CNN: Manufacturing boom in Right-to-Work low tax South

CAROL COSTELLO: You could say the South is in the middle of a hiring surge as big name businesses head to the region bringing thousands of new jobs with them. Here’s just a few of the companies: Hyundai is adding a third shift at an assembly plant in Alabama, while in Tennessee, Volkswagen has opened its only U.S. plant, spending a billion dollars to do it; Caterpillar is actually moving a plant from Japan to Georgia, and in Kentucky, GE has invested millions to reopen and revamp an appliance factory. Poppy Harlow has been all over this story joining me now. Automakers have been doing this for years and now GE and Caterpillar—what’s next?

POPPY HARLOW: I’ve been down to most of those plants to see it firsthand. There are four main reasons why this is happening. A big one is that most of these states, not all but most, are non-union states—they’re right-to-work states—that typically makes labor cheaper for a company. Secondly, the tax rates are incredibly competitive. I took a look this morning at all of the corporate tax rates in all 50 states; if you look at Alabama, Kentucky, Georgia, Tennessee, Mississippi, none of them have a tax rate over 6.5 percent. But if you look at Illinois, Minnesota, Rhode Island, Pennsylvania, none of them have a tax rate below 9 percent. So you’re talking about a huge difference here, more than 3 percent, typically when you compare the South, those states to the north and Midwest. So, that makes it cheaper for companies to build there. Also, China actually—it’s costing more to make things there. The labor costs in China are going up about 20 percent from where we were last year. That’s a good thing for U.S. in terms of jobs. Finally, what I saw firsthand at the GE plant in Kentucky, they are building water heaters there. That was a plant shuttered and idle and they would spin off that business totally but it became more expensive to make these things overseas and then ship them. So they decided we’ll make them here—they’re big, heavy items. Make them here so they are closer to transport to customers in U.S. rather than shipping them. They also told me and this is key, they won’t make microwaves or air conditioners smaller items in the U.S. because they don’t cost as much to ship so they will be made in China for the foreseeable future. But there is a big shift happening and it’s happening in the South.

via CNN: Manufacturing boom is in the Right-to-Work South | Washington Free Beacon.

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