D. Dowd Muska


Globalism in One State

August 29, 2013

Most blue-staters view the Deep South the way a 1992 Saturday Night Live sketch described Arkansas -- as “something out of Li’l Abner, with buxom underage girls in their cutoff denims prancing around in front of Jethro and Billy Bob, while corncob-pipe-smoking, shotgun-toting grannies fire indiscriminately at runaway hogs.”

Funny, sure, but the stereotype’s accuracy is rapidly withering. It doesn’t get more Dixie than Alabama, and foreign corporations flock to the state. They’re not in search of yokels to deep-fry roadkill. They seek competent, reliable workers to manufacture synthetic fibers, elevators, weapon systems, surgical devices, automobiles, oil-drilling equipment, ships, and soon, commercial jets.

A recent Business Roundtable analysis found that companies based in Japan, Germany, the United Kingdom, Canada, and France support 49,200 jobs in Alabama. The all-countries figure, according to the Organization for International Investment, is 81,200 positions. In 2012, firms such as Shandong Swan, EADS, JX Nippon Oil & Energy Lubricants, Austal, and Sandvik Medical Solutions announced plans for 6,000 new hires.

It’s a side of globalization rarely covered in mainstream-media accounts of international trade. Reporters and pundits are quick to seize on a U.S.-based company closing a plant or transferring work to Asia. Far less attention is devoted to the fact that 5.6 million Americans owe their livelihoods to foreign investment.

Alabama’s insourcing explosion is a myth-busting double threat: It exposes protectionists’ facile theory that wage rates alone determine site-selection decisions for multinational corporations, and torpedoes the moonbat mantra that Big Government states will experience strong economic development.

Pay in Huntsville, Birmingham, and Mobile doesn’t (yet) match compensation in Nob Hill, Chevy Chase, and Fairfield County. But China, Cambodia, Mexico, Brazil, Poland, and Romania have cheaper labor costs than Alabama. Clearly, the state offers a myriad of attractions. Land is inexpensive. Politicians impose a light tax burden -- levies on property are particularly low -- and junk-science-based  “environmental” regulations are rare. Alabama has a right-to-work law, so compulsory tribute to union bosses is banned. (“Organized labor” may hobble the private sector and run the government in Bluetown, U.S.A., but no coerced funding source means it is moribund in the South.) With competition brutal and shareholders vigilant, foreign corporations constantly examine the options, and in Alabama, they like what they see.

Bolstered by investment from abroad, the Alabama economy is flourishing -- well, at least it’s doing as well as possible, in the Bush-Obama era. Unemployment, at 6.3 percent, is more than a percentage point below the national figure. Equally impressive is the state’s progress in median household income (MHI). The typical American domicile grew its earnings, in inflation-adjusted terms, by a mere 0.6 percent between 1991 and 2011. Alabama’s improvement was better by a factor of ten. Meanwhile, many of the states that spend lavishly on “public investments” -- e.g., California, Illinois, New Jersey, New York, Connecticut, Rhode Island -- saw MHI fall. Who’s “backward” now?

The past is encouraging; the future looks stellar. There is no longer any doubt that an automobile cluster has taken hold. In January, The Birmingham News bragged that the “quality and loyalty” of the local workforce helped Honda, Mercedes-Benz, and Hyundai “produce … more than 880,000 vehicles last year, a 17 percent increase over 2011 and a record high level for the industry in Alabama.” It’s not farfetched to expect the state to one day usurp Michigan’s status as top automaker. In May, Mercedes-Benz broke ground on the latest addition to its Alabama infrastructure, a logistics hub expected to create 600 jobs. May also saw Honda launch production of its redesigned Acura MDX SUV. Car factories need parts suppliers, and dozens have sprung up to serve in-state customers as well as demand from plants (Volkswagen in Tennessee, Kia in Georgia, Nissan in Mississippi) throughout the South.

First the ground, next the skies. Last summer, Airbus selected Alabama to establish its first U.S.-based assembly line for commercial jetliners. The $600 million facility is expected, at full production, to employ 1,000 workers. Airbus is hiring mangers now, and the (Mobile) Press-Register reports that “the first blue-collar postings [are] expected as early as October.” The company’s arrival, its CEO believes, is “the most significant, game-changing event in U.S. aerospace in decades.”

The “deindustrialization of America” lobby has a tough time selling its message in Alabama. The state’s increasingly diversified economy is surging, and foreign companies are leading the way. It’s time to stop the cracks about moonshine, extra-chromosome offspring, snake handling, and mint juleps, and recognize that Alabama, and its neighbors, are on to something.

D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.

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