Jim Folsom Jr. isn't talking about the heat he's packing, he's talking about bringing
Mercedes-Benz to Alabama .
The former governor has made a point
of talking about his four shotguns and how he brought the German automaker to
Alabama in 1993, helping spark the growth of
Alabama 's automotive industry. In fact, it's so important to Folsom
that he uses it in all three of his television ads.
I've spent the last 12 years in business,
bringing economic growth to Alabama, just like I brought Mercedes, Folsom says
in an ad titled Roots.
They said it couldn't be done, Folsom
says in an ad titled We Will. But I got Mercedes for Alabama .
Mercedes gets a whole ad to itself
in the Folsom campaign, where Folsom's former Alabama Development Office director
Billy Joe Camp, Tuscaloosa County Commissioner Bobby Miller and Mercedes employees
praise and thank Folsom for bringing Mercedes-Benz of America to Alabama.
As the advertisements say, Folsom
worked diligently to bring the German manufacturer to Alabama . Folsom called a special session of the Legislature in
August 1993 in part to pass an incentives bill for Mercedes-Benz, flew to Germany
to plead Alabama's case and got the company to commit to Alabama in September
The company helped lure other firms
to the state and became a catalyst for the growth of the state's automotive industry.
(In the Mercedes ad, Camp exaggerates when saying that Mercedes brought 50,000
good-paying jobs to Alabama .
The plant opened with about 1,500 workers.)
The playing field has changed quite
a bit, said James Cashman, a professor at the University
of Alabama who studies the
automotive industry. For example, to get Honda or Hyundai, the advantage has
not just been the tax incentives, but also the fact that there's an infrastructure
here that makes it easier for them to go in on their own.
But getting Mercedes required approval
of a package of tax incentives totaling $253 million, including pledges by Folsom
to pick up $140 million in equipment and training bills with no way to pay for
them. The incentives law led to threats of lawsuits from teachers' unions and
a few municipalities who feared they might lose jobs to larger companies. Folsom,
moreover, did not announce the details of the deal including provisions for
the state to buy Mercedes-Benz vehicles for a month.
The resulting furor very nearly made
Mercedes-Benz a liability for Folsom in his 1994 campaign for governor, but Chip
Hill, a spokesman for the former governor, said he would not do anything differently.
Our incentives package was in line
with what other states were offering that were competing with the project, he
said. We simply outworked them for the project.
The state, to be sure, was a wallflower
when Mercedes-Benz announced it planned to build a $300 million manufacturing
plant in North America on April 5, 1993. The
German automaker had its pick of suitors and more or less forced interested states
to outbid one another's tax incentives.
Mercedes had the luxury of saying,
'Here are some spots that would work for us,' Cashman
said. There were a variety of factors in play, one of which was the friendliness
of the political environment as evidenced by the incentives.
Alabama had some other attractions, including
cheap land, a good transportation network and a deepwater port in Mobile . But it had some significant minuses, including the lack
of a major hub airport, and the poor educational environment. General Motors rebuffed
the state for Tennessee
when looking for a place for its Saturn plant in 1985.
Hence, the Mercedes-Benz bill, as
it was popularly known, was passed in haste. It allowed Mercedes-Benz to use the
money it would otherwise pay in state income taxes toward construction of the
plant, and withhold 5 percent of its employees' salaries in exchange for the same
Mercedes announced that September
it would build its plant in Tuscaloosa
County . However, Folsom did not release the details of the agreement
immediately. Those details emerged slowly, nearly killing the initial good will
for the plant. Folsom committed to work to get state and local agencies to purchase
2,500 vehicles from the plant when it opened, which would have cost somewhere
in the $75 million range.
Things got worse in January, when
the Alabama National Guard began clearing trees for the new plant. The Pentagon
complained, and the Guard was removed.
After Folsom left office in 1995,
the state struggled to pay a $42.6 million IOU to Mercedes-Benz. The Alabama Education
Association threatened to sue the state, citing the lost income tax revenues,
as did cities that had industries that could not qualify for the incentives, fearing
they would lose their industrial base. The Legislature rewrote the law to broaden
the qualifications for companies.
Hill said the company will pay for
itself for years to come, and Alabama
has seen its automotive industry grow since Mercedes came. But Cashman, who said he's a lover of the industry, worries
that the state has become too dependent on the automotive industry. That could
hurt if the whole sector encounters a downturn, or if the state becomes sluggish
in attracting high-tech or conceptual jobs.
We in Alabama
don't have anything the size of Atlanta ,
which could handle job losses better than we could, he said. If we believe,
as I do, that we're entering this new conceptual age, we're beginning to be heavily
involved in yesterday's jobs. And maybe we've gotten too complacent in attracting