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Copyright November 2013

TIRE MANUFACTURING:

SOUTHERN STATES ROLL TO THE TOP

A REGIONAL RESOURCE FROM THE SLC

of

The Council of
State Governments

Sujit CanagaRetna

Senior Fiscal Analyst


Southern Legislative Conference
November 2013

here has been a great deal of attention in recent


years over the drive to move South, i.e., an increasing number of foreign automakers setting
up manufacturing facilities and thriving across
the Southern United States.For more than two decades,
going back to the 1980s, foreign automobile manufacturers, from Toyota in Kentucky to Mercedes in Alabama to
BMW in South Carolina to Nissan in Mississippi to Kia
in Georgia to Volkswagen in Tennessee, have established
assembly operations that continue to prosper, generating billions of dollars in economic impact and employing
thousands of workers.In addition, thousands of auto
parts suppliers have established manufacturing facilities
to serve the dozen or so foreign automakers located in the
South, creating tens of thousands of more jobs.Finally,
a host of industries and services ranging from logistics
companies to restaurants to transportation companies to
service stations also have mushroomed to service the automakers and parts suppliers, cascading into even more
jobs and positive economic flows.
Even during the Great Recession, the worst economic
crisis to afflict the U.S. economy since the Great Depression, the foreign automakers scattered across the South
flourished, even expanding in some instances.Notably, none of these foreign automakers laid-off employees
during the Great Recession, an accomplishment that
stands in contrast to the Big Three automakers domiciled mostly in the Midwest and Northeastern parts of
the United States.*For instance, in July 2008, VolkswaWhile the Great Recession is deemed to have officially lasted from
December 2007 to June 2009, economic growth and job creation
have continued to be extremely anemic up to the current period.
*

SERVING THE SOUTH

Photo courtesy of Continental Media Center

Southern
Legislative
Conference

gen announced plans to build a $1 billion manufacturing


plant in Chattanooga, Tennessee, and hire 2,000 direct employees.In 2009, the Mercedes plant in Vance, Alabama,
saw a 225,000-square-foot paint shop expansion followed
by another $289 million enlargement project in December
2011.Also, in late 2011, Kia Motors in West Point, Georgia, completed a $100 million expansion to boost annual
production capacity from 300,000 vehicles to more than
360,000.Similarly, in January 2012, BMW announced
plans to expand its facility in Spartanburg County, South
Carolina, a $900 million investment that is expected to
generate 300 new jobs.In contrast, in February 2009,
General Motors dismissed 47,000 employees nationally in
one swoop, a number that ranked it among the top 10 layoffs in the nations history.Similarly, Ford and Chrysler
each eliminated over 15,000 and nearly 14,000 employees, respectively, during the Great Recession.In sum, the
economic performance and ensuing impact of the auto industry in the South continue to be one of the bright sparks
of an economic recovery that remains sluggish and far below the robust rates necessary for sustained, broad-based
economic growth.
While the economic impact of the automobile sector in the
South has been reviewed and scrutinized extensively in
recent years,1 there has been less fanfare about a burgeoning sector in the region: the growing importance of tire
manufacturing in the SLC states.Only in the last year and
a half or so are the media and auto industry analysts realizing that some of the worlds largest tire manufacturers are
locating, relocating or expanding their operations in the
South.2In fact, as an increasing number of the worlds automakers locate and expand their operations in the region,

THE SOUTHERN OFFICE OF THE COUNCIL OF STATE GOVERNMENTS


PO Box 98129 | Atlanta, Georgia 30359
ph: 404/633-1866 | fx: 404/633-4896 | www.slcatlanta.org

Continental Tire North America, Plant: Mayfield, Kentucky, USA (photo courtesy of Continental Media Center)

the worlds tire manufacturers also are seizing the opportunity to situate their production facilities nearby.For
instance, South Carolina has three major tire producing
facilities: Michelin, Continental and Bridgestone; Mississippi has Yokohama Tire, scheduled to begin operations
in 2015; Tennessee has Hankook Tire, also scheduled to
begin operations in 2015; and Georgia has Kumho Tire, a
project announced in September 2013.These tire manufacturers not only are making tires for passenger vehicles
but more lucratively for massive earth-moving machinery and vehicles in the mining and oil industries.There
is rising demand for these heavy tires from such countries
as Australia, Canada and China.For instance, Michelins
heavy tires, which can have rim diameters of more than
five feet, are deployed in a variety of equipment, including
dump trucks, and can sell for as much as $250,000 each.3
It is possible to identify several reasons for these tire makers to set up operations in the South.Proximity to the
auto companies in the region undoubtedly is an influential
factor, i.e., the opportunity to take full advantage of the
complex and well-established automotive cluster that operates very successfully in the region.Proximity is a major
incentive in terms of design, research and development,
production and delivery perspectives.Even though these
tire producers sell their products at thousands of retail establishments across the United States and the globe, they
also sell them directly to the automakers.For instance, in
October 2013, South Korean tire manufacturer Hankook
announced plans to build its first U.S. plant in Clarkes-

2 TIRE MANUFACTURING: SOUTHERN STATES ROLL TO THE TOP

ville, Tennessee, (an $800 million facility that eventually


will employ 1,800 people) to supply tires to Nissan and
Volkswagen (both automakers with production facilities
in the state).Hankooks Clarkesville, Tennessee, location
also is convenient to supply tires to two other South Korean automakers, Kia in West Point, Georgia, and Hyundai
in Montgomery, Alabama.
Strong technical educational resources and related infrastructure that bolster not only tire production specifically,
but also the auto industry, in general, are other driving
forces for tire makers to increasingly consider locating
their operations in the South.As in so many disciplines
within the 21st century manufacturing sphere, tire manufacturing is an increasingly complex and technically
rigorous process that requires workers with considerable
technological skills.South Carolina ranks very high with
regard to technical education in the tire industry, and the
tire makers indicate that state is attractive because of an
education system that grooms students to work on an
increasingly high tech factory floor.4For instance, Michelin North Americas president, Pete Selleck, cited South
Carolinas vibrant technical college system as a major factor in Michelins decision to expand their operations in
the state.As Mr. Selleck noted, South Carolina has a
long history with technical colleges dating back to the
1960s.5One of the ways South Carolina has been successful in promoting technical education in the tire industry is
through a technical scholars program.To prepare future
workers, the state-sponsored technical scholars program

allows students to receive a two-year apprentice program


at a tire factory while attending community college.
In comments similar to those made by the Michelin official, Bridgestone Americas chief project officer for tire
operations, Steve Brooks, noted in reference to South Carolinas superior tire industry workforce that I can have
the technology anywhere in the world, but it doesnt matter if you dont have the workforce.6In fact, Bridgestone
participates actively in South Carolinas technical scholars
program and, according to Mr. Brooks, as much as 10 percent of Bridgestones current maintenance staff graduated
from the program.These are workers that are very prepared to handle technology.Continental Tire, the other
major tire producer in the state that announced plans to
build its 1,600-worker factory in Sumter, South Carolina,
in 2012 highlighted the number of workers in the industry
proficient in the tire industry as a deciding factor.According to David Chesson, director of information technology
for Continental, the companys highly automated facility
needs workers proficient in advanced manufacturing.7
Other SLC states active in recruiting tire manufacturers to their jurisdictions also offer worker training as an
integral component of their incentive packages.For instance, when Mississippi clinched an agreement with the
Japanese tire company Yokohama to build a facility in the
state, $11.75 million of the overall incentive package was
allocated to build a training center.Similarly, when the
Korean tire company Hankook announced a production
facility in Clarkesville, Tennessee, the states overall $72
million incentive package included funding for a training
center and worker training.In fact, Hankook CEO Seung
Hwa Suh specifically noted the areas human resources
as a major factor in influencing the company to select the
Tennessee site for its first U.S. plant.
Several other factors ranked high in these tire producers
locating their operations in the South, all factors that also
remain valid in terms of the foreign automakers rationale
in locating in the area.These include:
the ability to construct new manufacturing facilities,
incorporating the latest technologies, more efficiently and effectively at a Southern location, as opposed to
reconfiguring older facilities in the Midwest or in the
Northeast, areas where much of the auto industry was
located in prior decades;
the low or nonexistent rates of unionization, negligible
level of interest among Southern autoworkers to unionize and the seeming inability of unions to gain traction
in the region;

Table 1
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54

U.S. Tire Exports - States, Territories, Protectorates


and Other, January to August 2013 (Dollar Value)
State, Territory, Protectorate or Other

South Carolina
Ohio
Texas
Illinois
California
Tennessee
Georgia
Pennsylvania
Michigan
Florida
Iowa
North Carolina
Kansas
Unknown
Alabama
Oklahoma
Indiana
New York
New Jersey
Oregon
Arizona
Washington
Vermont
Virginia
Arkansas
Nevada
Kentucky
Louisiana
Puerto Rico
Minnesota
Wisconsin
Maryland
Nebraska
Mississippi
North Dakota
Colorado
Connecticut
Delaware
Montana
Massachusetts
Missouri
Utah
West Virginia
Maine
South Dakota
Idaho
Alaska
U.S. Virgin Islands
District of Columbia
New Hampshire
Hawaii
Rhode Island
New Mexico
Wyoming
U.S. Total

Dollar Value
$1,175,576,975
$321,690,843
$313,583,748
$236,518,131
$216,356,324
$181,377,543
$151,016,301
$144,215,404
$123,821,096
$120,316,129
$113,112,989
$109,482,803
$108,373,237
$94,941,537
$68,430,859
$64,874,392
$59,839,785
$49,673,139
$38,033,725
$37,241,488
$17,119,934
$16,724,239
$10,606,925
$6,441,255
$5,294,143
$5,209,723
$4,997,202
$4,648,256
$3,810,052
$3,720,642
$3,180,546
$2,832,132
$1,624,560
$1,394,180
$1,198,021
$906,612
$891,154
$800,794
$716,988
$688,752
$558,289
$553,413
$521,854
$338,163
$299,903
$283,559
$221,470
$57,056
$33,600
$19,533
$18,457
$10,341
$9,200
$3,824,207,396

Source: USA Trade Online, Foreign Trade Division, U.S. Census Bureau
(accessed on October 25, 2013)

Table 2 State Tire Exports: Dollar Value and Proportion of Total Exports, 2002, 2007 and 2012
2002
State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Puerto Rico
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Unknown
U.S. Virgin Islands
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Total U.S.

All
Commodities
8,256,625,015
2,504,026,781
11,860,585,251
2,807,924,308
92,177,510,782
5,525,068,999
8,310,816,154
2,017,215,189
1,065,857,961
24,461,847,789
14,424,428,364
514,046,486
1,962,059,173
25,674,569,735
14,955,934,515
4,754,035,607
4,988,554,376
10,680,138,859
17,583,093,976
1,979,995,444
4,476,772,985
16,705,106,823
33,969,067,417
10,398,380,715
3,064,865,298
6,786,748,197
386,286,991
2,510,570,316
1,178,846,902
1,864,325,452
17,002,077,386
1,187,118,588
37,757,072,501
14,727,665,151
860,281,888
27,773,875,727
2,445,438,281
10,080,408,491
15,745,838,357
9,734,890,916
1,121,045,880
9,649,661,354
596,454,081
11,628,711,600
95,427,206,268
33,169,390,003
258,237,634
4,541,606,194
2,522,840,056
10,809,146,961
34,740,516,705
2,246,458,079
10,678,446,355
553,497,895
693,103,192,211

2007
Tires

115,786,291
354,022
10,757,147
2,645,322
59,466,682
69,218
1,284,997
111,795
164,289
57,813,072
51,361,535
824,209
61,209,511
66,226,879
50,083,753
28,133,600
26,610,952
1,266,365
79,822
3,480,009
1,661,622
21,310,219
2,131,453
14,359,900
1,787,506
29,496
251,389
3,282,883
8,597,418
28,103,703
176,128,266
163,617
276,531,870
153,417,243
27,533,311
29,298,924
148,328
474,321,398
119,092
257,190,637
143,940,184
35,314,754
359,009
118,170
37,837,894
8,816,133
601,399
1,044,607
2,242,129,895

% of
2002
Total
5.2%
0.0%
0.5%
0.1%
2.7%
0.0%
0.1%
0.0%
0.0%
2.6%
2.3%
0.0%
0.0%
2.7%
3.0%
2.2%
1.3%
1.2%
0.1%
0.0%
0.2%
0.1%
1.0%
0.1%
0.6%
0.1%
0.0%
0.0%
0.1%
0.0%
0.4%
0.0%
1.3%
7.9%
0.0%
12.3%
6.8%
1.2%
1.3%
0.0%
0.0%
21.2%
0.0%
11.5%
6.4%
1.6%
0.0%
0.0%
0.0%
1.7%
0.4%
0.0%
0.0%
0.0%

All
Commodities
14,406,676,895
4,009,894,879
19,227,791,370
4,886,844,975
134,318,906,761
7,352,198,821
13,799,141,842
4,024,183,349
1,082,135,647
44,858,050,410
23,365,865,349
560,071,275
4,703,433,247
48,896,249,905
25,956,346,037
9,655,733,616
10,277,477,026
19,652,095,856
30,318,911,145
2,750,326,347
8,948,636,829
25,351,439,596
44,555,349,131
18,061,826,408
5,184,420,753
13,483,588,154
1,133,672,004
4,266,141,656
5,713,833,904
2,914,139,835
30,836,468,846
2,585,121,373
71,115,801,477
23,355,818,431
2,046,659,843
42,562,233,016
4,579,067,887
16,530,875,039
29,195,435,464
18,078,284,156
1,648,709,556
16,575,455,732
1,509,876,310
21,864,789,113
168,228,620,315
38,893,711,264
808,339,747
7,814,523,484
3,684,920,270
16,864,469,904
52,089,477,068
3,987,020,782
18,825,489,177
802,170,915
1,148,198,722,191

Source: U.S. Department of Commerce, (data pulled on October 28, 2013)

2012
Tires

102,450,454
59,703
14,449,715
12,541,524
174,550,517
2,693,340
535,451
1,117,120
58,100
107,452,050
50,124,137
1,292,627
51,126,160
81,369,921
114,888,755
72,129,425
41,962,261
5,620,728
282,885
4,589,424
3,942,371
16,553,170
8,016,045
34,946,904
46,284,728
2,631,684
838,467
2,262,074
76,223
57,525,485
303,620
93,501,163
258,555,900
1,476,569
321,251,750
222,300,220
88,197,241
135,615,458
2,208,844
773,680,002
1,051,391
203,116,221
233,659,199
55,354,691
12,967
666,195
140,211
71,623,825
10,955,177
1,222,055
5,004,492
3,603,690
3,495,872,329

% of
2007
Total
2.9%
0.0%
0.4%
0.4%
5.0%
0.1%
0.0%
0.0%
0.0%
3.1%
1.4%
0.0%
0.0%
1.5%
2.3%
3.3%
2.1%
1.2%
0.2%
0.0%
0.1%
0.1%
0.5%
0.2%
1.0%
1.3%
0.1%
0.0%
0.1%
0.0%
1.6%
0.0%
2.7%
7.4%
0.0%
9.2%
6.4%
2.5%
3.9%
0.1%
0.0%
22.1%
0.0%
5.8%
6.7%
1.6%
0.0%
0.0%
0.0%
2.0%
0.3%
0.0%
0.1%
0.1%

All
Commodities

Tires

19,572,398,339
4,543,401,424
18,405,117,608
7,619,984,195
161,879,918,490
8,167,350,412
15,961,497,066
5,113,440,747
2,014,637,512
66,201,800,100
36,067,246,541
731,664,010
6,119,107,885
68,127,010,189
34,431,316,562
14,635,708,756
11,696,221,621
22,125,951,067
62,892,633,604
3,047,707,915
11,741,088,756
25,612,846,301
56,993,402,032
20,826,764,033
11,786,805,196
13,927,684,071
1,576,876,497
7,458,644,218
10,260,686,265
3,488,610,845
37,277,506,952
2,967,650,904
81,358,857,002
28,832,674,500
4,308,687,941
48,647,707,663
6,578,478,210
18,386,035,272
38,829,058,903
18,669,444,714
2,370,156,815
25,110,306,961
1,556,241,031
31,139,656,598
264,708,659,761
47,903,048,670
867,387,121
19,255,792,830
4,139,591,084
18,280,677,429
75,618,900,503
11,336,865,617
23,116,666,561
1,420,924,817
1,545,708,500,116

107,141,921
996,011
42,185,095
5,658,978
332,258,040
4,024,500
1,259,305
1,823,127
147,631
186,389,720
159,326,800
111,949
292,599
358,975,534
121,488,658
199,633,079
158,221,982
6,676,790
6,957,796
627,814
1,723,831
1,588,130
197,826,051
3,607,861
3,641,457
2,083,039
4,277,079
2,291,139
14,491,259
313,677
65,358,978
4,090
111,946,873
184,804,806
2,863,219
595,332,650
111,492,985
66,588,977
212,182,394
2,122,463
15,387
1,729,588,920
1,147,366
286,485,781
435,391,537
151,588,365
73,845
1,172,423
12,767,093
14,268,324
29,489,672
1,972,876
7,665,952
967,262
5,951,333,090

% of
2012
Total
1.8%
0.0%
0.7%
0.1%
5.6%
0.1%
0.0%
0.0%
0.0%
3.1%
2.7%
0.0%
0.0%
6.0%
2.0%
3.4%
2.7%
0.1%
0.1%
0.0%
0.0%
0.0%
3.3%
0.1%
0.1%
0.0%
0.1%
0.0%
0.2%
0.0%
1.1%
0.0%
1.9%
3.1%
0.0%
10.0%
1.9%
1.1%
3.6%
0.0%
0.0%
29.1%
0.0%
4.8%
7.3%
2.5%
0.0%
0.0%
0.2%
0.2%
0.5%
0.0%
0.1%
0.0%

facturers maintained their operations in the state.While


Ohio still is a major player in the tire manufacturing industry, it no longer is the dominant force it was for many
decades.These emerging trends are evident in a review of
the latest tire export figures for the states.As an example, for the first eight months of 2013 (the latest figures
available), the three states with the highest tire exports in
terms of dollar value were South Carolina (1st) with $1.2
billion, Ohio (2nd) with $321.7 million and Texas (3rd) with
$313.6 million.See Table 1 for these details.
As evident in Table 1, South Carolinas dominance of
tire exports is quite significant: $1.2 billion in the first
eight months of 2013, clearly outpacing second placed
Ohios $321.7 million.In fact, export production in South
Carolina is four times as much as the level in Ohio, a statistic that would have been unfathomable a few decades
ago.Given that South Carolina had $1.7 billion in tire exports in 2012, it is likely that at the end of 2013, the states
tires exports would either be around the 2012 figure or exceed it.Of note, third placed Texas is a scant $8 million
less than second placed Ohio for the review period, another striking development regarding the ascent of the SLC
states in total tire production.Overall, the SLC states fare
impressively, and for the first eight months of 2013, five
of the top 10 tire exporting states in the country are in the
SLC region.

Bridgestone Tire Operations in Aiken County, South Carolina (photo courtesy of Bridgestone Americas Tire Operations
Newsroom)

the attractive incentive packagesincluding tax


breaks, an abundant labor pool and the ability to train
a workforce that has not worked in the industry previouslyoffered by Southern states;
the extremely cost-effective intermodal transportation
network in the region, spanning railways, highways,
airports and, most importantly, ports; and
other attributes such as the weather, reduced costof-living, lower or no personal income taxes, free or
inexpensive property on which to build assembly plants,
along with other attractive quality-of-life characteristics, all make Southern locations very enticing.8
This increasing focus by tire makers on opening production facilities in the South has impacted national
statistics.For a number of decades, Ohio was the rubber
capital of the world and many of the largest tire manu-

In terms of further probing the growing importance of


the tire industry in the SLC states, Table 2 provides details on tire export statistics from the 50 states for three
years, 2002, 2007 and 2012.The classification of the data presented in Table 2 includes export information for
rubber pneumatic tires used on motor cars; buses; trucks
(on-the-highway and off-the-highway); aircraft; motorcycles; bicycles; agricultural vehicles and machines; forestry
vehicles and machines; and construction or industrial handling vehicles and machines.9
As Table 2 demonstrates, there has been a substantial
growth rate in overall U.S. tire exports during the 10-year
review period.From $2.2 billion in 2002, total tire exports leapt to $3.5 billion in 2007 (an increase of 56 percent)
and then to $6 billion in 2012 (a whopping 70 percent expansion).Between 2002 and 2012, the growth rate was a
gigantic 165 percent.
The record of a number of SLC states was most impressive
too.Specifically, there are four SLC states that rank in the
top 10 tire exporting states in 2012 in the country: Florida
with $186.4 million (ranked 10th nationally and notch-

TIRE MANUFACTURING: SOUTHERN STATES ROLL TO THE TOP 5

ing 3 percent of total exports); Tennessee with $286.5


million (ranked 6th nationally and accounting for 5 percent of total exports); Texas with $435.4 million (ranked
3rd nationally and generating 7 percent of total exports);
and South Carolina, the state that secured the top export
spot in all three years under review, with 29 percent of
total exports in 2012.It should be noted that tire exports
in seven SLC states (West Virginia, Missouri, Mississippi,
Arkansas, Kentucky, Louisiana and Virginia) amounted
to less than 1 percent of the cumulative amount exported by the 50 states in all three review years.The export
numbers for the remaining four SLC states amounted to
less than 2 percent in two states (Alabama, Oklahoma), less
than 3 percent in Georgia and 3.1 percent in North Carolina of total U.S. tire exports.
In terms of additional details, South Carolina raced to the
top of national rankings in terms of tire exports in the last
decade and has totally dominated the tire manufacturing
and exporting spheres in the last five years.With $474.3
million in tire exports in 2002 (21 percent of total national
exports), the state exported $773.7 million in 2007 (22 percent of total national exports) and then rolled to lead U.S.
tire exports in 2012 with an overwhelming $1.7 billion
(or 29 percent of total national exports).The fact that the
state currently exports nearly one-third of all U.S. tire exports is a major testament to the record of South Carolina
in pursuing tire manufacturing and exporting companies
to locate and expand in the state.
Additional details on some of the tire manufacturing operations in the SLC states follow:

South Carolina
2012 was a banner year for South Carolina in terms of tire
production:Three of the major tire manufacturers in the
world Michelin, Bridgestone and Continental either
announced expansions or relocations to the state over the
space of a few weeks.
Continental:In March 2012, Continental publicized
construction of its new plant in Sumter, South Carolina.10While the company will invest about $500 million
in total at the Sumter facility and generate about 1,600
new jobs, the plant will manufacture passenger and light
truck tires to meet demand from both aftermarket business and automotive manufacturers.Phase I of the project
will reach a production capacity of approximately 5 million units per year in 2017, and Phase II will propel the
plants maximum production capacity of 8 million units
per year by 2012.The state provided $31 million in incen-

6 TIRE MANUFACTURING: SOUTHERN STATES ROLL TO THE TOP

tives to the company, while Sumter County provided the


330-acre site to the company.
Michelin:In April 2012, Michelin announced expansion
plans creating 500 new jobs many in a new facility in Anderson County and investing $750 million to build its
ninth factory in the state and expand capacity at a plant in
Lexington.11Michelin opened its first South Carolina facility more than 40 years ago and has continued to invest
routinely in its operations; $5 billion in manufacturing
and an additional $2 billion in its research and development since inception.The company already is the largest
manufacturing employer in the state (in excess of 8,000
workers).For the new plant, the state offered Michelin
$9.1 million in grants for infrastructure improvements.As
noted earlier, Michelins world-class, product expertise in
earthmover tires the biggest Michelin builds is propelled by the unprecedented global demand for these
tires.According to Michelin officials, nearly every earthmover tire is sold before it is even produced.
Bridgestone:Also in April 2012, Bridgestone announced
the largest industrial development project in South Carolina history, with its $1.2 billion investment to expand
its passenger tire plant and build a new facility to build
off-road tires for the mining industry.12In total, the investment will generate an estimated 850 new jobs.Even
with the announcement of the Continental and Michelin
facilities a few weeks before, Bridgestone remains the
largest in state history and in the history of the Japanese
tire company.Of the $1.2 billion, $346 million is being
spent on enhancing the existing tire plant in Aiken, South
Carolina; the remainder will be allocated toward the new
facility planned for nearby Graniteville. Production at the
new facility will commence in July 2015 and construction
is ongoing.The new and expanded Bridgestone operation
in Aiken County eventually will produce 37,750 tires daily
or 13.4 million tires annually.In terms of financial incentives, Bridgestone received $15.5 million from the state.13

Mississippi
Yokohama:In September 2013, Yokohama Tire broke
ground in West Point, Mississippi, on a one-million-square-foot plant that will include production,
warehousing and operations facilities.14This is the Japanese tire companys first U.S. manufacturing facility
built from the ground up.During Phase I of the process,
the plant will produce 3,000 tires daily (approximately
1 million annually), involve a $300 million company investment and generate 500 direct jobs.Officials estimate
that the 500 jobs would have an average salary of $35,000,

In 2012, Michelin, the largest manufacturing employer in South Carolina, began the construction of a new earthmover tire manufacturing plant in Anderson County. The company also is expanding its earthmover tire facility in Lexington. The two projects represent a $750
million investment and will create up to 500 new jobs. The new plant will be Michelins 19th manufacturing facility in North America and
its ninth in South Carolina. More than 8,000 of Michelin North Americas 22,300 employees are based in South Carolina.
(Courtesy of Michelin North America, External Communications Department)

a boon to the economically depressed area in Clay County, Mississippi.Going forward, Yokohama forecasts
that the company will plough in an additional $700 million (total investment of $1 billion) at the facility and
raise employment by another 1,500 direct jobs for a total of 2,000 new jobs.
In terms of incentives provided by state and local governments, Yokohama received a total of $130 million spread
over a multi-year period.The state incentives include $70
million for Phase I and authorization up to $60 million
more in bonds for expansions.For Phase 1, the state also
will purchase land for Yokohama for $9.5 million, spend
$48 million on infrastructure and build an $11.75 million
training center.In addition, the company will receive up
to a 25-year exemption on state corporate income taxes;
concessions on local property and other taxes and pay the
local government and school district a fee in lieu of local
taxes.These fees would take the form of a $900,000 payment per year for local schools and $800,000 per year split
between the Clay County and West Point local governments.Local governments in Clay County have pledged
about $12 million in incentives to Yokohama.In total,
state officials estimated that tax exemptions could total $200 million or more but expect the state to recoup its
entire investment in a worse-case scenario within 10
years or sooner.

Tennessee
Hankook:In October 2013, after staving off stiff competition from a number of states in the region, Tennessee
secured an agreement with South Koreas Hankook Tire
to build its first U.S. plant in Clarkesville in Montgomery
County.15The $800 million, 1.5-million-square-foot plant
will be built in two phases: Phase I will involve an opening
by 2016 with 1,000 workers, and Phase II, two years later,
adding the final 800 workers.Upon completion, the facility will manufacture 11 million tires a year and will be
Clarksvilles largest employer.While construction will
begin early next year, hiring for the manufacturing jobs
will start in 2015.
Hankook officials cited a number of reasons for their selection of Tennessee, particularly the states workforce.In
addition, officials noted that Tennessee is in the middle
of the United States and the impressive transportation
infrastructure in place at the Clarksville site, including
interstate highways, airports, railroads, along with access to the Mississippi River were strong incentives for
the company selecting the state. Railways in particular were an important consideration, and Hankook will
be able to utilize the R.J. Corman Railroad, a short-line
company, whose tracks tie in with the CSX mainline in
nearby Guthrie, Kentucky.It is expected that the railroad
will run a spur to the Hankook plant, as it has to other

TIRE MANUFACTURING: SOUTHERN STATES ROLL TO THE TOP 7

companies located in the industrial park that the tire manufacturer will be sited.
In terms of incentives, Tennessee provided a state incentive package of $72 million to the company, an amount
that includes worker training, construction of a training
facility and a Korean cultural center in the Clarksville area.The two local governments involved, Clarksville and
Montgomery County, donated the plant site to the project.

Georgia
Kumho:A tire manufacturing project that was a number of years in the making was announced in September
2013.The South Korean tire company, Kumho, indicated
that it is ready to build a one-million-square-foot facility in Bibb County, Georgia.16The $225 million Kumho
investment will create more than 300 direct jobs, with hiring expected to commence in 2016 and 2017.

Conclusion
In conclusion, the economic success of the dozen or so
foreign automakers blossoming in a number of SLC

states has proven to be a magnet for an array of automotive-related companies locating their operations in the
region as well.Combined, these automotive companies,
automotive-related and ancillary operations have generated tremendous economic gains to the economies of
the SLC states, the region and the nation as a whole.An
emerging trend in recent years in this connection is the
location and expansion of a number of tire manufacturing companies to the region.These companies seek to
take advantage of the cluster effect created by the presence of the dozen or so foreign automakers and thousands
of auto parts suppliers in the vicinity, along with a number of additional competitive advantages proffered by the
region.Tire export data clearly demonstrate the increasing dominance of the SLC region, with South Carolinas
tire exports clearly surpassing states such as Ohio that
dominated these numbers in prior decades.In the last
two years, whether it is Yokohama in Mississippi or Hankook in Tennessee or Continental in South Carolina, the
draw of the Southern region as the locus of automotive
activity has resulted in the South emerging as the Tire
Hub of the United States.

Endnotes

1 For over a decade now, the SLC has focused extensively on the economic impact of the auto industry in the South.In 2003, the SLC
released a report entitled The Drive to Move South: The Economic Impact of the Auto Industry in the Southern Legislative Conference
States.Since that time, the SLC has featured the topic in subsequent publications, presentations to legislative bodies and other
organizations, media interviews and as a discussion topic at SLC annual meetings.For more information on the SLCs focus on the
topic, please see http://www.slcatlanta.org/Publications/index.php?topic=8.
2 Tire Makers New Home, The Wall Street Journal, April 16, 2012.
3 Ibid.
4 South Carolinas Tech Savvy Workforce Draws Tire Makers, The Wall Street Journal, April 10, 2012.
5 Tire Makers New Home . . .
6 South Carolinas Tech Savvy Workforce Draws Tire Makers . . .
7 Ibid.
8 CanagaRetna, Sujit M., Paving The Road To Prosperity: Auto Industry in the South Faring Well in Contracting National Economy, State
News, The Council of State Governments, August 2008, http://www.slcatlanta.org/Publications/EconDev/pavingtheroad.pdf.
9 Classification of Exports Rubber and Articles Therof, Section VII Chapter 40, U.S. Census Bureau.
10 MarketWatch Top Stories, March 28, 2012, www.marketwatch.com and Gov. Celebrates Continental Tires New Sumter Plant, The
Spartanburg Herald Journal, March 28, 2012.
11 Michelin Invests in Future of Company, Upstate, The Greenville News, April 10, 2012; Michelin to Build a New $750M Plant in Anderson,
The Times-Record News, April 10, 2012; and, South Carolina Lures Michelin Jobs in Latest Manufacturing Coup, The Charlotte Observer,
April 11, 2012.
12 Bridgestone Helps to Make S.C. A Hub of Tire Industry, The Augusta Chronicle, April 10, 2012 and Bridgestone Unveils Aiken County
Plant Expansion, The Augusta Chronicle, April 1, 2013.
13 South Carolina Lures Michelin Jobs in Latest Manufacturing Coup . . .
14 Yokohama Incentives Passed by Legislature, The Clarion Ledger, April 26, 2013; Legislature Approves Funding for North Miss. Tire
Plant, April 28, 2013; The Clarion Ledger, April 26, 2013; and, Yokohama Breaks Ground on Mississippi Truck-Tire Plant, FleetOwner,
September 24, 2013.
15 South Korean Tire Company to Build Plant in Middle TN, Reports Say, The Tennessean, October 11, 2013 and Clarksville Looks Best to
Korean Tire Maker Hankook, The Tennessean, October 15, 2013.
16 Kumho Tire Ready to Launch $225M Factory in Bibb, Bring 300 Jobs, The Atlanta Business Chronicle, September 5, 2013.

SERVING THE SOUTH

THE SOUTHERN OFFICE OF THE COUNCIL OF STATE GOVERNMENTS


PO Box 98129 | Atlanta, Georgia 30359
ph: 404/633-1866 | fx: 404/633-4896 | www.slcatlanta.org