Entrepreneurial Governance in the Neoliberal Era

Local Government and the Automotive Industry

Oliver Cowart

• Publisher: Routledge
• Year: 2021
• Print ISBN: 9780367620226
• eBook ISBN: 9781000452204
• Topic: Social Sciences
• Subtopic: Economic Policy
• Index: Social Sciences

Against the background of a growing tendency among state and local governments in the United States to vie against one another, spending public funds, and foregoing corporate tax revenues in order to attract private investment, this book offers an analysis of local economic development and business recruitment in the automotive industry. Asking why localities felt they could – and, more importantly, should – make deals with private capital in the first place, this book examines the shift toward entrepreneurial local governance from a global and historically informed perspective. Through a study of the 19 greenfield automotive assembly plants constructed in the United States during the neoliberal era, the author draws on interviews with corporate and government elites, to chart the connections between increasingly global competitive industry pressures and changing attitudes toward "incentivizing" private investment. Studying the development of an approach that has partially reoriented local governments away from managing localities and towards helping manage transnational capital flows by absorbing some of the increasing risk of long-term capital investment, Entrepreneurial Governance in the Neoliberal Era will appeal to scholars of sociology, politics, and urban studies with interests in globalization, the sociology of work and industry, the sociology of development, and neoliberal governance.

1 Introduction, context, and cases

DOI: 10.4324/9781003107569-1

In the early months of 2014, something strange happened in Chattanooga, Tennessee. Rumors had been circulating in trade journals and local papers that the German automaker Volkswagen was considering a plant expansion in North America to produce a new mid-sized sport utility vehicle, and the recently opened VW plant in Chattanooga was in the running along with another site in Mexico. However, a looming February vote by the Chattanooga plant employees on whether or not to accept United Auto Workers (UAW) organization was loudly denounced as threatening that site’s chances for winning the new platform. These fulminations did not issue from the lips of VW executives; indeed, officials at the plant had already organized works’ councils to deal with daily plant issues and had freely allowed UAW representatives to distribute literature to workers in the facility (Pare and Sher 2014). Rather, it was then Governor of Tennessee Bill Haslam and state and federal lawmakers who raised their voices against the specter of plant unionization. What is most surprising is that Tennessee lawmakers threatened to revoke their offer of incentives and subsidies to Volkswagen for the proposed expansion if unionization of the plant was approved – incentives that amounted to nearly half of the proposed $600 million dollar investment (Nelson 2014). Tennessee Senator “Todd Gardenhire said VW officials are ‘in your face. It’s their way or no way. They’ve decided by-golly they want the UAW here. They’re not listening to the community’” (Pare 2015). In a face-off against efforts to organize workers in their trophy manufacturing plant, Tennessee politicians threatened disinvestment – in their own state.

If the state representatives in Tennessee were perhaps a bit more vocal and threatening than in most other cases of plant unionization efforts, the anti-union sentiment was not. Indeed, anti-labor attitudes are a perennial feature of southern culture and political society; as soon as the Taft–Hartley Act allowing them to do so passed in 1947, almost every state in the Confederate South rushed to adopt so-called “right to work” laws (bills or laws that ban obligatory union dues) (Cobb 1993; Hülsemann 2001). Nor were the incentives and subsidies offered out of the ordinary. As we will see this practice, known as industrial recruitment, has become increasingly commonplace in the United States since the 1980s. There are some curious little puzzles here. If Tennessee recruited Volkswagen to create jobs in the first place, then how would allowing those workers at that plant to vote on unionization be ignoring the community? But local reporters have our answer for us: “Republican lawmakers, including Haslam and [US Senator] Bob Corker [Republican from Tennessee] complained loudly that the UAW would hinder economic development efforts”(Pare and Sher 2014). The community, it seems, is those most concerned with local economic development. In the end, tellingly, it was the workers themselves who decided the outcome by voting against unionization.

The states of the South have had a long history of being aggressive in trying to bring in industrial development and investment from capital, but in the past four decades or so, the efforts of these states to pursue development have changed in some critically important ways. As we will see, the strange kerfuffle over the Tennessee plant expansion encapsulates these changes quite well. Here, we see local governments vociferously decrying the political organization of labor, citing the harm it will do to efforts to pursue economic development, and to the community more broadly. And even though economic development efforts are nominally undertaken to bring jobs to that community, when the workers who work in those jobs contemplate organizing around their own political interests, governors and lawmakers say they are harming the community they constitute. Further, even though VW was publicly indifferent to unionization, the economic developers themselves protested it would have a negative impact on economic development efforts in the state. One might wonder just what local governments are doing here? I certainly did. This book is the result of the research and questions that have sought to dig beneath the surface of the economic development activities of local governments. I wanted to understand how these activities reflect fundamental changes in what government is and does, and how recruitment practices have altered relations between firms, localities, and workers.

When VW first came to Tennessee in 2008, the state offered up $577 million dollars in incentives for the plant, which were meant to make the state and locality more attractive to the global automotive producer than other competing locations. These incentives consisted of the suspension or abatements of various taxes by state and local governments as well as direct expenditures on the land for the plant site, worker training, and other up-front costs that go into starting a “greenfield” (or not previously developed) industrial project.¹ While very high profile projects such as Amazon’s HQ2 debacles occasionally make the national news, today it is commonplace to open a local news app or paper to a story about a corporate headquarters, or sports stadium, or data processing center being won by a local town and state who work together to incentivize global corporations with lucrative agreements. While the complexity of such public–private agreements limits the quality of systematic analysis (much more on that in a moment), one attempt by the New York Times to track this kind of activity painted a stark picture:

A portrait arises of mayors and governors who are desperate to create jobs, outmatched by multinational corporations and short on tools to fact-check what companies tell them. Many of the officials said they feared that companies would move jobs overseas if they did not get subsidies in the United States…over the years, corporations have increasingly exploited that fear, creating a high-stakes bazaar where they pit local officials against one another to get the most lucrative packages. States compete with other states, cities compete with surrounding suburbs, and even small towns have entered the race with the goal of defeating their neighbors. (Story 2012)

The questions

Story begs the question here, are local leaders really desperate and short on resources, and whether this explains why New York City and its boroughs would shell out billions for a company that had profits worth more than 20 billion dollars in recent years? Scholars of development would note that the state in capitalist societies has a long history of acting as midwife to capitalist development, investment, and growth from imperialism (Chase–Dunn 1998; Wallerstein 1974) and the enclosures (Brenner 1977; Marx 1976) to the construction of interstate road systems and the formation of welfare regimes (Hicks 1999; O’Connor 1973). Moreover, critical geographers and political economists began to note in the 1980s that local governments – particularly in wealthy nations – started to behave in strange risky behaviors, getting thick with private partners, u...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Dedication
• Contents
• Acknowledgments
• 1 Introduction, context, and cases
• 2 Theorizing local development strategies
• 3 Patterns in the industry – patterns in location
• 4 The industrial recruitment of automotive assembly plants in the South
• 5 The business of partnerships
• 6 The political and economic in partnership
• 7 Axiomatic? A weird, blurred line
• Appendix 1: Greenfield plant locations and incentives packages detail
• Appendix 2: Sample of prompts to business development professionals
• Index