Autoworkers at Mercedes Plant in Vance, Ala.
Autoworkers at the Mercedes plant in Vance, Ala., are currently assembling an all-electric SUV, according to a report by Stephan Bisaha from Gulf States Newsroom.
Mercedes Chooses Alabama for Assembly Plant
In 1993, German automaker Mercedes decided to open a new assembly plant in the United States. At the time, 19 states were vying for the opportunity, with Alabama being seen as the dark horse due to its proposed location near Tuscaloosa, which lacked a major airport and had an unskilled workforce and high poverty rates. However, these factors did not deter Mercedes from choosing Alabama in September of that year. The low-cost unskilled workforce, combined with the state’s lack of unionization, made it an attractive choice. This decision paved the way for a boom in foreign car manufacturing in the southern states, where opposition to unions was strong and large financial incentives were offered.
The Impact of UAW Strikes on Southern Autoworkers
While foreign automakers in the South have benefited from the absence of unions, the ongoing strikes by the United Auto Workers (UAW) are being closely watched by autoworkers in the region. However, they are left out of the negotiations and do not receive any benefits that may result from the strikes. If the UAW secures a significant pay increase for its members, it is likely that foreign automakers in the region will also provide raises to remain competitive. This prospect makes the companies nervous, as it could make the UAW more appealing to Southern autoworkers who currently do not have union representation.
Union Opposition and Incentive Wars in the South
The absence of unions and the availability of substantial incentives have made the South a favored destination for foreign automakers. Alabama, in particular, won over Mercedes not only due to its anti-union environment but also because of the approximately $400 million in incentives provided by the state. Other states in the South have gone even further in offering incentives to lure foreign automakers. For example, Georgia and local governments promised Hyundai $1.8 billion in tax breaks and other benefits to establish a new electric vehicle plant in the state. The lack of unions and the incentive wars have led to a significant increase in the auto workforce in the South, which currently stands at tens of thousands.
The Biden Administration and Incentives for EV Manufacturing
The Biden Administration has also joined the incentives game, aiming to encourage foreign automakers to produce more electric vehicles (EVs) in the United States. This could lead to the establishment of new plants in Southern states, such as Georgia. A.J. Jacobs, a professor and author, predicts that the South will be the preferred location for these plants, citing the region’s track record in attracting foreign automakers. However, Jacobs cautions that the incentives may not always be worth it, especially now that they have exceeded half a billion dollars in some cases.
The North-South Tug of War Over Wages
The lower wages in the South make it harder for the UAW to negotiate higher pay as it tries to remain competitive with foreign automakers. Additionally, UAW workers are currently on strike for better pay and benefits at a Mercedes supplier in Alabama. This strike is unrelated to the national strike against the Big Three automakers. It is not only the paycheck size that Southern workers are concerned about in relation to the strikes but also the global transition to EVs. The shift to EVs will lead to the creation of new jobs but also the loss of others, as the skills required for building traditional engines may become obsolete. The outcome of the UAW contract negotiations will play a crucial role in determining the impact of the EV shift on Southern autoworkers.
