Why Toyota chose Canada over Alabama/Mississippi
Why Toyota chose Canada over Alabama/Mississippi.
Fri Jul 8th, 2005 at 21:03:52 PDT
(From the diaries. More evidence that an educated workforce and government-subsidized health care are the best forms of economic development -- kos)
They got a $125 Million is subsidies from the Canadians. But that wasn't what sealed the deal, because several southern states offered nearly double the subsidies. What sealed the deal was the quality of education that their potential workers in Canada possesed.
The extra subsidies offered by the U.S. state would have been eaten up by the need to train and educate the workers in those states to the standards of a modern mechanized and digitized automobile plant. CBC news reports:
The factory will cost $800 million to build, with the federal and provincial governments kicking in $125 million of that to help cover research, training and infrastructure costs.
Several U.S. states were reportedly prepared to offer more than double that amount of subsidy. But Fedchun said much of that extra money would have been eaten away by higher training costs than are necessary for the Woodstock project.
He said Nissan and Honda have encountered difficulties getting new plants up to full production in recent years in Mississippi and Alabama due to an untrained - and often illiterate - workforce. In Alabama, trainers had to use "pictorials" to teach some illiterate workers how to use high-tech plant equipment.
"The educational level and the skill level of the people down there is so much lower than it is in Ontario," Fedchun said.
It's ironic that those southern states were willing to fork over the money to get the plant, but not to spend the same money to raise the educational standards in their schools. It's a classic penny-wise, pound-foolish approach.
But what about a northern state with better education. Well too bad northern states, you also are being "penny-wise and pound-foolish".
Only now it's health care that is a show stopper"
In addition to lower training costs, Canadian workers are also $4 to $5 cheaper to employ partly thanks to the taxpayer-funded health-care system in Canada, said federal Industry Minister David Emmerson.
"Most people don't think of our health-care system as being a competitive advantage," he said.
Tanguay said Toyota's decision on where to build its seventh North American plant was "not only about money."
"It's about being in the right place," he said, noting the company can rely on the expertise of experienced Cambridge workers to help get Woodstock up and running.