8 Southern states unite to woo r&d
Mich. group leads effort, drawing criticism from local groups
Eight Southern states, organized by a Michigan research group, are forming a coalition to encourage overseas automakers and suppliers to locate r&d centers in the Southeast.
The effort, called the Southern Automotive Research Agenda, hopes to attract engineering talent to support automakers and suppliers doing business in Alabama, Kentucky, Louisiana, Mississippi, Tennessee, South Carolina, Georgia and North Carolina. Texas and Florida may join the group.
The South has attracted a large share of transplant assembly plants in recent decades. An organized effort to win more r&d work would increase the South's competitiveness for high-paying auto jobs and fend off Mexico, which has attracted a number of assembly plants.
Leading the effort is the Center for Automotive Research, which is based in Ann Arbor, Mich. On March 12, the center will hold an organizational meeting in Washington, D.C.
Jay Baron, the center's president, says the coalition is intended as a counterweight to Mexico, which has attracted considerable investment from automakers and suppliers.
"We want the engineers to be here," Baron said. "These technicians and engineers are higher-end jobs."
Southeast Michigan, with its pool of engineering talent, has been a magnet for r&d centers built by foreign automakers such as Toyota, Nissan and Hyundai.
Michigan not happy
However, the plan is drawing criticism locally.
"It's a wake-up call," said Tom Manganello, a Detroit attorney and board member for MichAuto, a statewide industry association looking to attract development in Michigan. "We need to get more focused on what we have and how we're going to keep it and how we're going to grow it or we're going to lose it."
Manganello also is the brother of former BorgWarner Inc. CEO Tim Manganello, who is retiring as executive chairman of the supplier next month.
Doug Smith, senior vice president for business and community development for the Michigan Economic Development Corp., said the organization is not happy with the coalition idea but understands that CAR is not solely a Michigan-based group and has an international focus.
"We do see it as a threat," Smith said.
He said 75 percent of automotive r&d is done in Michigan.
"We don't take it lightly in terms of holding onto it," Smith said. "It means we need to redouble our efforts to keep them here."
Manganello said the plan is to steal away Michigan's more than 330 automotive r&d centers.
"The automotive epicenter for r&d is Michigan, and these are the highest-paying and most permanent jobs," he said. "Don't think the Southern states aren't licking their chops to get what we have."
Competition with Mexico
But Baron says the coalition does not intend to lure existing r&d centers away from Michigan and other Midwest states.
"The competition is with Mexico, not the North," Baron said. "We do not promote the idea that anybody should move from the North to the South. We are trying to make the pie bigger."
In an interview with Automotive News, Baron said the coalition would have three priorities:
1. Coordinate activities of engineering schools so Southern universities avoid overlapping research.
2. Provide expertise to economic developers to make their regions more competitive.
3. Identify the needs of automakers and Tier 1 suppliers, then help the Southern states provide those resources.
Member institutions could help provide resources for product development, manufacturing engineers, whatever a company might need.
For example, if BMW needs more technicians to fix robots in Spartanburg, the German automaker might get some help from other companies in the region.
Or it might consult Clemson University's International Center for Automotive Research in nearby Greenville, S.C.
That facility has attracted a dozen automotive suppliers, and it gets financial support from the state. In fact, South Carolina Commerce Secretary Robert Hitt is a former BMW executive.
Clemson "provides tremendous resources and support for suppliers and automakers," said Glenn Stevens, vice president of sales and membership at the Original Equipment Suppliers Association, which is based in suburban Detroit.
The Center for Automotive Research began discussing a research alliance with Southern states some years ago. Those talks were put on hold during the recession, then resumed when the economy began to rebound.
The talks gained momentum last year after Audi AG announced plans to build an assembly plant in Mexico -- not Chattanooga, as many Southern officials had hoped.
Audi's decision "was a tipping point" for Southern officials, Stevens said.
Although the research initiative appears to be gaining momentum, it's not yet clear how the Center for Automotive Research will coordinate its activities.
Baron says he could appoint a liaison in each state to act as a go-between, or he might open a branch office in the South.
In any event, Baron said the center's main office would remain in Ann Arbor.
Crain's Detroit Business contributed to this report.
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