German luxury car maker Audi will spend $4 billion to build its first US production facility near Macon, Georgia. The facility will be able to build 200,000 cars per year and will create 4,500 high paying jobs. Audi’s plant will be a four-hour drive south from Spartanburg, South Carolina where German rival BMW makes its X series vehicles. BMW is huge in South Carolina employing 11,000 workers at the company’s largest manufacturing facility anywhere in the world. BMW has invested $12 billion in Spartanburg.
There’s more to this auto industry boom in the American south. South Korea’s Hyundai is spending $12 billion on a huge plant near Savannah, Georgia’s Atlantic coast seaport. When it’s completed Hyundai in Georgia will employ 8,500 workers in a plant that can produce 500,000 cars per year. In addition, the American electric vehicle startup Rivian is building a plant near Atlanta. Online retailer Amazon and Volkswagen are major shareholders in Rivian.
“On October 28th Kevin Warsh, the new chairman of the US Federal Reserve, said there is an investment boom underway in the United States. Now most of that investment is in artificial intelligence (AI), things like data center and the like. But much of the investment is in manufacturing and most of that money is going to the American south, companies like Audi, Hyundai, Volvo, BMW.”
There are multiple factors explaining the boom in the South’s auto industry. One is the Trump administration high tariffs on imported vehicles. Another is the business-friendly environment in a region close to heavily populated consumer markets. Finally, there is an ample supply of workers and hostility to trade unions which have considerable power in the industrial Midwest, the Michigan and Ohio center of the American auto industry.
Workers at the Detroit Three—General Motors, Ford and Stellantis—are represented by the United Auto Workers union, which is unpopular with Asian and European manufacturers. None of the new auto plants In Georgia and South Carolina are unionized. Hostility to the UAW runs deep and centers on restrictive work rules more than compensation as pay and benefits at the transplant companies are in line with the Detroit Three.
These have been tough years for GM, Ford and Chrysler. Of the Detroit three only Ford escaped bankruptcy in the 2008 financial crisis. Ford avoided reorganization only because it sold off much of its overseas operation, including Sweden’s Volvo. The Detroit Three are laggards in EVs, where Tesla is dominant. By market value Tesla is the world’s richest car company.
In the year 2000 the Detroit Three accounted for 55% of all cars sold in US. Today their market share has shrunk to 36% with Asian manufacturers, imported and US produced, having a market share in excess of 50%. China is a non-factor as Chinese vehicles are neither built nor imported into the US.
There are 50 auto assembly plants in the US, 21 of which are foreign owned and they are mostly in the South. Toyota has several US factories including a massive facility in Georgetown, Kentucky that is Toyota’s biggest. In addition, Volvo, owned by China’s Geely, is in South Carolina, Mercedes is in Alabama and Nissan is in Tennessee. All together America’s auto industry employs 10 million people.
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