How the South (Was) Won: The Emergence of a New American Auto Industry

Publication Type:

Conference Paper


Gerpisa colloquium, Paris (2011)


How the South (Was) Won:
The Emergence of a New American Auto Industry

When Volkswagen presented its new, American-built Passat to the public in January 2011, it was the talk of the (Detroit Motor) Show. To support its renewed drive into the world's now second largest market for automobiles, the company which is aiming to become the world largest automaker by 2018 set up a dedicated new manufacturing facility for a product tailored to the local market. The plant in Chattanooga, Tennessee is only the latest in a series of new auto manufacturing plants which have literally sprung up across the American South over the past thirty years.

Already there is talk of increasing the capacity of the VW plant to half a million car per year, revoking memories of another automaker that once declared its intention to build that many vehicles in Tennessee and meanwhile has completely withdrawn assembly from there (GM/Saturn), and yet another one which actually has grown its business to that size from more humble beginnings (Nissan).

The emergence of a sizeable and full-blown automotive industry (including all sorts of suppliers, an R&D network, and even corporate HQs) in the American South and the complete makeover of the American automobile industry it has brought about makes for one of the most fascinating stories the industry has to tell – yet one that recently has tended to become overlooked with attention primarily focused on growth in the BRIC countries (mostly China), or all-new topics like the hype about E-mobility (which now doubt will substantially redraw the lines of the auto industry).

The paper/presentation will trace the development of this still relatively new regional center of automotive production and will put it in the context of a rapidly globalizing industry. It will argue that the emergence of a new automotive in the American South (or Southeast, if looked upon in pure geographic terms) is on the one hand the result of a rigorous, relentless and – certainly by the standards of its proponents – highly successful drive for auto-industrial recruitment. It is, at the same time however, a manifest documentation of international automakers turning abstract global market strategies into concrete facilities.

Triggered by Nissan's 1980 decision to put its first American assembly plant in a Southern state, others followed quickly: Japanese OEMs and suppliers in the first wave, German premium automakers and their suppliers in a smaller second wave (coinciding with additional plants by the Japanese Big Three), and the Koreans in a third. Volkswagen is only the latest automaker to join the ranks – most likely not the last, though.

Talk of "transplants" - the term widely used for the first Japanese assembly plants - has by now almost universally given place to a more respectful reference to the "new domestics", accounting for the fact that the manufacturing facilities have become part of the economic fabric of their host country and in many cases the social fabric of its localities. In turn, the automakers and suppliers which operate these plants have assigned each facility a specific role in the market strategy and the global automotive value chain of its respective corporate parent.

There has been no shortage of scholarly explanations, but interestingly, the various streams and bodies of literature have also come (and gone) in waves. Concepts that will be touched upon in the presentation include regional industrial development theories; the debate on new industrial spaces and industrial districts; the (mostly business-minded) literature on globalization and building and managing global enterprises; the "lean production" school focused on the perceived masters of lean production, the Japanese (and most of all Toyota of course); the global-local nexus (i.e. localizing products and production as part of a global strategy), among others. The presentation will also try to address the question to what degree this new auto industry makes for a departure from the long-standing pattern of a "branch plant economy" which had traditionally characterized the American South.

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