Bailout or Just in Time Delivery?

Toyota is careful in its ways; it didn’t get where it is today by idly locating manufacturing plants. And, so it chose Georgetown, Ky. – 12 miles north of Lexington on I-75 – for the location of its first and largest U.S. plant. It was followed in the ensuing years by numerous other foreign auto plants locating in the South – BMW, Mercedes, Saturn, Hyundai and yet another Toyota (in Mississippi).

Why, you may ask, did they come to the South? The easy answer is that they came for cheaper land and labor. They were also drawn by large and much criticized tax incentive packages as the South decided – value judgments aside – to get in the game and establish a manufacturing base to replace the sagging agriculturally based small farm economy. Here in Kentucky, the less than bright future for tobacco was ample motivation for welcoming Toyota.

But I believe there is more to this move. They came also for laborers eager to find the good paying auto jobs that had escaped the South for too long. The influx reversed a trend of Southerners leaving for the great factories of the North as my father did 60 years ago as he fled Appalachian Kentucky for Dayton, Ohio.

Also, contrary to East Coast “attitudes” they came for another reason – the work ethic common to this region. In Kentucky workers from 116 of its 120 counties were hired when Toyota began operations – 7,000 strong. They wanted to work, and were willing to move, commute, or hitchhike for the opportunities. Just as importantly, Toyota created a new employment strategy of hiring a “cushion” of temporary employees to insulate full-time employees from the impact of an eventual economic downturn.

This image contrasts that of Southerners – particularly those in Appalachia – as generally lazy, fat, dumb, happy, pregnant, barefoot, toothless, racist, sexist or any combination thereof. Speaking of lazy, we can thank Gary Tuchman and CNN for the latest contribution to stereotyping our Commonwealth when they chose to find poor sad people on a front porch in Clay County Ky., to enunciate in butchered English their discouragement with the state of the world.

So when we hear about the bailouts, first for the financial industry and now the Detroit-based U.S. auto industry, we have reason for skepticism. Our auto industry – that is the generally healthy industry created by Japanese, Korean and German manufacturers – doesn’t seem on the bailout list. Neither do our local banks. They’re not too big to fail and not stupid enough to follow the lead of Wall Street.

Of course, we don’t want to see any part of America fail, including Detroit. According to one Toyota executive, the webbing of the auto industry is so intertwined that the failure of the U.S. auto industry would bring down the entire house of cards, including the supplier plants that Toyota and other “new age” manufacturing plants call “just in time delivery” facilities.

But others do see the bailout as undermining a trend that favors efficiency in manufacturing – and the wise investment Toyota and other companies have made in developing smaller, more fuel-efficient cars. Still others are baffled about what they would do if it was their congressional vote. The global economy has grown complex in many ways. Among the most vexing issues are those surrounding present and future government involvement in private companies.

Ultimately we wonder what the attitude of the new administration will be toward Kentucky and the South. Kentucky in particular stood out once again with early poll closings, to be declared “red,” by a large percentage as it went to McCain. Obama tiptoed only once into the state, and that was in “blue” Louisville. He made no effort to win us over as Kennedy and Clinton had in earlier presidential campaigns. We will soon learn if he remains true to his rhetoric that proclaims that we are neither “red” nor “blue” but one America.

There’s much our new President could do for this part of the world. The mega car factories might show what our workforce is capable of but they have not been enough to reverse our relatively low per capita incomes. New investments – roads, waterways, freight rail lines, skills training – could help lift our region up even further. We just hope that the new President realizes that all of America will benefit if the South can build on its automotive industry success to achieve a much broader prosperity.

Sylvia L. Lovely is the Executive Director/CEO of the Kentucky League of Cities and the founder and president of the NewCities Institute. She currently serves as chair of the Morehead State University Board of Regents. Please send your comments to slovely@klc.org and visit her blog at sylvia.newcities.org.