Something Important Is Happening In Charlotte

September 5th, 2012 at 8:23 am

While everyone was listening to the predictable speeches at the DNC in Charlotte, Lori Montgomery of the WaPo cleverly snuck off to a successful Siemen’s factory where they manufacture the big gas turbines that will power new electric plants here and abroad.

I suspect you’d learn a lot more at this factory about the combination of public policy and private initiative needed to create good jobs on our shores than you would down the street at the convention center.

Ask Siemens executives why they placed their bet on Charlotte and they talk about public investments such as the state-funded rail spur that runs through their facility and the city’s international airport, which recently added a fourth runway using $132 million in federal funds.

They talk about the Export-Import Bank, an independent federal agency that in January approved a $638 million loan to finance the sale of turbines to Saudi Arabia, helping Siemens beat bids from companies in Germany, South Korea and Japan.

And they talk about the quality of the workforce in Charlotte, where local leaders are retooling the public education system to churn out the engineers and skilled technicians needed to operate one of the most efficient gas-turbine plants in the world.

“A lot of things that were offshored in the past were offshored because of lower-cost labor, but that’s no longer the most important factor,” said Eric Spiegel, president and chief executive of Siemens’s U.S. subsidiary. “The reasons you bring a plant like this to the United States are higher-skilled labor, access to the world’s best research and development, and good, sound infrastructure. All those things together make the U.S. a good place to invest.”

Because journalists these days are obligated to do “he said, she said” the piece goes into the ways both D’s and R’s don’t get it.  But the above paragraphs clearly speak of a role for government that is precluded by the budgets of Romney and Ryan.

In fact, as the piece points out, House Republicans have tried to “kill the Export-Import bank” and their budget spends a third less than that of the President on education and training.  In a classic example of the kind of public-private partnerships that must characterize the future of our job market, a local community college “added a mechatronics program aimed at producing a stream of technical workers. Duke Energy helped finance an energy program within the engineering school at the University of North Carolina at Charlotte, to which Siemens contributed $4 million.”

There is no room for such initiatives in the R’s austerity budgets that leave nothing for such investment after they’ve enacted trickle down tax cuts partially offset with large spending cuts in the very areas that fund these sorts of programs.  Even the President’s budget reduced this type of spending—“non-defense discretionary”—as a share of the economy down to levels that may not go far enough into this public-private space.

But certainly, the example of this Siemen’s plant underscores a critical role for government in keeping this kind of production here and providing firms with the public goods, including an educated workforce, they need to compete.

If you’re paying attention to the conventions, that, IMHO, is what you should be listening for.

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7 comments in reply to "Something Important Is Happening In Charlotte"

  1. Blake says:

    Jared,

    I agree with you that the Republican’s budget would be a disaster and that the EXIM Bank is valuable, but how is giving subsidized credit to a company to beat competitors from Germany (which is where Siemens is based) helping? It doesn’t sound like they chose the US based only on the quality of the labor force, but needed to receive subsidized credit to tip them over the edge. It sounds to me more like Siemens exercising its power to force countries to ‘bid’ for the location of their plant, which really becomes a zero sum game, like states throwing tax credits to attract the newest factory from Solar World or Boeing. Siemens wins, but everyone else (countries) just throws themselves under the fiscal bus to show slavish dedication to Siemens for considering their country.

    Blake


  2. Jake says:

    In my humble opinion, this is the direction we need to go. The article recommended by another commenter at http://harvardmagazine.com/2012/09 shows how the business sector finally is catching on to what the economists have been saying for years decrying how the “narrow focus” of the business person that looks only at low labor costs and access to markets is self-defeating in the long run. Also, the private sector is more than happy to turn to government to help them with their financing (e.g. tax breaks) What is different now is that they may be willing to swallow the higher cost of labor to “in-source” here. Let’s keep educating the voting public on how public-private partnerships work for business and for labor in higher wages and more jobs.


  3. Magnus says:

    The head of the Charlotte Chamber of Commerce touted Right to Work as another reason for the Siemen’s plant, but that is celebrating a race to the bottom for wages.


  4. Patrick Thompson says:

    It would take a German company to understand the economics of building this in Charlotte. Did you see the DNC Clean Energy Conference also yesterday in Charlotte? This is all about economic competitiveness – we either take the lead on renewable energy or buy from other countries. Highlighting the importance of renewable energy and the 1800 homes (and growing) powered by methane gas at a landfill property in Gaston Country – the Renewable Energy Center of Gaston County, NC.


    • Jake says:

      The fact this is a German company investing in the U.S. fits my working theory that business leaders respond either to fear or greed. If the thinking of business leaders is changing so that they are more willing to invest in the U.S. and not just exploit cheap labor by outsourcing overseas, fear may be the motivator. Specifically, if Siemens can invest in education and plant and make a go of it, the U.S. business may have reason to fear loss of their own markets to outsiders.


  5. Beth Gray says:

    There are, I’m sure, similar projects in many other cities. THey aren’t very glamorous, often, to look at . . . muddy constructi0n sites . . . inconvenient detours as the state builds I-69 t hrough southern Indiana . . . I-69 will “open the door” and bring life again to small towns like Petersburg, Washington, and cities like Evansville, making way for many new “open doors” in those communities.

    Beth


  6. Fred Donaldson says:

    They are here because workers are paid far less than in Germany at the same company and same job, and do not receive the same benefits as in Germany.

    When asked how they could have lower wages, etc. in America, the answer from a company spokesman was: “because we can.”

    The only reason Germans come here (and Korean factories) is because workers work for less in the U.S. Foreign firms love “right to work” states and an unemployment rate at least two percent more than in Germany, and there are no mandatory six weeks of vacation here, and no paid months-long maternity/paternity leave, no very cheap healthcare, etc.

    The more we lower our wages, compared to developed countries, the more factories we will attract from them, and the worse the living standards here, compared to the rest of the world.


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