Why a Vietnamese EV maker is building a factory in the Southern Auto Corridor

Hello to our CEO and site consultant readers. There are all kinds of sales pitches out there to capture your next expansion, startup or relocation. Here are a few from outside the South:

New York (From Empire State Development): “New York State is committed to attracting and aiding in the expansion of businesses to help create jobs, especially leading-edge businesses and manufacturing companies looking to make significant capital investments.”

SB&D’s take: New York State is one of the state leaders in the reshoring of semiconductor companies and New York City remains the center of North America’s financial services industry. 

However, net domestic migration has been negative every year for decades, peaking at lows in the early and late 1970s, and right after 9/11, to net migration record lows in 2020 and 2021. Census estimates that just since 2020, New York has lost nearly 1 million residents to other states.

If New Yorkers are leaving the state in such numbers, companies looking to locate their operations should certainly ask why. And in a period when labor has essentially vaporized, losing that many from the labor shed should cause an immediate concern to any company wishing to expand, start up or relocate to New York.

Here is what one politico in New York said about population loses in his state: Republican state Senator Jim Tedisco of the 44^th district said if population losses continue unchecked, New York could lose three congressional seats in the 2030 Census, further eroding the state’s influence in Washington.

“We won’t be the Empire State anymore, we’ll be fast moving towards being called the empty state,” Tedisco said. “And we’re not only number one out-migration. Last year during the redistricting, and during the Census, we were one of seven states that lost another congressperson.”

Illinois: Illinois is home to many Fortune 500 headquarters, almost all of which are in the Chicago area. But, like New York State, name another city in Illinois that is an economic development dynamo other than Chicago? 

SB&D’s take: Illinois is losing population and the losses are not waning. Not unlike New York State, the population losses are increasing with every two-year period. (See chart.) Again, if labor is leaving Illinois in droves and the exodus is multiplying each year, what are the issues that a growing company should be concerned about?

Was the lack of labor in Illinois the reason why Caterpillar relocated its headquarters to Irving, Texas? No, according to the publication “Illinois Policy:”

“Expenses were a major factor in Caterpillar’s decision (see Toyota below). The total cost of living in suburban Deerfield, Illinois is 26% higher than Irving, Texas. For example, Illinois commuters are paying the fifth^–highest gas prices in the nation. Illinois residents also pay the nation’s highest combined state and local tax burden.” 

I found over the years that Caterpillar still operating its Peoria, Ill. world headquarters as being a real reach at best. Caterpillar, after several strikes by its union members multiple times in the 1990s and beyond warned Illinois officials’ way back then. In fact, Caterpillar from the 1990s to today have essentially told unions to “drop dead” and several new, non-union plants started a major shift in Caterpillar’s strategy, which essentially was anti-union. Here is more from “Illinois Policy:” 

An AI report from an unknown source told me exactly what I already knew. “Yes, Caterpillar has non-union plants, including some in the Southern United States. For example, Caterpillar’s engine remanufacturing facility in Corinth, Mississippi is not unionized. 

“Caterpillar is a unionized company, but it has moved some production away from unionized sites in the Midwest. In 2023, Caterpillar and the United Auto Workers (UAW) union reached a tentative agreement that included a moratorium on closing union-represented plants.” 

California: The largest state economy in the U.S. has a problem with retaining its citizens, even its legal and illegal immigrants. California is simply too expensive to operate a business, live or work, unless you must. 

Remember, Toyota relocated its North American headquarters to the Dallas-Fort Worth area because housing costs in Southern California were out of sight when they made that announcement in 2014. 

SB&D’s take: The South is home to lots of foreign automakers’ headquarters, including Toyota and Caterpillar in D/FW; Nissan in Nashville; Mercedes-Benz in Atlanta and VW in Virginia.

Jim Lentz, the North American CEO for Toyota in 2014, cited that he wanted the headquarters closer to the automaker’s manufacturing operations in Texas, Kentucky and Mississippi. He also said in an aside that Toyota headquarter workers who would move with the company to Texas (over 3,000) could buy two homes there with the money they make off their homes in California — a permanent home and a vacation home.

Population Losses of profiled and selected states 

2018-2019     2019-2020      2021-2022 2022-2023

New York     

-80,967           -126,355          -319,020 -102,000

Illinois          

-57,668           -79,487            -104,437 -33,000

California    

-53,502           -12,280           -398,295 -75,000

Source: Census

Population Gains – Selected Southern States

“The growth in the South was predominantly fueled by domestic migration, with more than 706,000 individuals relocating to the region, stretching from Texas to D.C. since 2020. Additionally, net international migration contributed nearly 500,000 new residents. 

Texas stands out as the state with the highest population increase, welcoming over 473,000 people, followed closely by Florida with 365,000 new inhabitants. South Carolina and Florida emerge as the fastest-growing states. The South’s population grew by 1.4 million people in 2023, bringing the total population in the region to 130,125,290. This was the largest population gain since 2018.

So, when scouting a location, look carefully at population gains or losses. If working with a site consultant, ask them to run a 20-year population study. In other words, can the labor that you have be backfilled or replaced by future populations? The number of available jobs are sometimes double the number of unemployed in some states, look at things on the local level . . . you know, where your interests are.

According to the Census Bureau, the U.S. population grew by 1.6 million from the summer of 2022 to the summer of 2023. The South accounted for almost 87 percent of that population growth, or 1.4 million of the 1.6 million of gains in the entire country. 

That is unheard of, or is it? Nope. The South has gone from a total population of 50 million people in 1960 to 135 million in 2023 and most likely 133 million by the end of 2025 at the current rate of growth. 

U.S. Regional Populations

Region           1960                   2022  

South               50 million        128 million

West                26 million          74 million

Midwest         52 million           69 million

Northeast      50 million           57 million

Source: Census