Capital Goods: December 2013

Setting sights on an auto plant

“If you build it, they will come” might have worked for the Ray Kinsella character in the movie Field of Dreams, but that refrain could have a far different effect on the 170 characters who fill the seats of the General Assembly.

Gov. Pat McCrory keeps talking about bringing a car manufacturer to North Carolina as one of his top priorities. Enviously eyeing that dreamy field near Greenville, S.C., where a BMW plant has spawned associated parts-makers, he and his advisers want to see something similar grow in this state.

They face a problem, the same one Kevin Costner’s character had in the movie: creating a place the action can begin almost immediately. But accommodating an auto plant requires a lot more space than a cornfield. It needs between 1,000 and 2,000 acres available for a single tenant or owner. Automakers also want it to be “shovel-ready,” with water, sewer, electrical, road and rail infrastructure in place. Having, in essence, a giant spec site available costs a lot of money — $50 million, for starters, economic developers say.

They have identified a handful of “mega-sites” with enough developable land and other attributes to attract an automaker or other mammoth manufacturer. Late last year, the state made three $1.7 million grants available to local governments for land acquisition and planning. But $1.7 million is not $50 million. Fretting about the financial concerns, officials in Davidson County dropped plans for a mega-site to focus on a more traditional industrial site, where public investment would follow private-sector commitment. Randolph County economic developers and officials have expressed similar concerns there, where they have the added problem of landowners opposed to selling their property for an idea rather than an actual plant.

A site in Edgecombe County has been in the works for years. Local officials invested huge amounts of public money in the property, installing sewer, water and electric services. The 1,400 acres are near a site that landed a QVC distribution center, which opened in 2000 and employs 1,500. But much of the talk about an auto plant has focused on the Piedmont. Another site, one that didn’t receive a state grant, is just west of Siler City along the Chatham-Randolph county line. The 1,700 acres are owned by two Triad businessmen who want to see the tract turned into a major industrial site, but it lacks the infrastructure automakers require.

N.C. Commerce Secretary Sharon Decker says developing mega-sites is an important part of transforming the state’s economy. But she and McCrory don’t control the purse strings. Legislators do, and what ultimately happens will fall to them. Local governments will likely pitch in some money, but the situations in Randolph and Davidson counties show that they want — and even need, from a political standpoint — a commitment of resources from the state. And legislators have their own demons to deal with when it comes to cart-before-horse schemes.

The scariest has been the N.C. Global TransPark in Kinston, where roughly $140 million of public money has been invested in an idea — that one day cargo planes would move goods manufactured there by tenants that would employ thousands. Two decades later, Wichita, Kan.-based Spirit AeroSystems Inc., which has a couple of hundred workers there, remains its only real success. Even after landing Spirit, the TransPark could not repay $20 million borrowed from the state’s unclaimed-property fund, money that the state constitution says must go back to its owners or to public education. Around the Legislative Building, the project is still invoked as the quintessential government boondoggle. If debate occurs next spring and summer over providing large sums of money for mega-sites, chances are you’ll hear the name spat out again.

No elected official wants to be associated with a public investment that ends up as a field of weeds rather than of dreams. But what else can McCrory, Decker, local officials and economic developers do if they want to compete? Like the incentives that accompany most major deals, the development is required to get in this game. The question is whether they can convince those who pay the bills that it’s one worth playing.         

Scott Mooneyham is editor of The Insider, www.ncinsider.com. Email him at smooneyh@ncinsider.com.