESOURCE FROM THE SLC Copyright November 2013Photo courtesy of Continental Media CenterSujit CanagaRetna Senior Fiscal AnalystSouthern Legislative ConferenceNovember 2013There has been a great deal of attention in recent years over the drive to move South, i.e., an in-creasing number of foreign automakers setting up manufacturing facilities and thriving across theSouthernUnitedStates.Formorethantwodecades, going back to the 1980s, foreign automobile manufactur-ers, from Toyota in Kentucky to Mercedes in Alabama to BMWinSouthCarolinatoNissaninMississippitoKia in Georgia to Volkswagen in Tennessee, have established assemblyoperationsthatcontinuetoprosper,generat-ing billions of dollars in economic impact and employing thousandsofworkers.Inaddition,thousandsofauto partssuppliershaveestablishedmanufacturingfacilities to serve the dozen or so foreign automakers located in the South,creatingtensofthousandsofmorejobs.Finally, ahostofindustriesandservicesrangingfromlogistics companiestorestaurantstotransportationcompaniesto service stations also have mushroomed to service the au-tomakersandpartssuppliers,cascadingintoevenmore jobs and positive economic flows.EvenduringtheGreatRecession,theworsteconomic crisistoafflicttheU.S.economysincetheGreatDepres-sion,theforeignautomakersscatteredacrosstheSouth flourished,evenexpandinginsomeinstances.Nota-bly, none of these foreign automakers laid-off employees duringtheGreatRecession,anaccomplishmentthat standsincontrasttotheBigThreeautomakersdomi-ciledmostlyintheMidwestandNortheasternpartsof theUnitedStates.*Forinstance,inJuly2008,Volkswa-genannouncedplanstobuilda$1billionmanufacturing plant in Chattanooga, Tennessee, and hire 2,000 direct em-ployees.In2009,theMercedesplantinVance,Alabama, saw a 225,000-square-foot paint shop expansion followed by another $289 million enlargement project in December 2011.Also, in late 2011, Kia Motors in West Point, Geor-gia,completeda$100millionexpansiontoboostannual productioncapacityfrom300,000vehiclestomorethan 360,000.Similarly,inJanuary2012,BMWannounced plans to expand its facility in Spartanburg County, South Carolina,a$900millioninvestmentthatisexpectedto generate300newjobs.Incontrast,inFebruary2009, General Motors dismissed 47,000 employees nationally in one swoop, a number that ranked it among the top 10 lay-offs in the nations history.Similarly, Ford and Chrysler eacheliminatedover15,000andnearly14,000employ-ees, respectively, during the Great Recession.In sum, the economic performance and ensuing impact of the auto in-dustry in the South continue to be one of the bright sparks of an economic recovery that remains sluggish and far be-lowtherobustratesnecessaryforsustained,broad-based economic growth.While the economic impact of the automobile sector in the Southhasbeenreviewedandscrutinizedextensivelyin recent years,1 there has been less fanfare about a burgeon-ingsectorintheregion:thegrowingimportanceoftire manufacturing in the SLC states.Only in the last year and a half or so are the media and auto industry analysts realiz-ing that some of the worlds largest tire manufacturers are locating,relocatingorexpandingtheiroperationsinthe South.2In fact, as an increasing number of the worlds au-tomakers locate and expand their operations in the region, * While the Great Recession is deemed to have officially lasted from December2007toJune2009,economicgrowthandjobcreation have continued to be extremely anemic up to the current period.2 TIRE MANUFACTURING: SOUTHERN STATES ROLL TO THE TOPthe worlds tire manufacturers also are seizing the oppor-tunitytosituatetheirproductionfacilitiesnearby.For instance,SouthCarolinahasthreemajortireproducing facilities:Michelin,ContinentalandBridgestone;Missis-sippihasYokohamaTire,scheduledtobeginoperations in2015;TennesseehasHankookTire,alsoscheduledto begin operations in 2015; and Georgia has Kumho Tire, a projectannouncedinSeptember2013.Thesetiremanu-facturers not only are making tires for passenger vehicles butmorelucrativelyformassiveearth-movingmachin-eryandvehiclesintheminingandoilindustries.There is rising demand for these heavy tires from such countries asAustralia,CanadaandChina.Forinstance,Michelins heavytires,whichcanhaverimdiametersofmorethan five feet, are deployed in a variety of equipment, including dump trucks, and can sell for as much as $250,000 each.3It is possible to identify several reasons for these tire mak-erstosetupoperationsintheSouth.Proximitytothe auto companies in the region undoubtedly is an influential factor,i.e.,theopportunitytotakefulladvantageofthe complex and well-established automotive cluster that op-erates very successfully in the region.Proximity is a major incentiveintermsofdesign,researchanddevelopment, production and delivery perspectives.Even though these tire producers sell their products at thousands of retail es-tablishmentsacross theUnited Statesand theglobe,they also sell them directly to the automakers.For instance, in October2013,SouthKoreantiremanufacturerHankook announcedplanstobuilditsfirstU.S.plantinClarkes-ville,Tennessee,(an$800millionfacilitythateventually willemploy1,800people)tosupplytirestoNissanand Volkswagen(bothautomakerswithproductionfacilities in the state).Hankooks Clarkesville, Tennessee, location also is convenient to supply tires to two other South Kore-an automakers, Kia in West Point, Georgia, and Hyundai in Montgomery, Alabama.Strongtechnicaleducationalresourcesandrelatedinfra-structure that bolster not only tire production specifically, butalsotheautoindustry,ingeneral,areotherdriving forcesfortiremakerstoincreasinglyconsiderlocating theiroperationsintheSouth.Asinsomanydisciplines withinthe21stcenturymanufacturingsphere,tireman-ufacturingisanincreasinglycomplexandtechnically rigorous process that requires workers with considerable technological skills.South Carolina ranks very high with regard to technical education in the tire industry, and the tire makers indicate that state is attractive because of an educationsystemthatgroomsstudentstoworkonan increasinglyhightechfactoryfloor.4Forinstance,Mi-chelin North Americas president, Pete Selleck, cited South Carolinas vibrant technical college system as a major fac-torinMichelinsdecisiontoexpandtheiroperationsin thestate.AsMr.Sellecknoted,SouthCarolinahasa longhistorywithtechnicalcollegesdatingbacktothe 1960s.5One of the ways South Carolina has been success-ful in promoting technical education in the tire industry is through a technical scholars program.To prepare future workers,thestate-sponsoredtechnicalscholarsprogram Continental Tire North America, Plant: Mayfeld, Kentucky, USA (photo courtesy of Continental Media Center)Rank State, Territory, Protectorate or Other Dollar Value1 South Carolina $1,175,576,9752 Ohio $321,690,8433 Texas $313,583,7484 Illinois $236,518,1315 California $216,356,3246 Tennessee $181,377,5437 Georgia $151,016,3018 Pennsylvania $144,215,4049 Michigan $123,821,09610 Florida $120,316,12911 Iowa $113,112,98912 North Carolina $109,482,80313 Kansas $108,373,23714 Unknown $94,941,53715 Alabama $68,430,85916 Oklahoma $64,874,39217 Indiana $59,839,78518 New York $49,673,13919 New Jersey $38,033,72520 Oregon $37,241,48821 Arizona $17,119,93422 Washington $16,724,23923 Vermont $10,606,92524 Virginia $6,441,25525 Arkansas $5,294,14326 Nevada $5,209,72327 Kentucky $4,997,20228 Louisiana $4,648,25629 Puerto Rico $3,810,05230 Minnesota $3,720,64231 Wisconsin $3,180,54632 Maryland $2,832,13233 Nebraska $1,624,56034 Mississippi $1,394,18035 North Dakota $1,198,02136 Colorado $906,61237 Connecticut $891,15438 Delaware $800,79439 Montana $716,98840 Massachusetts $688,75241 Missouri $558,28942 Utah $553,41343 West Virginia $521,85444 Maine $338,16345 South Dakota $299,90346 Idaho $283,55947 Alaska $221,47048 U.S. Virgin Islands $57,05649 District of Columbia $33,60050 New Hampshire $19,53351 Hawaii $18,45752 Rhode Island $10,34153 New Mexico $9,20054 Wyoming -U.S. Total $3,824,207,396Source: USA Trade Online, Foreign Trade Division, U.S. Census Bureau (accessed on October 25, 2013)Table 1U.S. Tire Exports - States, Territories, Protectorates and Other, January to August 2013 (Dollar Value)allows students to receive a two-year apprentice program at a tire factory while attending community college.IncommentssimilartothosemadebytheMichelinof-ficial,BridgestoneAmericaschiefprojectofficerfortire operations, Steve Brooks, noted in reference to South Car-olinassuperiortireindustryworkforcethatIcanhave the technology anywhere in the world, but it doesnt mat-ter if you dont have the workforce.6In fact, Bridgestone participates actively in South Carolinas technical scholars program and, according to Mr. Brooks, as much as 10 per-cent of Bridgestones current maintenance staff graduated from the program.Theseare workers thatare very pre-pared to handle technology.Continental Tire, the other majortireproducerinthestatethatannouncedplansto build its 1,600-worker factory in Sumter, South Carolina, in 2012 highlighted the number of workers in the industry proficient in the tire industry as a deciding factor.Accord-ing to David Chesson, director of information technology for Continental, the companys highly automated facility needs workers proficient in advanced manufacturing.7OtherSLCstatesactiveinrecruitingtiremanufactur-erstotheirjurisdictionsalsoofferworkertrainingasan integralcomponentoftheirincentivepackages.Forin-stance, when Mississippi clinched an agreement with the Japanese tire company Yokohama to build a facility in the state, $11.75 million of the overall incentive package was allocatedtobuildatrainingcenter.Similarly,whenthe KoreantirecompanyHankookannouncedaproduction facilityinClarkesville,Tennessee,thestatesoverall$72 million incentive package included funding for a training center and worker training.In fact, Hankook CEO Seung HwaSuhspecificallynotedtheareashumanresources as a major factor in influencing the company to select the Tennessee site for its first U.S. plant.Severalotherfactorsrankedhighinthesetireproducers locating their operations in the South, all factors that also remain valid in terms of the foreign automakers rationale in locating in the area.These include: theabilitytoconstructnewmanufacturingfacilities, incorporatingthelatesttechnologies,moreefficient-lyandeffectivelyataSouthernlocation,asopposedto reconfiguringolderfacilitiesintheMidwestorinthe Northeast,areaswheremuchoftheautoindustrywas located in prior decades; the low or nonexistent rates of unionization, negligible level of interest among Southern autoworkers to union-izeandtheseeminginabilityofunionstogaintraction in the region; 2002 2007 2012StateAll CommoditiesTires% of 2002 TotalAll CommoditiesTires% of 2007 TotalAll CommoditiesTires% of 2012 TotalAlabama 8,256,625,015 115,786,291 5.2% 14,406,676,895 102,450,454 2.9% 19,572,398,339 107,141,921 1.8%Alaska 2,504,026,781 354,022 0.0% 4,009,894,879 59,703 0.0% 4,543,401,424 996,011 0.0%Arizona 11,860,585,251 10,757,147 0.5% 19,227,791,370 14,449,715 0.4% 18,405,117,608 42,185,095 0.7%Arkansas 2,807,924,308 2,645,322 0.1% 4,886,844,975 12,541,524 0.4% 7,619,984,195 5,658,978 0.1%California 92,177,510,782 59,466,682 2.7% 134,318,906,761 174,550,517 5.0% 161,879,918,490 332,258,040 5.6%Colorado 5,525,068,999 69,218 0.0% 7,352,198,821 2,693,340 0.1% 8,167,350,412 4,024,500 0.1%Connecticut 8,310,816,154 1,284,997 0.1% 13,799,141,842 535,451 0.0% 15,961,497,066 1,259,305 0.0%Delaware 2,017,215,189 111,795 0.0% 4,024,183,349 1,117,120 0.0% 5,113,440,747 1,823,127 0.0%District of Columbia 1,065,857,961 164,289 0.0% 1,082,135,647 58,100 0.0% 2,014,637,512 147,631 0.0%Florida 24,461,847,789 57,813,072 2.6% 44,858,050,410 107,452,050 3.1% 66,201,800,100 186,389,720 3.1%Georgia 14,424,428,364 51,361,535 2.3% 23,365,865,349 50,124,137 1.4% 36,067,246,541 159,326,800 2.7%Hawaii 514,046,486 0.0% 560,071,275 0.0% 731,664,010 111,949 0.0%Idaho 1,962,059,173 824,209 0.0% 4,703,433,247 1,292,627 0.0% 6,119,107,885 292,599 0.0%Illinois 25,674,569,735 61,209,511 2.7% 48,896,249,905 51,126,160 1.5% 68,127,010,189 358,975,534 6.0%Indiana 14,955,934,515 66,226,879 3.0% 25,956,346,037 81,369,921 2.3% 34,431,316,562 121,488,658 2.0%Iowa 4,754,035,607 50,083,753 2.2% 9,655,733,616 114,888,755 3.3% 14,635,708,756 199,633,079 3.4%Kansas 4,988,554,376 28,133,600 1.3% 10,277,477,026 72,129,425 2.1% 11,696,221,621 158,221,982 2.7%Kentucky 10,680,138,859 26,610,952 1.2% 19,652,095,856 41,962,261 1.2% 22,125,951,067 6,676,790 0.1%Louisiana 17,583,093,976 1,266,365 0.1% 30,318,911,145 5,620,728 0.2% 62,892,633,604 6,957,796 0.1%Maine 1,979,995,444 79,822 0.0% 2,750,326,347 282,885 0.0% 3,047,707,915 627,814 0.0%Maryland 4,476,772,985 3,480,009 0.2% 8,948,636,829 4,589,424 0.1% 11,741,088,756 1,723,831 0.0%Massachusetts 16,705,106,823 1,661,622 0.1% 25,351,439,596 3,942,371 0.1% 25,612,846,301 1,588,130 0.0%Michigan 33,969,067,417 21,310,219 1.0% 44,555,349,131 16,553,170 0.5% 56,993,402,032 197,826,051 3.3%Minnesota 10,398,380,715 2,131,453 0.1% 18,061,826,408 8,016,045 0.2% 20,826,764,033 3,607,861 0.1%Mississippi 3,064,865,298 14,359,900 0.6% 5,184,420,753 34,946,904 1.0% 11,786,805,196 3,641,457 0.1%Missouri 6,786,748,197 1,787,506 0.1% 13,483,588,154 46,284,728 1.3% 13,927,684,071 2,083,039 0.0%Montana 386,286,991 29,496 0.0% 1,133,672,004 2,631,684 0.1% 1,576,876,497 4,277,079 0.1%Nebraska 2,510,570,316 251,389 0.0% 4,266,141,656 838,467 0.0% 7,458,644,218 2,291,139 0.0%Nevada 1,178,846,902 3,282,883 0.1% 5,713,833,904 2,262,074 0.1% 10,260,686,265 14,491,259 0.2%New Hampshire 1,864,325,452 0.0% 2,914,139,835 76,223 0.0% 3,488,610,845 313,677 0.0%New Jersey 17,002,077,386 8,597,418 0.4% 30,836,468,846 57,525,485 1.6% 37,277,506,952 65,358,978 1.1%New Mexico 1,187,118,588 0.0% 2,585,121,373 303,620 0.0% 2,967,650,904 4,090 0.0%New York 37,757,072,501 28,103,703 1.3% 71,115,801,477 93,501,163 2.7% 81,358,857,002 111,946,873 1.9%North Carolina 14,727,665,151 176,128,266 7.9% 23,355,818,431 258,555,900 7.4% 28,832,674,500 184,804,806 3.1%North Dakota 860,281,888 163,617 0.0% 2,046,659,843 1,476,569 0.0% 4,308,687,941 2,863,219 0.0%Ohio 27,773,875,727 276,531,870 12.3% 42,562,233,016 321,251,750 9.2% 48,647,707,663 595,332,650 10.0%Oklahoma 2,445,438,281 153,417,243 6.8% 4,579,067,887 222,300,220 6.4% 6,578,478,210 111,492,985 1.9%Oregon 10,080,408,491 27,533,311 1.2% 16,530,875,039 88,197,241 2.5% 18,386,035,272 66,588,977 1.1%Pennsylvania 15,745,838,357 29,298,924 1.3% 29,195,435,464 135,615,458 3.9% 38,829,058,903 212,182,394 3.6%Puerto Rico 9,734,890,916 148,328 0.0% 18,078,284,156 2,208,844 0.1% 18,669,444,714 2,122,463 0.0%Rhode Island 1,121,045,880 0.0% 1,648,709,556 0.0% 2,370,156,815 15,387 0.0%South Carolina 9,649,661,354 474,321,398 21.2% 16,575,455,732 773,680,002 22.1% 25,110,306,961 1,729,588,920 29.1%South Dakota 596,454,081 119,092 0.0% 1,509,876,310 1,051,391 0.0% 1,556,241,031 1,147,366 0.0%Tennessee 11,628,711,600 257,190,637 11.5% 21,864,789,113 203,116,221 5.8% 31,139,656,598 286,485,781 4.8%Texas 95,427,206,268 143,940,184 6.4% 168,228,620,315 233,659,199 6.7% 264,708,659,761 435,391,537 7.3%Unknown 33,169,390,003 35,314,754 1.6% 38,893,711,264 55,354,691 1.6% 47,903,048,670 151,588,365 2.5%U.S. Virgin Islands 258,237,634 0.0% 808,339,747 12,967 0.0% 867,387,121 73,845 0.0%Utah 4,541,606,194 359,009 0.0% 7,814,523,484 666,195 0.0% 19,255,792,830 1,172,423 0.0%Vermont 2,522,840,056 118,170 0.0% 3,684,920,270 140,211 0.0% 4,139,591,084 12,767,093 0.2%Virginia 10,809,146,961 37,837,894 1.7% 16,864,469,904 71,623,825 2.0% 18,280,677,429 14,268,324 0.2%Washington 34,740,516,705 8,816,133 0.4% 52,089,477,068 10,955,177 0.3% 75,618,900,503 29,489,672 0.5%West Virginia 2,246,458,079 601,399 0.0% 3,987,020,782 1,222,055 0.0% 11,336,865,617 1,972,876 0.0%Wisconsin 10,678,446,355 1,044,607 0.0% 18,825,489,177 5,004,492 0.1% 23,116,666,561 7,665,952 0.1%Wyoming 553,497,895 0.0% 802,170,915 3,603,690 0.1% 1,420,924,817 967,262 0.0%Total U.S. 693,103,192,211 2,242,129,895 1,148,198,722,191 3,495,872,329 1,545,708,500,116 5,951,333,090 Source: U.S. Department of Commerce, (data pulled on October 28, 2013)Table 2 State Tire Exports: Dollar Value and Proportion of Total Exports, 2002, 2007 and 2012TIRE MANUFACTURING: SOUTHERN STATES ROLL TO THE TOP 5 theattractiveincentivepackagesincludingtax breaks,anabundantlaborpoolandtheabilitytotrain a workforce that has not worked in the industry previ-ouslyoffered by Southern states; theextremelycost-effectiveintermodaltransportation networkintheregion,spanningrailways,highways, airports and, most importantly, ports; and otherattributessuchastheweather,reducedcost-of-living,lowerornopersonalincometaxes,freeor inexpensive property on which to build assembly plants, alongwithotherattractivequality-of-lifecharacteris-tics, all make Southern locations very enticing.8Thisincreasingfocusbytiremakersonopeningpro-ductionfacilitiesintheSouthhasimpactednational statistics.Foranumberofdecades,Ohiowastherubber capitaloftheworldandmanyofthelargesttiremanu-facturers maintained their operations in the state.While Ohiostillisamajorplayerinthetiremanufacturingin-dustry, it no longer is the dominant force it was for many decades.These emerging trends are evident in a review of thelatesttireexportfiguresforthestates.Asanexam-ple,forthefirsteightmonthsof2013(thelatestfigures available), the three states with the highest tire exports in termsofdollarvaluewereSouthCarolina(1st)with$1.2 billion, Ohio (2nd) with $321.7 million and Texas (3rd) with $313.6 million.See Table 1 for these details.AsevidentinTable1,SouthCarolinasdominanceof tireexportsisquitesignificant:$1.2billioninthefirst eightmonthsof2013,clearlyoutpacingsecondplaced Ohios $321.7 million.In fact, export production in South Carolina is four times as much as the level in Ohio, a sta-tisticthatwouldhavebeenunfathomableafewdecades ago.Given that South Carolina had $1.7 billion in tire ex-ports in 2012, it is likely that at the end of 2013, the states tires exports would either be around the 2012 figure or ex-ceedit.Ofnote,thirdplacedTexasisascant$8million less than second placed Ohio for the review period, anoth-erstrikingdevelopmentregardingtheascentoftheSLC states in total tire production.Overall, the SLC states fare impressively,andforthefirsteightmonthsof2013,five of the top 10 tire exporting states in the country are in the SLC region.Intermsoffurtherprobingthegrowingimportanceof thetireindustryintheSLCstates,Table2providesde-tailsontireexportstatisticsfromthe50statesforthree years,2002,2007and2012.Theclassificationoftheda-tapresentedinTable2includesexportinformationfor rubberpneumatictiresusedonmotorcars;buses;trucks (on-the-highway and off-the-highway); aircraft; motorcy-cles; bicycles; agricultural vehicles and machines; forestry vehicles and machines; and construction or industrial han-dling vehicles and machines.9AsTable2demonstrates,therehasbeenasubstantial growth rate in overall U.S. tire exports during the 10-year reviewperiod.From$2.2billionin2002,totaltireex-ports leapt to $3.5 billion in 2007 (an increase of 56 percent) and then to $6 billion in 2012 (a whopping 70 percent ex-pansion).Between2002and2012,thegrowthratewasa gigantic 165 percent.The record of a number of SLC states was most impressive too.Specifically, there are four SLC states that rank in the top 10 tire exporting states in 2012 in the country: Florida with$186.4million(ranked10thnationallyandnotch-BridgestoneTireOperationsinAikenCounty,SouthCaroli-na(photocourtesyofBridgestoneAmericasTireOperations Newsroom)6 TIRE MANUFACTURING: SOUTHERN STATES ROLL TO THE TOPing3percentoftotalexports);Tennesseewith$286.5 million(ranked6thnationallyandaccountingfor5per-centoftotalexports);Texaswith$435.4million(ranked 3rd nationally and generating 7 percent of total exports); andSouthCarolina,thestatethatsecuredthetopexport spotinallthreeyearsunderreview,with29percentof total exports in 2012.It should be noted that tire exports in seven SLC states (West Virginia, Missouri, Mississippi, Arkansas,Kentucky,LouisianaandVirginia)amounted tolessthan1percentofthecumulativeamountexport-edbythe50statesinallthreereviewyears.Theexport numbersfortheremainingfourSLCstatesamountedto less than 2 percent in two states (Alabama, Oklahoma), less than 3 percent in Georgia and 3.1 percent in North Caroli-na of total U.S. tire exports.In terms of additional details, South Carolina raced to the top of national rankings in terms of tire exports in the last decadeandhastotallydominatedthetiremanufacturing and exporting spheres in the last five years.With $474.3 million in tire exports in 2002 (21 percent of total national exports), the state exported $773.7 million in 2007 (22 per-cent of total national exports) and then rolled to lead U.S. tireexportsin2012withanoverwhelming$1.7billion (or 29 percent of total national exports).The fact that the state currently exports nearly one-third of all U.S. tire ex-ports is a major testament to the record of South Carolina in pursuing tire manufacturing and exporting companies to locate and expand in the state.Additional details on some of the tire manufacturing oper-ations in the SLC states follow:South Carolina2012 was a banner year for South Carolina in terms of tire production:Three of the major tire manufacturers in the worldMichelin,BridgestoneandContinentaleither announced expansions or relocations to the state over the space of a few weeks.Continental:InMarch2012,Continentalpublicized constructionofitsnewplantinSumter,SouthCaroli-na.10Whilethecompanywillinvestabout$500million intotalattheSumterfacilityandgenerateabout1,600 new jobs, the plant will manufacture passenger and light trucktirestomeetdemandfrombothaftermarketbusi-ness and automotive manufacturers.Phase I of the project will reach a production capacity of approximately 5 mil-lionunitsperyearin2017,andPhaseIIwillpropelthe plantsmaximumproductioncapacityof8millionunits per year by 2012.The state provided $31 million in incen-tives to the company, while Sumter County provided the 330-acre site to the company.Michelin:InApril2012,Michelinannouncedexpansion plans creating 500 new jobs many in a new facility in An-dersonCountyandinvesting$750milliontobuildits ninth factory in the state and expand capacity at a plant in Lexington.11MichelinopeneditsfirstSouthCarolinafa-cilitymorethan40yearsagoandhascontinuedtoinvest routinelyinitsoperations;$5billioninmanufacturing andanadditional$2billioninitsresearchanddevelop-ment since inception.The company already is the largest manufacturingemployerinthestate(inexcessof8,000 workers).Forthenewplant,thestateofferedMichelin $9.1 million in grants for infrastructure improvements.As noted earlier, Michelins world-class, product expertise in earthmovertiresthebiggestMichelinbuildsispro-pelledbytheunprecedentedglobaldemandforthese tires.According to Michelin officials, nearly every earth-mover tire is sold before it is even produced.Bridgestone:AlsoinApril2012,Bridgestoneannounced thelargestindustrialdevelopmentprojectinSouthCar-olinahistory,withits$1.2billioninvestmenttoexpand itspassengertireplantandbuildanewfacilitytobuild off-roadtiresfortheminingindustry.12Intotal,thein-vestmentwillgenerateanestimated850newjobs.Even with the announcement of the Continental and Michelin facilitiesafewweeksbefore,Bridgestoneremainsthe largestinstatehistoryandinthehistoryoftheJapanese tirecompany.Ofthe$1.2billion,$346millionisbeing spent on enhancing the existing tire plant in Aiken, South Carolina; the remainder will be allocated toward the new facility planned for nearby Graniteville.Production at the new facility will commence in July 2015 and construction is ongoing.The new and expanded Bridgestone operation in Aiken County eventually will produce 37,750 tires daily or 13.4 million tires annually.In terms of financial incen-tives, Bridgestone received $15.5 million from the state.13MississippiYokohama:InSeptember2013,YokohamaTirebroke groundinWestPoint,Mississippi,onaone-mil-lion-square-footplantthatwillincludeproduction, warehousingandoperationsfacilities.14ThisistheJap-anesetirecompanysfirstU.S.manufacturingfacility built from the ground up.During Phase I of the process, theplantwillproduce3,000tiresdaily(approximately 1 million annually), involve a $300 million company in-vestment and generate 500 direct jobs.Officials estimate that the 500 jobs would have an average salary of $35,000, TIRE MANUFACTURING: SOUTHERN STATES ROLL TO THE TOP 7a boon to the economically depressed area in Clay Coun-ty,Mississippi.Goingforward,Yokohamaforecasts that the company will plough in an additional $700 mil-lion(totalinvestmentof$1billion)atthefacilityand raiseemploymentbyanother1,500directjobsforato-tal of 2,000 new jobs.In terms of incentives provided by state and local govern-ments, Yokohama received a total of $130 million spread over a multi-year period.The state incentives include $70 millionforPhaseIandauthorizationupto$60million more in bonds for expansions.For Phase 1, the state also willpurchaselandforYokohamafor$9.5million,spend $48 million on infrastructure and build an $11.75 million training center.In addition, the company will receive up toa25-yearexemptiononstatecorporateincometaxes; concessions on local property and other taxes and pay the local government and school district a fee in lieu of local taxes.These fees would take the form of a $900,000 pay-ment per year for local schools and $800,000 per year split betweentheClayCountyandWestPointlocalgovern-ments.LocalgovernmentsinClayCountyhavepledged about$12millioninincentivestoYokohama.Intotal, stateofficialsestimatedthattaxexemptionscouldto-tal $200 million or more but expect the state to recoup its entireinvestmentinaworse-casescenariowithin10 yearsor sooner.TennesseeHankook:InOctober2013,afterstavingoffstiffcompe-titionfromanumberofstatesintheregion,Tennessee securedanagreementwithSouthKoreasHankookTire to build its first U.S. plant in Clarkesville in Montgomery County.15The $800 million, 1.5-million-square-foot plant will be built in two phases: Phase I will involve an opening by 2016 with 1,000 workers, and Phase II, two years later, addingthefinal800workers.Uponcompletion,thefa-cility will manufacture 11 million tires a year and will be Clarksvilleslargestemployer.Whileconstructionwill beginearlynextyear,hiringforthemanufacturingjobs will start in 2015.Hankook officials cited a number of reasons for their selec-tionofTennessee,particularlythestatesworkforce.In addition,officialsnotedthatTennesseeisinthemiddle oftheUnitedStatesandtheimpressivetransportation infrastructureinplaceattheClarksvillesite,including interstatehighways,airports,railroads,alongwithac-cesstotheMississippiRiverwerestrongincentivesfor thecompanyselectingthestate.Railwaysinparticu-larwereanimportantconsideration,andHankookwill beabletoutilizetheR.J.CormanRailroad,ashort-line company,whosetrackstieinwiththeCSXmainlinein nearby Guthrie, Kentucky.It is expected that the railroad willrunaspurtotheHankookplant,asithastoother In 2012, Michelin, the largest manufacturing employer in South Carolina, began the construction of a new earthmover tire manufactur-ing plant in Anderson County.Te company also is expanding its earthmover tire facility in Lexington.Te two projects represent a $750 million investment and will create up to 500 new jobs.Te new plant will be Michelins 19th manufacturing facility in North America and its ninth in South Carolina. More than 8,000 of Michelin North Americas 22,300 employees are based in South Carolina.(Courtesy of Michelin North America, External Communications Department)THE SOUTHERN OFFICE OF THE COUNCIL OF STATE GOVERNMENTSPO Box 98129 | Atlanta, Georgia 30359 ph: 404/633-1866 | fx: 404/633-4896 | www.slcatlanta.orgSERVING THE SOUTHEndnotes1Foroveradecadenow,theSLChasfocusedextensivelyontheeconomicimpactoftheautoindustryintheSouth.In2003,theSLC released a report entitled The Drive to Move South: The Economic Impact of the Auto Industry in the Southern Legislative Conference States.Sincethattime,theSLChasfeaturedthetopicinsubsequentpublications,presentationstolegislativebodiesandother organizations,mediainterviewsandasadiscussiontopicatSLCannualmeetings.FormoreinformationontheSLCsfocusonthe topic, please see http://www.slcatlanta.org/Publications/index.php?topic=8 .2Tire Makers New Home, The Wall Street Journal, April 16, 2012.3Ibid.4South Carolinas Tech Savvy Workforce Draws Tire Makers, The Wall Street Journal, April 10, 2012.5Tire Makers New Home . . .6South Carolinas Tech Savvy Workforce Draws Tire Makers . . .7Ibid.8CanagaRetna, Sujit M., Paving The Road To Prosperity: Auto Industry in the South Faring Well in Contracting National Economy, State News, The Council of State Governments, August 2008, http://www.slcatlanta.org/Publications/EconDev/pavingtheroad.pdf.9Classification of Exports Rubber and Articles Therof, Section VII Chapter 40, U.S. Census Bureau.10MarketWatchTopStories,March28,2012,www.marketwatch.comandGov.CelebratesContinentalTiresNewSumterPlant,The Spartanburg Herald Journal, March 28, 2012.11Michelin Invests in Future of Company, Upstate, The Greenville News, April 10, 2012; Michelin to Build a New $750M Plant in Anderson, The Times-Record News, April 10, 2012; and, South Carolina Lures Michelin Jobs in Latest Manufacturing Coup, The Charlotte Observer, April 11, 2012.12Bridgestone Helps to Make S.C. A Hub of Tire Industry, The Augusta Chronicle, April 10, 2012 and Bridgestone Unveils Aiken County Plant Expansion, The Augusta Chronicle, April 1, 2013.13South Carolina Lures Michelin Jobs in Latest Manufacturing Coup . . .14YokohamaIncentivesPassedbyLegislature,TheClarionLedger,April26,2013;LegislatureApprovesFundingforNorthMiss.Tire Plant, April 28, 2013; The Clarion Ledger, April 26, 2013; and, Yokohama Breaks Ground on Mississippi Truck-Tire Plant, FleetOwner, September 24, 2013.15South Korean Tire Company to Build Plant in Middle TN, Reports Say, The Tennessean, October 11, 2013 and Clarksville Looks Best to Korean Tire Maker Hankook, The Tennessean, October 15, 2013.16Kumho Tire Ready to Launch $225M Factory in Bibb, Bring 300 Jobs, The Atlanta Business Chronicle, September 5, 2013.companies located in the industrial park that the tire man-ufacturer will be sited.Intermsofincentives,Tennesseeprovidedastateincen-tivepackageof$72milliontothecompany,anamount thatincludesworkertraining,constructionofatraining facility and a Korean cultural center in the Clarksville ar-ea.The two local governments involved, Clarksville and Montgomery County, donated the plant site to the project.GeorgiaKumho:Atiremanufacturingprojectthatwasanum-berofyearsinthemakingwasannouncedinSeptember 2013.The South Korean tire company, Kumho, indicated thatitisreadytobuildaone-million-square-footfacili-tyinBibbCounty,Georgia.16The$225millionKumho investment will create more than 300 direct jobs, with hir-ing expected to commence in 2016 and 2017.ConclusionInconclusion,theeconomicsuccessofthedozenorso foreignautomakersblossominginanumberofSLC states has proven to be a magnet for an array of automo-tive-relatedcompanieslocatingtheiroperationsinthe regionaswell.Combined,theseautomotivecompanies, automotive-relatedandancillaryoperationshavegen-eratedtremendouseconomicgainstotheeconomiesof the SLC states, the region and the nation as a whole.An emergingtrendinrecentyearsinthisconnectionisthe locationandexpansionofanumberoftiremanufactur-ingcompaniestotheregion.Thesecompaniesseekto takeadvantageoftheclustereffectcreatedbythepres-ence of the dozen or so foreign automakers and thousands of auto parts suppliers in the vicinity, along with a num-ber of additional competitive advantages proffered by the region.Tire export data clearly demonstrate the increas-ingdominanceoftheSLCregion,withSouthCarolinas tireexportsclearlysurpassingstatessuchasOhiothat dominatedthesenumbersinpriordecades.Inthelast two years, whether it is Yokohama in Mississippi or Han-kook in Tennessee or Continental in South Carolina, the drawoftheSouthernregionasthelocusofautomotive activityhasresultedintheSouthemergingastheTire Hub of the United States.