Luring a supplier

Published 12:00 am Monday, March 3, 2003

Though a great deal of recent conversations about the quest to get a Hyundai supplier have been about how to best entice companies, one state official close to the negotiating process thinks incentives are not the primary attraction.

Shabbir Olia is the manager of the Community Development Block Grant program for the Alabama Department of Economic and Community Affairs. His organization has been one of the main state-level groups working with the influx of Korean companies looking to supply the new Hyundai plant near Montgomery.

With about 10 more companies set to announce locations for factories - and the much-coveted jobs that go along with them - the competition by municipalities to offer inducements to these firms has been heating up.

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However, Olia said the incentives, which could legally include cash, are not huge lures for many of the companies.

&uot;Incentives play a secondary role. Once there are two or three equal cities, only then may incentives play a role,&uot; he said.

The companies are looking for other things as they consider where to locate, he said.

&uot;Different cities are doing different things. Most are providing infrastructure such as water, sewer and road improvements. This is first and foremost,&uot; he said. &uot;Sometimes they need to seek grants. Other times they are kicking in some site improvements. Sometimes they donate the site itself.&uot;

Are any cities taking advantage of the recent decision from Attorney General Bill Pryor, which allows municipalities to give cash to companies?

&uot;None to my knowledge,&uot; he said. &uot;If the cities are giving cash, I don't know about it.&uot;

Already HS R&A, Ltd. Has announced plans to build a $20 million plant which will provide 350 jobs in Enterprise and Shin Young Metal Industrial will hire 400 people for its new plant in Luverne.

Whether those nearby plants hurt Pike County's chances of landing a supplier remains to be seen.

&uot;They want these supplier facilities to be close, but not too close to each other,&uot; Olia said. &uot;They don't want to compete for the same labor.&uot;

Though the area to the southeast of Montgomery is a large labor market, Olia said factories consider that employees may be willing to commute up to 40 miles to get to work, which could mean that Troy residents could reach either of the plants in other towns.

The competition for the plants is fierce for a reason, Olia said.

&uot;Economic development is important to most communities. We did a survey of cities and economic development was on the top of the list. We are talking about creation of jobs. The earnings turn over several times, what you call a multiplier effect. The jobs can spur some other growth in the area,&uot; he said.

Observers expect the suppliers to make decisions within the next few weeks. Hyundai has announced plans to begin test production by the summer of 2004 and the first wave of tier 1 suppliers will need to be in place by then so logistics and other concerns can be coordinated.

Some of the main funds to get the suppliers have come through ADECA grants.

&uot;ADECA's Community Block Grant Money helps with infrastructure improvement. At least 51 percent of the job must be available to low and moderate income people. Their earnings have to qualify as low income and, that way, unemployed or underemployed people could take the job and see their earnings grow,&uot; he said.

ADECA provides some incentives for worker training, working closely with the Alabama Development Office.

Stephen Stetson can be reached at stephen.stetson

Editor's Note: This is the second in a series on Hyundai suppliers.