KIA and Georgia

The Columbus Ledger-Enquirer has published a time line of activities associated with the decision of KIA to establish a 1,2001,500 person auto manufacturing plant in Georgia. A few neat observations for you hard core economic development fans out there:

1. The Georgia Governor went to South Korea to pitch the firm in 2003. The decision was made in 2006. Sometimes it takes a while to get these big deals done. Lesson? Don’t call on KIA in 2005 when they started planning in 2003 or earlier. Sales efforts need to start upstream – several years before the decision is actually made.

2. The friggin’ site is 2,194 acres. That’s 3.5 square miles for one company. That is larger than all but 2-3 of all the industrial parks in New Brunswick. Lesson here? Take a page out of Tennessee, Georgia, Louisiana, Mississippi, etc. and identify those megasites in advance. Have them in hand when visiting potential clients.

3. Shut up, Hailey Barbour, Governor of Mississippi. He announced KIA was looking at Mississippi. Never go public during a site selection process. Period.

4. It’s a team effort. In addition to the Governor’s office and the Department of Economic Development, the Department of Transportation and the Department of Technical and Adult Education were part of the Georgia team. Top officials from relevant departments must be part of the sales process.

5. Feb 24: Chairman Chung blesses the site and goes on to the new Hyundai plant near Montgomery, Ala. Kia is a subsidiary of Hyundai. Georgia Economic Development folks and Kia officials go to dinner at the Atlanta Fish Market in Buckhead. Before dinner, Lesser and Ahn work out the final details of the deal. They negotiate terms on the back of an old receipt. When the deal is done, the two men shake hands, sign the receipt and have dinner. Ah, the old ‘back of the napkin’ dealing, I get tingles just thinking about it.

6. Terms of the deal have not been made public, yet but I have heard it will be north of $200 million USD.

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0 Responses to KIA and Georgia

  1. Anonymous says:

    Essentially I agree with the above, however, I don’t agree that making these into private deals serves any valid purpose, and is essentially undemocratic. There is no evidence that taxpayers do not support industries such as this, even when the costs are onerous. Doing it behind closed doors virtually guarantees a court challenge with a future government and the ‘dirty laundry’ eventually gets aired. I wouldn’t even be surprised that could New Brunswickers vote, they would have supported the quarter billion payout to the logging industry, even though it will cost jobs and wipe out the environment. So it really serves no purpose to keep such details hidden-unless of course both sides know damn well that the terms of the agreement are so outragious that perhaps the case could be made that the people of the state are better off without it. In which case, there are FAR bigger problems than economic ones.

    It’s not like these things are big secrets, any corporation not run by retards is going to say right out of the gate “here’s what we’re getting over here, can you beat it?”

  2. Anonymous says:

    Dear anonymous…so…from what you’ve said…if you are going to put an offer in a gourgeous house that you and your spouse were dreaming about for years and finally went up for sale, you would tell everyone?!
    Sure!! just go public and let them all know what your offer is, let your whole family vote if the house is located on the best place possible, if has the best heating options and so. And remember, if they say no just because they don’t really have all the “relevant information” don’t be sad…you were just exercizing democracy…
    And also remember that when you go public, the other people with the same “dream house” may offer a better deal and even if your family vote “yes” you may not have enough cash to counter offer…
    WOW! this is not good it is?! I guees if you’ve just kept a little secret you would be sleeping in your “dream house” by now!!

  3. scott says:

    I prefer the ‘back of a golf score card’ myself.

  4. David Campbell says:

    Eventually, the full cost of any incentive package will be published. The problem is that it’s not ‘cash’. In fact, very little of those large incentives are cash. Companies prefer other types of incentives as there is less tax implications. For example, abating local taxes for 15 years is preferred to a $5 million grant (NOTE: New Brunswick is still in the ‘grant giving’ business although this is not common practice in economic development). Other components of the ‘deal’ tend to be free land (think about how much that would be on 2,200 acres), training support and other infrastructure improvements which tend to benefit more than just the company. For example, BMW negotiated a runway expansion at the local airport to accommodate the 747s bringing in cargo from Germany. That was included as part of their incentive package but benefited the community at large.

  5. Anonymous says:

    To spin off the above argument, its quite obvious that when homes are purchased they are public. They are called ‘asking prices’, you can look at them on MLS. If more than one person is interested then they bid higher, that is quite permissible, we did that for our home. They then go to the owners and ask if they accept, they are free to accept or wait for the other person to offer it.

    The other party is then told of the higher offer and has the opportunity to top it. Thats how you make money, certainly not by simply letting companies submit their best offer and picking the best one. The parties don’t know what the others offer, so it won’t be clear ‘how low to go’ or ‘how much to give’.

    However, home ownership has nothing to do with democracy since its one families money and another’s property. Only three or four parties are involved. When government is involved then it is TAXPAYER money, and they shouldn’t be allowed to throw it around like its their personal fiefdom.

    Again, just look at the liquified natural gas terminals. In Maine the company essentially had to bribe towns to get them to accept the terminal, in the end they got guaranteed jobs, guaranteed profit sharing, and guaranteed environmental considerations. They will have 60 jobs making 60 grand a year.

    In New Brunswick the city not only didn’t get any of those, but gave up a huge tax break as well. Irving says it will only provide eight jobs, no guarantees on salaries and no guarantees on anything else.

    ONE of those is more democratic, and from an economic standpoint anybody who wants to argue for eight jobs and no guarantees over 60 jobs at 60 grand and a percentage of the profits is free to do so.

    That’s a special case because its an industry that NEEDS a specific location, however, I’d argue quite strongly that if somebody did a poll right now on how many people would support, say, even a BILLION dollars to go to a high end manufacturer like an automaker, you’d have few disagreeing. With an automaker you also need parts, and its easy to stretch the industry in a variety of directions. Hell, you could throw UPN the hell out and turn that mill into a kickass manufacturing facility. If you look at industry studies you can note that subsidiary industries spread up to 300 km away and are still cost effective, which means that investment would aid every sector of the province.

    How many billions get pocketed by Irving and McCain for industries that provide less than a quarter of the workforce? Keep in mind also that the province has 6 billion in investment capital, none of which is even invested in the province, not to mention that feds almost ALWAYS put in money for industry infrastructure once provinces go ahead.

    In a place like New Brunswick I would personally put my money on people like this blogger as well as the general intelligence of the popullation before I would the pinheads in Fredericton. THEY had a shot and get dumber and more crooked by the day.

    Actually, the government agrees with me, after six years its decided on public meetings to get input, and even the morons at the irving press are saying that new immigrants should be involved in marketing the province back to their home territory. Question is, if WE are doing all that, what the heck do we need a government for? They clearly don’t know how to do this any more than we do.

  6. Anonymous says:

    Dear anonymous,
    I was just drawing a parallel. Stop taking the grammar to extreme and open your mind to what really matters… I also bought a home and know how it is done…

  7. Anonymous says:

    That WAS the parrallel, it is no more true in home buying than in it is in economic development, as my above post says. Whether citizens of a province like New Brunswick knows or doens’t know what is going on is irrelevant to whether a company chooses their bid or not. If province A submits a bid for a billion dollars in training, land, etc., while province B submits the same, I think any company worth its salt is going to take the one where the deal has been approved by the electorate. That’s because it makes operating there so much easier. You won’t get constant demonstrations, you won’t get online boycotts, etc. The only issue is how much those people are willing to spend. It may be true that SOME bids will be lost because other bidders pony up more dough, but that’s going to happen regardless of whether the population knows about it or not.

    Of course nobody is saying that every time the province sees a company that it may want to bring in then it should have a referendum, however, economic development can clearly be done out in the open with people’s blessing. This certainly hasn’t been the case with the LNG terminal, and certainly isn’t with the forestry pork barreling or even getting Bennett Environmental. In fact, the OPPOSITE is true, that they have gone out of their way to protect the interests of tiny minorities over the wishes, needs and well being of the majority, which is the opposite of democracy.