Mercedes Benz to Atlanta: Incentives and Location

After Mercedes Benz announced its plans to relocate from Montvale, New Jersey to Atlanta two weeks ago, the speculation began for the reason why. In the end, it appears that the move, which will bring more than 800 jobs to north Fulton County, came as a result of incentives offered the company and metro Atlanta’s location and proximity to Mercedes’ business and business partners.

Let’s start with incentives. According to the Detroit News, the total incentive package offered by the Georgia Department of Economic development amounted to $24,540 per job, or $23.3 million. That number assumes 950 new jobs, slightly more than the initial workforce Mercedes is expected to bring, but certainly within reason. The incentives offered do not include anything from Fulton County, so the total offered may actually be higher, with some sources claiming a number between $40 and $50 million.

But, incentives aren’t everything. That brings us to location. Georgia is already home to Kia in West Point, and the Port of Brunswick, a key transshipment location for vehicles between the U.S. and overseas. Mercedes has a plant a few hours away in Alabama. And Hartsfield-Jackson Airport offers direct flights to and from Stuttgart, the company’s German home.

Another reason is the concentration of automotive suppliers in metro Atlanta, according to Autoblog:

Increasingly, Atlanta has emerged as the capital of this automotive region. Croteau says there are approximately 250 auto-related companies that operate in its vicinity that employ more than 20,000 people and the Center for Automotive Research says Georgia overall has more than 70,000 auto-related jobs throughout the state. Beyond the big names of GM, Porsche and now Mercedes-Benz, it’s suppliers that make up the bulk of the operations.

“We’ve seen tremendous activity from suppliers,” [Tom Croteau, deputy commissioner of global commerce for the Georgia Department of Economic Development] said. “When we look at our portfolio of projects that are active and moving, it’s sometime as high as 40 percent that are coming out of the auto industry or related in some way. Maybe it’s a company that’s both autos and aerospace or a plastics company, but it’s a remarkably high percentage over the past year-and-a-half or two years. So right now, the automotive industry is paramount to us, and we’re paying more attention than ever.”

The Center for Automotive Research study cited in the quote cites Georgia’s workforce development training programs and the alignment of training programs with the needs of employers as a reason so many automotive suppliers are located in the metro Atlanta area.

Comparison of the cost of living between New Jersey and Fulton County.  credit: NorthJersey.com
Comparison of the cost of living between New Jersey and Fulton County. credit: NorthJersey.com
For Mercedes’ employees, the headquarters location, expected to be in the Sandy Springs area of North Fulton County, offers its own amenities. According to Autoblog, younger employees can live in Atlanta, while those wishing to raise a family can live outside the Perimeter. And, as the graphic from NorthJersey.com points out, the cost of living in Fulton is much lower than that of Bergen County, Mercedes’ former home.

One must wonder, however, if the editors at Autoblog were highlighting a potential issue with moving to the Peach State when they included this picture in their story. It’s the “Walking Dead” view of downtown Atlanta seen as you approach the city on Freedom Parkway at the Jackson Street bridge, apparently taken during last year’s snowmageddon.

16 comments

  1. saltycracker says:

    At dinner last night with a FL neighbor whose main residence is Montvale they expressed concern for the many large corporations leaving NJ., naming several.

    Their taxes, particularly real estate were, as the chart here shows, very high. They also fear that this drain and the high pension benefits of public employees will drive taxes much higher. They plan to sell that home and move to Virginia as their primary residence.

    NJ is prime hunting grounds for GA relocations.

    • androidguybill says:

      We should not even be in the business of hunting relocations in the first place. It is a losing game as it is generally the companies and industries that are on the decline who relocate because they are trying to pinch every penny that they can. So we pay all that money to get them to relocate here, only to have them either A) start laying off their workers as soon as they get here or B) relocate again when someone bribes them to. Sports teams are famous for doing that. And look at NCR: because their old business model (old style electronics hardware used by retail stores) is long obsolete thanks to smart checkout terminals, they keep trying to reinvent themselves. So they first move to Dayton, Ohio to be near the University of Dayton, then they move to Gwinnett County for lower taxes and real estate (and employee wages), now they are moving again to downtown Atlanta to be near Georgia Tech … all in the last 10 years.

      Healthy growing companies don’t relocate. And they don’t even mind the taxes and unions in places like California and the northeast because those areas have the best K-12 schools (public and private), the best universities and the best workers as a result. Apple? They aren’t going anywhere. Google? Ditto. Microsoft? Same deal. Yahoo? They will probably move around a few times before they finally go bankrupt. And when that happens, the red states will line up, offer them tons of incentives, and then brag about how the business climates in low tax, small government, low regulation right to work states are so much better. NCR claims that they are moving near Georgia Tech to get the tech talent, but Home Depot, a healthy company, moved their IT operations from Georgia to California because the Georgia talent wasn’t good enough! Having Georgia Tech is great, but having Stanford, UCLA, Cal-Berkeley, UC-San Diego, USC, Fresno State AND Cal Tech is better. The same for the northeast. They will lose Mercedes (a foreign company to begin with) because our auto industry is being battered because young people would rather bike or ride the bus than buy luxury SUVs like they would in the 80s and 90s. But the big banks, private equity companies, insurance companies, mutual fund companies etc. aren’t going to leave New Jersey (or New York or Connecticut). Why? Because that is where the talent is. The banking, finance, accounting etc. schools at Georgia Tech, UGA, Emory and Mercer don’t have anything on similar schools at UConn, Rutgers, Syracuse, Pitt and the Ivy League schools. No top, healthy, desirable company that pays their people – the ones who get the work done, not the upper managers mind you – $250,000 a year is going to move here because virtually none of our workers are worth that type of money.

      King cotton is dead. We have to decide if we want to live in a sleepy little economy where we subsist mostly off the federal government redistributing to us wealth earned somewhere else in the country and whatever dying, low profile/low desirable/low paying companies or industries we can attract, or we can create the workforce and entrepreneurs capable of building our own companies. We have moved from an agricultural/manufacturing economy to a tax credit/incentives economy. That is not a good direction to take. It is not sustainable for one thing, and it doesn’t result in a large number of healthy companies paying high salaries for another.

      It is easy to point the finger at New Jersey, but once you remove crime-and-poverty plagued Newark from the equation, New Jersey is actually a very good place to live, work and send your kids to school. By contrast, crime-and-poverty plagued Atlanta actually is one of the better places to live, work and receive an education in our state, especially if the alternative is outside the metro area entirely. I would bet you that there aren’t that many places in New Jersey where the public school system is the largest employer, which is the case for large swaths of Georgia. Or that schools aren’t furloughing their employees or dealing with a shortened calendar 3 years after the recession ended, like it is the case in a lot of places in Georgia. I bet that nowhere as many banks failed in New Jersey as did in Georgia, and I also do not believe that there is a rural hospital solvency crisis in New Jersey the way that there is in Georgia. Or that New Jersey has to resort to every trick in the book to deal with higher education funding for college and trade school students because of the terrible decision to use A LOTTERY to fund such vital things in the first place. New Jersey isn’t merging some of their better colleges like SPSU and Georgia Perimeter (decisions that will make the already sketchy higher education scene in Georgia even worse). And they also don’t have to beg the federal government for 20 years to fund their own vitally needed infrastructure projects like SHEP because they aren’t last in transportation and infrastructure spending. And even after SHEP gets finished, Georgia will still need to improve its inadequate highway and rail networks to move the freight, not to mention expand the cargo capacity at its airports. And speaking of airports, New Jersey doesn’t have any metro areas the size of Atlanta being served by only one.

      Add it all up and New Jersey’s economy will be better off with Mercedes and all the other companies that they are allegedly losing than our economy – again especially outside metro Atlanta where the real unemployment rate is over 20% in some places, and moreover has been for decades ever since the factory and farm jobs went away – will be with them.

      • Jon Richards says:

        A minor correction to your post: NCR was founded in Dayton, and was headquartered there until they relocated to Georgia. They claimed University of Dayton (and other area colleges / universities) weren’t providing the talent they needed.

        I’ll also argue that NCR has reinvented themselves such that they are not a dying company. They are leaders in the ATM / Self Service terminals (think Redbox, and others) field.

      • gcp says:

        Androidguybill, not sure where you get your HD info but the following was in Atl. Bus. this morning.

        “Home Depot wants 250,000 square feet in Marietta for IT center
        The deal, if approved, would bring 525 new jobs to the site and move 675 existing employees there.”

  2. blakeage80 says:

    I think it was greencracker that once stated, “Georgia, for when you wake up and realize New Jersey sucks.”

    • saltycracker says:

      -It was a great summary – and they will bring their own skilled workers with them…(not a bad thing, just something to bake into our incentives)

      • androidguybill says:

        Yeah. Too bad it is not true. The problem is that when people say “New Jersey” they think “Newark” and the places that are essentially undesirable suburbs of New York City. What most people in the southeast don’t realize that the actual New Jersey has tons of high paying employers, as well as a very strong education (K-12 and university, public and private) system that ensures that they will continue to attract and produce high paying employers.

        New Jersey has a ton of very talented and skilled workers, far more than Georgia does. And most of the best talent that Georgia does produce at places like Emory and Georgia Tech leaves the state – for places like New Jersey, New York and the west coast. This is just one of these things were red state Americans and blue state Americans honestly do inhabit different realities. We get the AMERICAN headquarters of a FOREIGN car company because they want to be closer to the sorts of jobs (parts manufacturing, shipping etc.) that folks in New Jersey don’t want anyway. Good for us. But New Jersey KEEPS the high paying finance, banking, insurance, brokerage, patent law etc. jobs that would NEVER move to ANY southern state because we don’t have the talent to do that type of work. Better for them. Yes, taxes are high in New Jersey, but the incomes are much, much higher. And outside of Newark, the schools, the crime, disease rates etc. are much much lower. That is something that everyone but red state conservatives seem to be aware of.

        • TheEiger says:

          You done trashing Georgia? You know you can rent a U-haul truck and move to the Jersey shore whenever you like. No one is stopping you.

          • Lea Thrace says:

            Why does this tend to be the response when someone is honestly critical of GA? (Which, by the way, androidguybill’s comment wasnt really critical of GA. More so promoting NJ ). Can we not take criticism of the things our state is lagging behind on? And work to improve? Or must me always metaphorically kick out those who choose not to tow our “This state is awesome at everything” line?

            • TheEiger says:

              I don’t like when people capitalize entire words to make a point. You should be able make a point without doing that and with the content. I know. It’s the little things that get me.

    • Max Power says:

      Well that’s just silly there are many wonderful parts of New Jersey, Montvale is a really nice little town. However, I wonder how many of the relocating workers will react when they find they can’t just hop on an NJT train for a ride into the city.

  3. Charlie says:

    Buried in the Autoblog story is this gem, which directly correlates to Jon’s comment above about NCR & Dayton:

    “Nothing against English or history degrees, but really our university system needs to be more nimble to the needs of industry today,” Croteau said. “That’s what will separate us from our neighbors. Because the work is so automated and highly skilled, the states that win on workforce are going to win on economic development.”

    There’s a reason that a lot of folks are learning the term “workforce development”. Too many of Georgia’s current companies are having to recruit from out of state for the skills they currently require. We’re good in some areas. We need to be great in a lot more if we’re going to maintain our attraction for employers.

  4. Richard says:

    androginousguy,
    I think Lewis Grizzard’s quote to a Chicago fan years ago would be appropriate here. I-75 runs north out of Atlanta, and Delta is ready when you are.

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