Monday, January 23, 2012

Taylor Bryant: It's Time for a Local Economic Development Revolution

Billions of Dollars in Direct Economic Impact Packaged and Ready to Roll

Economic Development: Time for a Revolution
Monday, Jan. 23, 2012
Augusta, GA

The study of economic theory and practice has been a hobby of mine for quite some time now. I have studied the works of Frederic Bastiat, John Maynard Keynes, Murray Rothbard, and F.A. Hayek to name a few, and I will be the first to admit I am no expert in the field by any stretch of the imagination. The study of economics is not very exciting or entertaining, which is probably the reason that most people, including some that hold the highest offices in the land, are ignorant to the causes and effects of manipulating the systems by organized government. 
Locally, our economic system had developed a hardened shell of protected income, buoyed by taxpayer funded jobs, such as Fort Gordon, Savannah River Site, certain medical positions, and the secondary education system. While this is positive, we must realize that those things can go away with a simple piece of legislation. We have no solid backup plan in that event. We can learn from Charleston, SC what happens when a military installation disappears. The largest stockpile of nuclear capable submarines pulled anchor in the early nineties, leaving the town in shambles for over a decade. My house that I lived in at the time took six years to sell. SIX YEARS ON THE MARKET.
Charleston was able to stay alive by exploiting their tourism industry and luring in large manufacturing powerhouses. North Charleston just landed one of the largest economic impact features in on the East Coast, a Boeing Aircraft Assembly plant that will directly bring in 3,800+ jobs, taking people out of the unemployment line and into the workforce. There will be even more jobs when parts manufacturers build supply plants, warehouses, and logistic chains, estimated to be almost 6,000 more. This is revolutionary for that area. It is estimated that it will bring in three times the local economic impact of the BMW plant in Spartanburg, which in the last 15 years has totaled almost 9 BILLION DOLLARS! The biggest plus is that the tax dollars generated by Boeing are not being pulled from an existing taxable entity within the border of the county. More on that later...
Almost a year ago I had heard that Audi of America had intentions of putting a plant somewhere in North America. The corporate brass have set extremely aggressive goals of taking BMW down a peg in market share, and was looking to build here due to a dropping dollar and a workforce that could put out the high quality cars that made Audi a force to be reckoned with. I immediately started doing intensive research on this subject and started to ask some questions of our local leaders. I sent emails, made phone calls, even spoke to Audi executives trying to find out any information on the bid process for securing this jewel of an opportunity for our area. Volkswagen had just pulled the trigger on their factory in Chattanooga, TN, and now are pumping out the newly designed Passat to dealerships all over the world. 

I was told that the Audi plant would be hand building engines and producing complete units on a limited basis. The plant would employ up to 2,400 people, with salaries ranging in the mid $40,000 range, which is about the same as the VW plant. Porsche, another piece of the company, has just bought land for a Corporate and Testing headquarters in Atlanta, and now it has been rumored that VW will move their Southeastern Corporate office to the Atlanta area. This is good news for the state of Georgia. 
That leaves the point of my column... we missed the boat, my friends
Augusta has a plethora of motivated workers, strong technical schools such as Augusta Tech and even Aiken Tech across the river, a surplus of real estate suitable for conversion or building, and a closeness to the Interstate and Garden City port in Savannah, along with the Brunswick port that is VW/Audi/Porsche’s port of entry. We have a low cost of living and housing is affordable. What is the leadership of this town waiting for? Why aren’t we wearing out our knuckles beating on the doors of industries like this? We need an economic revolution
We paid $10,000,000 in sales taxes to Costco to set up shop. At first glance that seems like a good idea, and was generally well received by the community, generating 200 jobs. I wonder how Sam’s Club, Target, Wal-Mart, and the small business community feel about the city of Augusta paying a large franchise to come in and strip income from existing sales tax producing tenants of this County? Is this fair to those that have worked hard? Is it morally correct to subsidize competition, and let our local government pick winners and losers in this painful economy? I will let the reader decide, I think you know where I stand. 
Bringing in heavy industry to Augusta does not damage the sales of the service or retail industry, and in fact, does quite the opposite. Take the Audi plant for example. We build an Audi A7 sedan in the boundaries of Richmond county. Let us say that it takes 1500 man hours to build this car, at the average rate of $20 an hour, counting the janitor to the Plant manager we have made $30,000 within the boundaries of our county. Now, someone is going to buy that car, and it’s safe to say it will be someone from outside the county. That means we have exported 1500 hours of labor and imported $30,000 of money, all to be taxed by the State and the City at various rates to pay for teachers, firemen, pothole filling, and TEE centers (heh). Meanwhile, the rest will be spent in the service, housing, and retail side, because people have to have clothes, hairdos, and oil changes, right? Seems fairly simple. 
2,400 Audi jobs x $40,000 average salary = $96 Million dollars of taxable income into Richmond county a year. That equals $6,720,000 in sales taxes.... in one year! It would also cut our unemployment by nearly 25% across the board, putting people back to work. Again, this is direct impact. I am not counting the extra impact from the transporting of goods, outlying parts suppliers, out of town visitors, or construction stimulus of the plant. 
Why aren’t we offering Volkswagen the old Fort Discovery for their corporate office? can you imagine over 400 highly paid executives and staff in the Downtown area for 40 hours a week? Why are we using the Tax Allocation District to bring in the small potato companies with negligible economic impact? Why are people trying to bring this to light being ignored by those that can make such a difference to so many? 
I really do not have a solid answer to that question. I know this town needs someone that can go out and at least try to get these opportunities, and it will take well more than a $100,000 conference room to make this happen. We need leaders in our government who can bring things like this to Augusta, or at least make a good effort. When I first brought this up, I was ignored and called a dreamer, and those people may be correct in their assertion. If believing in my town enough to think we can build cars when the people in our area have assembled nuclear warheads, cured cancer patients at our state of the art hospitals, and host the most prestigious golf tournament in the world make me a dreamer, then so be it. 
We are better than call centers. We are better than an empty mall on Gordon Highway. We are better than Costco. It is about time we start electing and hiring people who think we aren’t above that list to positions of power. We must rise above THEIR expectations of what WE can do. We need an Economic Revolution in Richmond County, and you can call this the first shot in that battle. ***

UPDATE: After writing this column, there is new information that Mercedes is eyeing the South East US for another manufacturing facility. Will Augusta leaders step up to the plate and aggressively court Mercedes and the high paying jobs they would bring to the area?


Craig Spinks said...


Does niggardly Billy want to compete for employees with high-wage-paying corporations?

Heavy amounts of lip service to high-paying jobs is paid in the AC. But what are Billy and his minions doing to bring such jobs here?

Craig Spinks said...

OOPS: Third line- "are" to replace "is."