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August 25, 2008 Inside Out

Tupelo Honey | Maine could learn a thing or two from the sweet deal Mississippi struck with Toyota

On Aug. 25, 2005, one of the three deadliest and costliest storms ever crashed into Louisiana and Mississippi. Six months after Hurricane Katrina, much of the Gulf Coast was still devastated. In February 2006, USA Today said "the extent of the devastation in Mississippi is staggering."

The devastation that shook Mississippi is beyond comprehension. And yet in February 2007, just a year and a half after Katrina, Toyota announced a $1.3 billion investment to build a new manufacturing facility in Tupelo, Miss. Toyota has since announced that it will produce its popular hybrid Prius in Tupelo.

Other than being the birthplace of Elvis, there is not much else to recommend in Tupelo. It's a town of 34,000 - about the size of Lewiston/Auburn - in northern Mississippi. There is nothing in the region that would lead you to think that Tupelo would be the site of the next manufacturing boom in the United States. Since Maine & Co. is in business to attract companies to Maine, I decided to call down to Mississippi and find out how they did it.

According to the local economic officials, the effort to attract Toyota was a long one. In 2001, six years before the announcement, three counties formed a regional economic development group. The stated goal of this alliance was to attract a manufacturing plant to the Tupelo area. Before they had contact with any company who might be interested, the economic development group worked to locate and prepare a site, identify an incentive package and arrange for infrastructure improvements.

Then Mississippi met Toyota. Toyota announced its intentions of opening a new facility in the United States two years before the announcement. The company considered every state in the country. In those two years, Mississippi Gov. Haley Barbour quietly visited the president of Toyota in Japan more than six times. By last winter, Toyota had narrowed the choice to three cities: Tupelo, Miss., Chattanooga, Tenn., and Marion, Ark.

Picking a winner

I asked my contact in Tupelo how his city won. He said that it came down to three criteria: skilled labor, environmental standards and business climate.

When he talked about environmental standards, I felt certain that Tupelo had dropped their standards and promised Toyota that they could operate in any fashion they wanted. I could not have been more wrong. Tupelo was the only of the final three cities that was willing to raise their standards to meet Toyota's requirements. The other cities were afraid they would injure their existing businesses if they raised their standards.

Next we talked about business climate. Since Maine's business climate is a source of almost endless discussion around the state, I was interested in Toyota's view of what constituted a winning business climate. According to my source, Tupelo needed a $300 million bond package to close the deal. The Mississippi Legislature passed the bond in 15 minutes. Unanimously. Toyota found that legislative response an indication of a suitable business climate.

So they had winning environmental standards and a favorable business climate. But I was skeptical about the skilled workforce. Interestingly, my contact was most proud of Tupelo's efforts to provide workforce. I couldn't wait to hear his explanation.

He told me that "not one dime" of the $300 million went to Toyota. More than a third of the money, about $120 million, went to community colleges to train the workforce for the Toyota facility and the supplier companies that would co-locate with the plant. The University of Mississippi received money to create an automobile manufacturing research and development facility based on lean manufacturing standards. The rest of the money went to roads and bridges, site preparation and utilities. Mississippi made a targeted investment and will have about 10,000 high-paying jobs by 2010 as a result.

About three weeks after the announcement between Tupelo and Toyota, Maine announced a bond package. Maine also spent about $300 million. We had money for roads and bridges and infrastructure improvements. Maine's package also had money for research and development, and for our community colleges. Maine spent the same amount of money on essentially the same things as Mississippi. Did we get the same value for our investment as Mississippi?

Mississippi made this investment in the face of crushing needs in the southern part of the state. They decided to invest in creating opportunity, even as whole towns on the Gulf Coast were washed away and many of its citizens were still displaced from the storm.

In Maine, we have many advantages that Tupelo does not. We have earned a worldwide reputation for quality workmanship and hard work. If Tupelo can be the place the best car manufacturer in the world invests to make its most technologically advanced model, what could we do in Maine?

Matt Jacobson, president of Maine & Co. in Portland, can be reached at mjacobson@maineco.org.

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