Executive Briefings

Incentives Help Attract Major Projects, But Not the Total Answer

When the State of Alabama offered a $253 million incentive package to attract Mercedes-Benz to Tuscaloosa County in 1993, other states said that Alabama was crazy to open its purse strings so wide.

But when the project grew from 1,500 jobs 1997 to more than 4,000 workers with an economic impact of $1.5 billion, opinions have changed. Honda and Hyundai soon followed, employing 6,000 more Alabamans. A Toyota engine plant in Huntsville has nearly tripled employment from initial projections. The state also has attracted defense contractors such as Boeing, which builds rockets in Decatur, and a proposed Northrop Grumman/ EADS North America aircraft tanker assembly plant in Mobile that the state has set aside $250 million to support. The director of the Alabama Development Office maintains that incentives are "one arrow in the quiver" of what any state can offer a manufacturer, it's true that many manufacturers allow states and regional entities to compete for their business. But the ultimate factor may well be that intangible combination of incentives, workers, quality of life, land, training and relationships that will be unique to each manufacturer and will vary widely from company to company.

Ohio, which has suffered from relocation of many industries to lower-cost states or countries, has restructured incentives to keep and attract manufacturers. Ohio restructured its incentive programs, dropping the personal property tax for manufacturers to reduce the tax consequences of investment and repealing the profits tax, which was shifted to the retail sector. Voters in November also approved $500 million in infrastructure improvements, which will be coupled with $1.2 billion in budgeted funds over the next decade to develop job-ready sites for manufacturers and fund R&D and new product efforts. The state has notched several wins recently, including the expansion of Whirlpool in the state following its acquisition of Maytag which will retain 6,100 jobs and create another 1,100 by expanding laundry manufacturing facilities in Clyde and Marion with a $53 million company investment. Ohio beat out 11 other states for a new facility for Clopay Building Products, which is expected to create 400 jobs and retain 155 positions. Overall, Ohio ranks third in the nation in manufacturing, and was the source of 5.7 percent of American production in 2004. Manufacturing is the single-largest sector of Ohio's economy with 20.2 percent of total output, employing more than 811,000 workers.
http://www.themanufacturer.com/

When the State of Alabama offered a $253 million incentive package to attract Mercedes-Benz to Tuscaloosa County in 1993, other states said that Alabama was crazy to open its purse strings so wide.

But when the project grew from 1,500 jobs 1997 to more than 4,000 workers with an economic impact of $1.5 billion, opinions have changed. Honda and Hyundai soon followed, employing 6,000 more Alabamans. A Toyota engine plant in Huntsville has nearly tripled employment from initial projections. The state also has attracted defense contractors such as Boeing, which builds rockets in Decatur, and a proposed Northrop Grumman/ EADS North America aircraft tanker assembly plant in Mobile that the state has set aside $250 million to support. The director of the Alabama Development Office maintains that incentives are "one arrow in the quiver" of what any state can offer a manufacturer, it's true that many manufacturers allow states and regional entities to compete for their business. But the ultimate factor may well be that intangible combination of incentives, workers, quality of life, land, training and relationships that will be unique to each manufacturer and will vary widely from company to company.

Ohio, which has suffered from relocation of many industries to lower-cost states or countries, has restructured incentives to keep and attract manufacturers. Ohio restructured its incentive programs, dropping the personal property tax for manufacturers to reduce the tax consequences of investment and repealing the profits tax, which was shifted to the retail sector. Voters in November also approved $500 million in infrastructure improvements, which will be coupled with $1.2 billion in budgeted funds over the next decade to develop job-ready sites for manufacturers and fund R&D and new product efforts. The state has notched several wins recently, including the expansion of Whirlpool in the state following its acquisition of Maytag which will retain 6,100 jobs and create another 1,100 by expanding laundry manufacturing facilities in Clyde and Marion with a $53 million company investment. Ohio beat out 11 other states for a new facility for Clopay Building Products, which is expected to create 400 jobs and retain 155 positions. Overall, Ohio ranks third in the nation in manufacturing, and was the source of 5.7 percent of American production in 2004. Manufacturing is the single-largest sector of Ohio's economy with 20.2 percent of total output, employing more than 811,000 workers.
http://www.themanufacturer.com/