GLOBAL MEDIA POST / Southern USA report 2019

A relationship that began in the 20th century

The southern U.S. states of Alabama, Mississippi, Tennessee and Florida share historical and cultural ties with Japan that date back to the early 20th century. As the south’s economic strengths evolved through the decades, so have Japanese investments. The relationship started with Japan’s interest in the region’s agricultural exports, which later became fertile ground for Japanese manufacturers, carmakers and clean-technology companies.

“Each of those states has had a long, mutually beneficial partnership with Japan. While most people think first of huge economic benefits from positive Japan-U.S. relations, more importantly, this resulted in Japanese companies having greatly contributed to the expansion of the Southern Automotive Corridor,” Consul General of Japan in Nashville Hiroyuki Kobayashi said.

Competitive labor environments, leading workforce development programs, low utility costs and cooperative state governments are factors that have made this region an excellent business and investment destination.

“We will see more investment by Japanese companies in the automotive industry, which is exemplified by the future plant of Toyota-Mazda in Alabama. And I hope that more southern companies with innovative technologies will have interest in establishing a base in Japan, as two-way investments are keys to expand our business relationship,” Japan External Trade Organization (JETRO)Atlanta Office Executive Director Takuya Takahashi said.

Alabama:  Strengthening mutual benefits

Since the early to mid 1990’s, Alabama has proven to be one of the south’s most important manufacturing clusters. The state’s manufacturing capability began with the Mercedes-Benz plant in Vance, Alabama. The German carmaker’s confidence in finding success in the state opened opportunities to Japanese automakers such as Honda, Toyota and the new $1.6 billion dollar Mazda-Toyota factory in northern Alabama’s Huntsville region.

“Japanese business investment has had a tremendously positive impact on Alabama over the years, and this footprint continues to grow today with new projects that are bringing thousands of good jobs to communities in our state. Alabama’s longstanding economic relationship with Japan is very important to us, and we’re committed to strengthening these mutually beneficial bonds in the coming years,” Gov. Kay Ivey said.

At present, 90 Japanese companies selected Alabama as a manufacturing base, the majority of which are major suppliers of parts not only to Japanese carmakers, but also to American and other Asian auto manufacturers along I-65.

“The key reason Japanese investors chose Alabama is that the economic development community is prepared to receive Japan’s strict end-to-end requirements when it comes to ample land, infrastructure, workforce and community support” Honorary Consul General of Japan in Birmingham Mark Jackson said.

This  economic development community expects that Japanese suppliers to the major automotive manufacturers in Alabama will follow and set up shop in the state in the short to medium term.

Tennessee: Enhancing rural communities

Like in other states in the south, Japan is the largest source of foreign direct investment in Tennessee, with about 200 Japanese companies operating in the state and employing around 50,000 Tennesseans in advanced manufacturing, automotive and chemicals. Memphis in the west, Nashville in the middle and Knoxville toward the mountainous east have become hubs of Japanese car manufacturing and chemical production.

“I have a particular interest in developing economic strength in rural Tennessee. Numerous Japanese companies have located their plants in these rural communities. Not only do they bring much-needed high-paying jobs, but they also enhance the life and culture of these communities,” Gov. Bill Lee said.

“I’m excited to meet with business leaders in Japan. I’d like to express our gratitude because the economy of Tennessee has been profoundly impacted in a positive way through Japanese investments here,” added Lee, who is keen on attracting more Japanese investment.

The recently-elected governor’s priority in developing Tennessee’s rural economy complements the Japanese industry’s strategy of looking at rural areas to establish their manufacturing bases. Coupled with the Southerners’ strong work ethic and high skills, Japanese manufacturers and local Tennesseans are a perfect match.

Mississippi: Attracting more investors

Japan is the Magnolia State’s largest investor and one of the state’s largest foreign job creators. Centered on the Nissan plant in Canton and the Toyota plant in Tupelo in the northeast, Japanese manufacturers consider Mississippi as a crucial base in the North American market.

Similar to other states in the south, Mississippi is at a crossroads where manufacturers can take advantage of its deep-water ports and its proximity to major domestic markets like Texas and the Midwest. But what sets Mississippi apart is its abundance in value-added land and availability of infrastructure.

“We are the only state that both has a Toyota and Nissan facility” said Gov. Phil Bryant, who went on an  investment mission to Japan in 2018. Close to 50 Japanese companies employ more than 10,000 Mississippians, and the Magnolia State is excited to attract more investors especially as Japanese investments in neighboring states rise.

The automotive corridors within the Southern United States that run east to west and north to south means that Mississippi is conveniently integrated with the rest of America’s markets and manufacturing bases.

Florida: Business-friendly environment

With more than 200 Japanese companies accounting for nearly 26,000 jobs, Florida has become an optimal and strategic state for Japanese business, including manufacturing, life sciences, aerospace and defense. In fact, many Japanese companies have used Florida as their headquarters for Latin American operations.

As foreign investment from Japan has increased, recently appointed Consul General of Japan in Miami Kenji Hirata has stressed the importance of strengthening ties between Japan and the state.

“When it comes to economic relations, what I would like to do is to create a conducive environment for the support of free trade to strengthen Japanese investment and Japanese export,” said Hirata.

“There are a lot of opportunities for Florida-Japan cooperation in the areas of water management, hospitality, and aerospace,” he added.

With its business-friendly environment, low taxes, and multilingual labor force, many companies are attracted to Florida. This has been shown by individuals who are also starting to relocate to the state due to its quality of life and great climate.

“Florida is such a diverse state. It now has the third-highest population in the U.S. and has grown to become a trillion-dollar economy with some 126 million visitors last year. If Florida were taken independently, it would be the 18th-largest economy in the world,” said David Woodward, the executive director of the Florida Delegation of the Southeast U.S./Japan Association.