< PreviousR ecent investments by global automakers confi rm that when it comes to competing in South America’s lucrative vehicle market, the road runs through Brazil. With a long history of making cars, trucks, buses and farm equipment, Brazil is South America’s hub for motorized vehicles. In addition to hosting manufacturing plants of the top global OEMs — think Stellantis, Mercedes, Honda, Hyundai, GM, Ford and Volvo — Brazil also boasts an impressive roster of supplier companies represented by its Union of Retail Trade of Vehicle Parts and Accessories. Last May, Stellantis announced plans to invest $. billion in Brazil between and , which the automaker described as the “largest investment in the history of the Brazilian and South American automotive industry.” e investment will support the production of fl ex-hybrid vehicles, meant to give Stellantis a jump on the competition for clean energy autos in South America. “ is announcement solidifi es our trust and commitment in the future of the South American automotive industry and is a response to the favorable business environment in Brazil,” Stellantis CEO Carlos Tavares said in a statement. “South America will take a leading role in accelerating the decarbonization of mobility, together with our employees, our supply chain network and our partners.” Who Needs EVs? Like Stellantis, other major automakers are by GARY DAUGHTERS gary.daughters@siteselection.com GLOBAL AUTOMOTIVE 38 NOVEMBER 2024 SITE SELECTION South America’s automotive powerhouse, Brazil paints its own picture. ‘Eclectic, NOT Electric’ SITE SELECTION NOVEMBER 2024 39 investing in Brazil, not to make EVs, which cost too much for the average South American consumer, but rather hybrids, which come at a signifi cantly lower price. In the process, they are leveraging incentives available under the new Green Mobility Innovation program launched by Brazilian President Luiz Inácio Lula da Silva, as well as Brazil’s vast supplies of ethanol, an economical clean energy fuel. “We say here in Brazil that we are not electric, we are eclectic,” says André Jalonetsky, communications director for Anfavea, the Brazilian automotive industry’s trade association. “If the goal is decarbonization,” Jalonetsky told Site Selection in September, “we don’t need electrifi cation in Brazil.” In April, Honda announced an $ million investment in its plant in Itirapina, outside São Paulo, meant to focus on new technologies and the development of a hybrid-fl ex model for the Brazilian market able to run on ethanol. Similar investments are being made by Volkswagen, GM and Toyota. Anfavea’s Jalonetsky says Brazil has also become a benefi ciary of nearshoring within the industry. “For us,” he says, “it has produced some very positive eff ects. We are a stable democracy that’s closer to the U.S. than China. And we have a lot of experience and expertise in this.” Volkswagen’s Woes Volkswagen’s September announcement of possible plant closures in Germany rattled its home country and sent shockwaves across its borders. Offi cials of Europe’s largest carmaker cited a Image courtesy of Anfavea40 NOVEMBER 2024 SITE SELECTION projected inability to hit critical cost- cutting targets and a precipitous drop in European auto sales. As explained by CFO Arno Antlitz, who addressed employees at the company’s Wolfsburg headquarters, the threatened retreat “has nothing to do with our products or poor sales performance. The market simply is no longer there.” Those explanations aside, auto industry analysts were quick to point another worrying trend, namely China’s increasing penetration of the European EV market. Earlier this year, the European Federation for Transport and the Environment reported that made-in- China vehicles — including Teslas — accounted for 19.5% of battery-powered EVs sold in Europe in 2023, likely to soar to over 25% this year as Chinese brands such as BYD ramp up exports of competitively priced, well-performing electric vehicles. Volkswagen employs about 120,000 workers at 10 plants across Germany. After cancelling a longstanding pledge that would have barred layoffs through 2029, Volkswagen denied a report in September that it was contemplating a reduction in force of up to 30,000 workers. After that, German Economy Minister Robert Habeck said that Berlin is examining ways to support the company in order to avoid massive job cuts. “VW,” he said, “is of central importance to Germany.” U.S. to China: Nip It in the Bud China’s EV sales in U.S. market are meager by comparison to Europe, having accounted for some $368 million in 2023. But the potential for that to change explains the Biden Administration’s 100% tariffs — up from 25% — imposed on imported Chinese EVs. Announced in May and joined by Canada in August, the U.S. measures took effect in September. They also include a 25% tariff on Chinese batteries, battery components and critical minerals — up from 7.5%. “What’s occurring in Europe gives us a peek behind the curtain of what could happen here,” says John Voorhorst, vice president of economic growth and innovation at the Ann Arbor-based Center for Automotive Research. “It’s a daunting prospect to see companies like BYD producing high-quality electric vehicles and selling them for a third of what our current EV manufacturers can produce,” Voorhorst told Site Selection in September. Still, Maybe Not So Bad The issue has sparked an angry exchange of words, with the U.S. accusing China of unfair trade practices “carefully targeted at strategic sectors,” and China’s foreign minister suggesting that Biden Administration officials “may be losing their minds.” But Voorhorst recommends recalling a similar episode from the past, when in the 1980s the U.S. imposed stiff tariffs and quotas on autos imported from Japan. Forty years later, U.S. roads teem with Japanese cars, while Toyota and Honda continue to invest billions in auto plants spread across the U.S. South and Midwest. “Over time,” Voorhorst says, “concessions were made on both sides, and I think we came to a reasonable, peaceable accommodation.” These new tariffs, Voorhorst suggests, could allow for the introduction of Chinese autos at “a proper cadence.” In the long term, he believes, “we can expect to see more Chinese vehicles in the U.S. market. And over time, our Big Three will start to look at opportunities to form alliances or joint ventures with some of these Chinese companies to start to produce those vehicles in our domestic market.” F rom Buddy Holly and Jimi Hendrix to Jeff Beck and Eric Clapton, many of the greatest rock guitarists of all time have played the Fender Stratocaster, hand- made by the legendary Fender Musical Instruments Corporation (FMIC). Soon, the rock legends of today and tomorrow will beat a path to Phoenix to check out the next generation of Fender guitars and amps when the company opens its second headquarters at the site of the former Paradise Valley Mall. Fender broke ground October at PV — the new name of this redevelopment site on the north end of Phoenix. e new Fender facility will be an ,-sq.- ft., three-story building designed by SmithGroup. It is set to open in fall , and Fender plans to hire new employees over the next fi ve years. e groundbreaking came just seven months after Fender announced that it was moving its HQ from Scottsdale to Phoenix. Company offi cials said they were attracted to PV by the work being done by RED Development, the Phoenix-based company overseeing the transformation of the old mall property. Representatives from both JLL and Cresa also worked on the deal. According to a Fender statement, the new space will be used for collaboration, modeling and design work, as well as various administrative functions. e facility will also comprise a shop for guitar and amplifi er designers, a sound room, cafeteria and meeting space. e fi rm’s primary headquarters will remain in Los Angeles. FMIC CFO Matt Janopaul said, “Fender’s decision to partner with RED reinforces our long-term commitment to Arizona and a local community we have called home since the early s. Our building will foster a dynamic environment that attracts top engineering, fi nance, IT, product development, sales and supply chain talent. Most importantly, we believe that PV’s mixed-use off erings will enhance Fender’s culture of creativity and innovation and provide our team members with an exceptional workplace experience.” From Dead Mall to Live Music PV covers more than acres and is part of a $ billion redevelopment project being orchestrated by RED. “ e scale of the project will redefi ne what live-work- play means,” FMIC noted in a statement. Phase one of PV includes a -unit apartment community, a Whole Foods Market, a Harkins dine-in theater and three specialty restaurants. Chris Camacho, president and CEO of the Greater Phoenix Economic Council, says that Fender originally came to Scottsdale in because its plant in Corona in Orange County, California, got too costly. “ ey were working in Scottsdale, but they had outgrown their space,” he says. “ ey needed to fi nd an alternative solution.” By relocating to PV, Fender enters a neighborhood that has one of the highest average household incomes in Maricopa County. “All of these new jobs at Fender are six-fi gure roles,” says Camacho. He confi rms that a number of U.S. markets were under consideration for the project, “but Fender quickly narrowed their search to Phoenix because they wanted to keep their employees. All options were on the table; they decided to continue to invest in this market.” Fender will qualify for state tax credit programs, and local incentives from the City of Phoenix also played a role. But labor was the real driver. “ is is not too far from their current HQ,” says Camacho. “ ey can still draw from the entire region by being located in north central Phoenix. e labor draw is important to the company. From east to west across the northern suburbs of Phoenix, they can draw talent from across the region. eir ability to retain and recruit employees will be enhanced by this move.” by RON STARNER ron.starner@siteselection.com BUSINESS RETENTION & EXPANSION SITE SELECTION NOVEMBER 2024 41 Stays In Tune With Greater Phoenix Grammy-winning artist Finneas, brother of pop sensation Billie Eilish, poses with the new signature FINNEAS Acoustasonic Telecaster guitar being made and sold by Fender. Image courtesy of Fender Musical Instrument Corp.42 NOVEMBER 2024 SITE SELECTION Southern states score massive wins in foreign direct investment. F or the th consecutive year, the United States is the world’s top destination for foreign direct investment. And with healthy population growth supplying a reliable base of workers, states in the South are leading the way in attracting FDI, with major foreign projects landing even in out of the way places such as Sumter, South Carolina; Metter, Georgia; and Linwood, North Carolina. e pattern holds true across multiple industries — from automotive to life sciences, electronics to aerospace, metals to food & beverage. “Global companies are attracted by the same forces as Americans,” says John Boyd, Jr., principal of the Boyd Company, the Boca Raton, Florida– based site consultancy. “If you poll most job creators, you tend to get a response that they feel more welcome in high-growth, pro-business states in the South.” While America’s top ranking is derived from the FDI Confi dence Index ® by Kearney, the global management consulting fi rm, the strong performance of states in the southern U.S. emerged through an analysis of qualifying investments drawn from Site Selection’s Conway Projects Database. An outsized proportion of major capex outlays announced or completed over the past months by companies based in South Korea, Germany, Japan, France, Switzerland, the Netherlands, the UK and Canada — America’s traditional top foreign investors — went to locations in states in the South. “If a foreign company is looking to do business in the United States, generally I’m competing with states from the Carolinas and Tennessee, Alabama and Texas,” says Pat Wilson, commissioner of the Georgia Department of Economic Development (GDEcD). “From by GARY DAUGHTERS gary.daughters@siteselection.com FDI IN THE USA Smiling on the South Toyota’s engine plant in Huntsville, Alabama. Photo courtesy of Toyota USA44 NOVEMBER 2024 SITE SELECTION what I see on a day-to-day basis, the South has done very well in creating an environment by which these companies can be successful in the long run, and that reputation spreads.” The reasons for that are many, according to officials and experts who spoke for this article, some factors familiar and others that might surprise. “Bear in mind,” says Boyd, “the art of economic development was really created in the Southeast — as a way to lure industry away from the Northeast and from the Rust Belt.” Tarheel Triumphs North Carolina, with eight qualifying FDI projects, led the way among states in the South. Given the gravitational pull of the state’s Research Triangle, it’s no surprise that the life sciences sector figured prominently among North Carolina’s biggest wins. In June, Kyowa Kirin, a specialty pharmaceutical company based in Japan, announced plans to invest up to $530 million to build a biologics plant in Sanford. The 172,000-sq.- ft., two-reactor facility, the company said in a statement, will accelerate development and production of therapies for patients with rare and serious diseases. “The extraordinary complexity of the medicines we manufacture requires specialized skills and resources that are in plentiful supply in Sanford and the Research Triangle Region,” said Paul Testa, executive vice president and regional head of North America/EMEA Manufacturing for Kyowa Kirin North America. Scheduled to open in 2027 at Sanford’s Helix Innovation Park at the Brickyard, the facility will be supported by performance-based state and local incentives totaling $10 Germany’s HOLON is investing $100 million to make autonomous shuttles in Jacksonville, Florida. Rendering courtesy of HOLON46 NOVEMBER 2024 SITE SELECTION million over 12 years. The plant is projected to create more than 100 new jobs at an average salary of $91,496. Japan, according to the office of North Carolina Gov. Roy Cooper, accounts for nearly half of North Carolina’s foreign direct investment over the past decade. Nipro (life sciences), Morinaga (food & beverage) and Dai Nippon Printing (chemicals) are among Japanese companies that have made nine-figure investments in North Carolina over the past year. Keeping the Wheels Turning Global automakers, Asian producers in particular, continue to find their sweet spot in the South. In June, Toyota announced a $282 million investment in its Huntsville, Alabama, engine plant, raising total investment in the facility inaugurated in 2003 to more than $1.7 billion. Toyota plans to hire more than 350 new workers. Huntsville’s Mazda- Toyota partnership has made investments exceeding $2 billion since its launch in 2018. South Korea’s ILJIN, which makes industrial bearings and chassis, is investing nearly $100 million in a new operation that’s bringing 160 jobs to Auburn. In Kentucky, Toyota announced plans in February to pump $1.3 billion into its Georgetown plant for EV production, pushing investment in the facility to nearly $10 billion since 1988. In July, Mitsubishi Electric US announced a $143.5 million investment that’s to create 122 new jobs at its plant in Maysville. Each April, Augusta National Golf Club hosts The Masters golf tournament, referred to by one site consultant as “the gold standard of all red-carpet tours” for potential investors in Georgia. Getty Images Japan accounts for nearly half of North Carolina’s foreign direct investment over the past decade.Next >