Georgia wonders 'why?' after Volvo snub

Sources: Volvo Car Group and Bloomberg

Known only as “Project Peach” on Georgia Gov. Nathan Deal’s calendar, it was one of the most important economic development projects in state history.

Georgia’s attempt to lure Volvo’s first U.S. auto plant involved secret recruiting trips, legislation to clear the way for the deal, a united political front and likely the largest economic development package the state has ever offered.

Even after all that, though, the automaker informed state leaders Friday it would not build in Georgia, leaving officials on a soul-searching quest to determine what — if anything — the state could have done to secure the plant and the 4,000 jobs they hoped it would bring to the Savannah area.

The Atlanta Journal-Constitution first reported Friday evening Volvo’s decison not to locate in Georgia, citing two people with knowledge of the situation who were not authorized to speak publicly.

Volvo now appears to favor a South Carolina site that was believed to be the other finalist. A spokesman for the automaker said late Friday a site decision hasn’t been made and declined to comment further. Deal’s office and South Carolina economic development officials also declined to discuss the matter.

A formal announcement, however, is likely to be made this week, the AJC has learned.

Deal had set his sights on the plant for months as a signature economic development triumph. He persuaded Georgia lawmakers to make it easier for state agencies to buy Georgia-made cars and championed the overhaul of an environmental agency to pave the way for a deal. His economic development team shuttled back and forth to Volvo’s home country of Sweden and courted executives. Deal flew to New York in late April to make a final pitch to Volvo’s leaders.

“We’ve had a growing automotive presence here and we have every reason to think it can continue,” the governor said last week, before the decision was made. “We want to say to the world that Atlanta and Georgia is the place to be in the automotive world.”

With none of the main players in the deal talking, it was unclear Saturday exactly why Georgia lost out.

But the early analysis from the two people with direct knowledge of the negotiations was that South Carolina offered a bigger bounty of incentives than Georgia was willing to pony up.

That could be a significant trove. Georgia readied a massive nine-figure incentive package to land the plant. It included an infusion of as much as $40 million in so-called deal closing funds slipped into Georgia’s budget, and the promise of a $25 million state training center to cater to Volvo’s employees.

It also was likely to include a package of state and local tax breaks that helped Georgia land the Kia auto plant in 2006. The South Korean automaker got more than $400 million worth of incentives to put a plant in West Point, 75 miles southwest of Atlanta.

The Volvo news was a bitter ending to an uplifting week for Georgia’s budding auto industry.

The governor traveled to Kia’s sparkling training facility on Wednesday to visit with executives and sign the legislation that encourages state agencies to buy cars manufactured in Georgia.

The next day, Georgia politicos and other leaders attended a lavish grand opening gala at Porsche’s new North American headquarters near Atlanta’s airport. Across town, Mercedes-Benz’s chief executive headlined an Atlanta Press Club luncheon to explain why his company chose Atlanta’s suburbs for its new U.S. base.

Landing Volvo at the new “megasite” in Bryan County, 30 minutes west of Savannah, would have likely meant more than an infusion of 4,000 jobs in Georgia. It would have turbocharged growth in metro Savannah, an area already seeing its economy surge, driven by manufacturing, logistics, health care and tourism.

Tom Bordeaux, a Savannah city alderman and former state legislator, said he learned of Volvo’s rejection from media reports and called it “tremendously disappointing.”

“We have to figure out how we could have been inadequate, because I was under the impression that we were offering some remarkable incentives,” he said. “We are doing very well, but Volvo would have added extra horsepower.”

Heavy manufacturers are coveted for their high number of relatively well-paying jobs, as well as the thousands of additional jobs they spawn from auto suppliers and other associated industries.

And it would have burnished the state’s reputation as a manufacturing hub recovering from the closure of auto plants such as GM in the past decade.

“If you want to employ a larger sheer number of medium-skilled persons — manufacturing is where it is at, and auto assembly plants are the crème de la crème,” said Jon Gabrielsen, a consultant in Atlanta to manufacturing firms.

Technology and other “knowledge” jobs are the highest-paying, he said, but affect fewer people. Georgia has been fortunate to claim recent wins in both the technology and manufacturing worlds, he said.

The automotive industry employs about 20,000 people in Georgia across 250 facilities, according to state figures. But South Carolina counts major names such as Daimler AG, BMW, Michelin and Bridgestone.

South Carolina Gov. Nikki Haley aggressively courted Volvo, eager to add another auto company to her state's list. She also trekked to New York last month to huddle with the automaker's executives, and the state proposed a 2,800-acre site north of Charleston.

“When it comes to manufacturing we are knocking it out of the park,” she said in an interview last month, where she also boasted of South Carolina’s largely non-union workforce.

“And as they continue to show they know what it’s like to build things, the rest of the country has taken notice,” Haley said. “We’re very proud of what’s happening not only in South Carolina but in the Southeast.”

The difference between being in southeast Georgia and southeast South Carolina in some respects isn’t dramatic.

They share similar demographics and work forces. Both boast bustling ports in Brunswick, Savannah and Charleston, S.C. And the distance by car or connecting flight to Atlanta’s international airport is similar.

But South Carolina can outgun Georgia on certain types of incentives, said one high-ranking economic development official. And the Palmetto State uses those dollars and perks to obtain an edge and to overcome some perceived shortcomings, such as workforce training, said the official, who spoke on condition of anonymity because of the sensitivity of the situation.

There also may have been questions about the 1,900-acre site that Georgia proposed. The Bryan County tract wraps around a working-class neighborhood with access to highways, rail lines and Savannah’s booming port. But Army Corps of Engineers documents showed it would require work to shore up wetlands that could have been damaged by the project.

Some economic development recruiters were already looking for a bright side in losing the bid for the plant: It could free up resources, such as the training facility and the $40 million deal-closing package, for the next “Project Peach” pitch.

Jerry Williams, who runs a land clearing company near the megasite, said the community buzzed about the prospects, particularly in an area that often loses its young people to colleges or jobs in Atlanta and other cities. Williams said he was hoping to bid on work at the site.

“It would have been so big for the community,” he said.