Much attention has been focused on the fact that the residents of Georgia are raving about Kia Motor's plant, saying it is a godsend during a time of great economic difficulty. But there hasn't been any coverage of the humility, care and efforts the people of Georgia undertook to persuade the Korean car-maker to build its factory there.
West Point, Georgia, where the plant is being built, is a small farming community with a population of just 3,400. Georgia, known for its conservative white-supremacist background, is where civil rights activist Dr. Martin Luther King Jr. spearheaded his efforts. But there are reasons why Georgia stepped up to persuade an "outsider" like Kia to build its plant there.
The region's industry collapsed after its mainstay cotton and textile industries were pushed out by cheap Chinese imports after the turn of the 19th century. The level of local unemployment was higher than other states, while the average wage was around 20-percent lower. General Motors and Ford, proud symbols of the American automotive industry, announced plant closures after lax management caused them to lose ground to competitors like Toyota and Hyundai Motor.
Then Georgia Governor Sonny Perdue and West Point Mayor Drew Ferguson sought to persuade Kia, a rival of GM and Ford, to build its plant there. Some residents protested, perhaps from a sense of embarrassment over the world's most powerful country turning to an Asian country for help, and fears of an invasion from the East. Moreover, there was no pressing need for the deal, since the U.S. economy was in great shape at that time.
But governing officials persuaded the residents and also worked hard to win over Kia. This served the practicality that "jobs" are more important than "pride" when it comes to reviving the region's economy. When Hyundai Kia Automotive Group Chairman Chung Mong-koo was being investigated by prosecutors in 2006, Mayor Ferguson said he prayed that Kia's factory plans would not be scrapped.
Offering radical benefits, including construction of infrastructure facilities, tax breaks, and support funds for new hires, Georgia eventually beat its rival Alabama to win the Kia plant deal. These days, the residents of West Point are dreaming of prosperity, while the remainder of the country reels from the impact of the global economic crisis. When the Kia plant starts rolling out cars at the end of this year, with an annual output capacity of 300,000 vehicles, 10,000 jobs will be created. Residents' views have also changed regarding foreign companies. Rather than being wary, locals are criticizing U.S. car-makers for failing to produce competitive models.
Georgia is not the only state to persuade a foreign company to build a production plant. Georgetown, a community in Kentucky famous for bourbon whiskey and horse racing, was a small rural town with a population of 2,000 in the 1980s. But then governor Martha Layne Collins ran to Toyota after Ohio, to the north, persuaded Honda to build a plant there and Tennessee, to the south, had Nissan and Saturn build cars there.
Residents were not happy about a Toyota plant being built in their town, but she eventually won them over. And Collins offered Toyota a US$147-million incentive package, which was almost 30 times higher than what Ohio offered Honda. As a result, Georgetown has prospered into a mid-sized city with a population of 20,000. Kentucky and Georgia won by boldly opening their doors to rivals of American car-makers, as long as they were willing to provide jobs.
Just after the Asian financial crisis 11 years ago, our country put a lot of effort into attracting foreign businesses. But foreign direct investment, which surged just after the crisis, has been on a downward trend due to lack of interest.
The Korean economy is faring relatively better than those of other countries during the economic crisis, minimizing the need to focus too much on attracting foreign investments. But this is the time to prepare for the future by adopting Georgia's "open-minded stance" to attract large foreign companies that can create lots of jobs. We should be aware that top Korean businesses are setting up factories overseas, while lowering the number of workers it hires here.
By Kim Ki-hoon from the Chosun Ilbo's News Desk