One of their first calls was to Bronner, to get a businessman’s point of view on how to proceed. He told them to act fast and to be relentless in their pursuit. Within weeks, the state officials and Bronner were on a plane to Stuttgart for an initial meeting with some mid-level Daimler officials. They didn’t realize it at the time, but they would get to know that city well over the coming months. The Germans were cordial, but no promises were made, and the Alabamans flew home. But the Germans had been impressed by the Alabamans’ resourcefulness and their determination, and after some visits to the state by the Daimler site-selection team, the Alabamans were invited back to Germany. This time they got to see Mercedes’s chief executive, Helmut Werner, whose office was deep in Mercedes’s manufacturing complex in Unterterkheim, outside Stuttgart. They brought with them an elaborate presentation, printed, in the days before PowerPoint files, on big poster boards that they had to carry onto the plane for fear that they might be damaged if they were checked into the baggage hold. By this point, the Alabamans knew that they weren’t alone in their quest for the plant, which was widely rumored to be for Mercedes’s first SUV. North Carolina wanted it badly, too, as did Nebraska—as unlikely a candidate as there could be for an auto factory. But somebody in Nebraska knew Henry Kissinger, who got on the phone to Stuttgart and asked Daimler to send someone to look at the site the state was trying to peddle.
Andreas Renschler, a lanky, boyish manufacturing expert whom Mercedes had tapped to run the factory, flew over to take a look. The Alabamans, alarmed that Renschler was headed to a rival state, invited him to come to their state, too, and went to pick him up in an Alabama Power Company plane. However, the utility company had a no-smoking policy on its aircraft—anyone who allowed it to be violated could be fired—and Renschler was a chain smoker. The chief executive of the utility, clued in to how important the trip had become, told the development team, “Buy or steal an ashtray and let him smoke.” On the flight to Nebraska, the team could see the devastation that had been wreaked on the midwestern plains by widespread flooding during the spring of 1993. There was water everywhere, and the sight was sobering. Renschler was waiting at the airport when the plane arrived, and he jogged up the steps, ducking his head to get in the door of the plane. As he settled into his seat, one of the Alabamans asked him how the visit to Nebraska had gone. “They’re very nice people,” Renschler replied. Then he paused and, without cracking a smile, said, “We are in the car business, not the boat business.”
Back in Alabama, the team flew Renschler over the site in Vance, alongside I-20/59, where they hoped the plant would be built. Renschler, looking down from the plane, saw the rolling hills surrounding Birmingham, with the city nestled in a valley below, and remarked that it reminded him of the topography that surrounded Stuttgart. He returned to Germany on a Friday. On the following Sunday, the Alabama team received a heads-up from Germany: An even more important visitor was coming from overseas. His code name was Ernest. “This will be the most important visit you will have. If Renschler was Jesus, this is God,” the Alabamans were told.
On Monday, Dieter Zetsche stepped off a plane at the Birmingham airport’s private aviation terminal. Then in charge of Mercedes’s passenger car division, he would make the recommendation to Daimler’s board on the plant’s location. The Alabamans helicoptered him over the location, and then landed nearby. Four-wheel-drive vehicles waited to cart Zetsche around, but he wanted to walk the site. The Alabamans could hear him saying, “I can see the paint shop over there. Here is where final assembly will go.” It seemed as if Zetsche was selling himself.
But first the Alabama team had to make one more trip to Stuttgart, in September 1993, when the Daimler board would select the winner. Their fiercest rival, North Carolina, was still in the hunt, and the Carolinians were supremely confident. News reports had claimed that Daimler had already picked that state, and the Alabama delegation, including Governor Folsom and Camp, didn’t know what to believe. The two delegations were supposed to stay in the Intercontinental Hotel in Stuttgart, but at the last minute, the Alabamans switched to the Marriott Hotel in Frankfurt, just across the street from the giant convention center where the Frankfurt Motor Show was under way. The Daimler board members had some questions to ask the Alabama team (such as “What is Klan activity like in Alabama?”). When the board meeting ended, the team was told they were no longer needed, but they did not have an answer. Governor Folsom needed to get back to the United States to attend the Southern Governors’ Conference in Richmond, but he asked to be alerted as soon as word came about Daimler-Benz’s decision. He was taking part in a televised panel discussion when a call came from Camp. “Get me the governor—now!” Camp said. No one had cell phones then, meaning Folsom had to physically come to a telephone, and the panel organizers refused to let him step down from the podium on live TV. The minute the discussion ended, however, Folsom rushed off the platform and went to the receiver, every eye in the room on him. Alabama had won the plant.
The decision triggered a celebration the likes of which few in Alabama had ever seen. The Birmingham Metropolitan Development Board spent $75,000 to erect a huge three-pointed star above a scoreboard at the city’s football stadium as a way of thanking Mercedes for selecting the state. “This, my friends, is a new day for Alabama, a day when we move to the forefront of economic development,” a gleeful Folsom, sporting a tiny Mercedes star in his lapel, declared at the ceremony to mark the state’s selection. More than 4,000 people stood in line to shake hands with the newly arrived Mercedes officials, including Renschler and Bill Taylor, an executive from Toyota’s plant in Cambridge, Ontario, who would be the plant’s top North American manager. But the fireworks that greeted the plant’s announcement were nothing compared to the uproar that erupted when the development package was disclosed. In return for Mercedes’s $300 million investment, which would bring 1,500 jobs at the outset, Alabama had pledged $253 million in tax breaks and subsidies. They included the purchase of 2,500 vehicles for state agencies and a sleek black $82,000 S-Class sedan for Folsom to drive as the governor’s official car. The money included funds to clear the site, fix roads and install utilities, as well as create a job training center—in fact, every job that Mercedes had promised was going to cost the state more than $60,000. (By contrast, the original package that Ohio gave Honda for its factory in Marysville was a mere $5 million.)
The package put the state on the spot and triggered a flood of negative publicity; even Mercedes had to defend its choice and reiterate that it was happy to have selected Alabama. This aftermath stripped the situation of much of the earlier joy, as state officials were forced to address charges that they had gone out and bought the factory. The drama didn’t end immediately: As the plant was under construction, the state struggled to come up with the funding it had promised. Bronner, in order to save the project from collapsing, stepped forward with a loan of $100 million in pension money so that the state could make good on the package. Even today, the incentives are a touchy subject among Alabama business leaders, who point out that the deal was no more generous than what North Carolina and other states were offering. The main difference was that everybody knew what was in the Alabama plan, and that it seemed so lavish in comparison with what other states had paid in the past. But at the time, there was nothing to show for the project except a promise.
Today, there is the Mercedes M-Class, a little dated after six years on the market, but a critically important vehicle for the German auto company. The $36,000 vehicle vaulted Mercedes into the luxury sport utility market, helping it keep pace with Lexus and beat BMW. The M-Class was a linchpin of Mercedes’s sales expansion during the late 1990s, helping it grab first place for several years among luxury vehicle makers in the United States. More important than just a car, M-Class was a statement by Mercedes that it believed American workers could produce vehicles that were the same quality as those produced by workers in Germany.
Mercedes did hedge its bets, in a way. T
he Alabama plant is not completely the equivalent of one of Mercedes’s production facilities in Europe. It does not produce engines, which come from Germany, and it relies heavily on modular production, like the Nissan plant in Jackson, taking out some of the complexity of building automobiles. But for the state of Alabama, and for the people who work here, this factory is an economic landmark. Mercedes has been Alabama’s drawing card for billions of dollars in new investments, not least of which have been Honda’s plant in Lincoln and the Hyundai factory in Lincoln. The factory is a draw for tourists, as well, who stroll through the plant, wide-eyed, watching the gleaming SUVs saunter down the assembly line. The people who work in this plant have been given a level of pay, responsibility and standing in the community that they might never have achieved otherwise.
Among them is Lisa Evans, an assistant manager in the audit quality department. As an engineering student at the University of Alabama, Evans spent a semester working at the same Delphi Thermal Systems plant that Portera had managed to convince GM to spare years before. But Evans had no hopes of landing a job there after graduation, and she had few other prospects in Alabama. While she could have been hired by a company elsewhere, she wanted to stay in the region. However, she realized that with the lack of opportunities, “I might have just ended up managing a fast-food restaurant,” she said. Her mother urged her to apply at Mercedes, saying that even if she started on the assembly line, the job might lead to other things. On the last day the company would accept applications, she filled one out. Evans was hired, and was sent to Mercedes’s Sindelfingen factory for six months of training, the first time she had ever been on an airplane, let alone to Europe. Though she had experience at Delphi, and an engineering degree, Evans found that neither had prepared her for the demands of a luxury car factory or for Mercedes’s expectations of quality. “Mercedes definitely had to develop me,” she said. “I’m the last person in the world to say if a product is good or not.”
But at least Evans had worked in a factory. Frida Drymon was a housewife with two sons, looking for work after staying home with them through junior high school. “Miraculously, there was Mercedes,” Drymon said. And incredibly, her husband also landed a job at the plant, though the two work different shifts so someone will be available for their children. Drymon, who is of Native American descent, said her position in the plant’s paint shop has been the equivalent of a university degree. “You go to college out there on the plant floor,” she said. Mercedes, and indeed all the new factories in Alabama, Mississippi and elsewhere, have placed a critical emphasis on employee training. All of these plants have elaborate training facilities built, in the case of Mercedes and Honda, by the state of Alabama on the factory grounds or close by, where they put candidates through a rigorous assessment process as they determine who is best suited. The incentive to make it through is valuable, because take-home pay for one of these jobs can be close to $80,000 a year.
The Talladega County Industry Training Center, for example, is set just across the road from the Honda plant in Lincoln, Alabama, part of the $198 million incentive package that included $20 million for training. Nestled back in a stand of trees, the two-story building at first glance looks like a small company headquarters. Inside the entrance is a banner reading: “Honda: The Power of Dreams.” All around, there is a flurry of activity. In the auditorium, a collection of Honda managers are hearing a lecture on production techniques. In classrooms, Honda employees brainstorm answers to problems that occurred on the assembly line. The pièce de résistance lies below, on the first floor, a wide-open space resembling a plant floor that is divided into two areas.
To the right is a series of 16 workstations where job candidates practice the kinds of tasks they might be expected to perform on the job. There are bins of parts, labeled according to their use, all manner of tools, including screwdrivers and air guns, and instructions in how to perform the simulated work. It is here that the job candidates have to pass muster, during a 48-hour pre-employment process, before they can be certified as graduates of the state’s training program, in turn making them eligible for a job at Honda or one of the state’s other manufacturing employers. It is now typical to see requests for state-certified employees in the classified ads run by employers in the Birmingham News. Some take themselves out of the running right away, said Steve Sheridan, the project manager in charge of this facility. Sheridan, who keeps a black leather Bible on his desk, said applicants quickly recognize whether they are suited for the repetitive work. The rules are strict. Candidates are allowed one chance to be late; any further tardiness and they are dropped from the training program. The applicants, who come on their own time, are allowed to select whether to come on Monday and Wednesday nights, or Tuesday and Thursday, and they also must devote a full Saturday.
Those who make it all the way through have to be truly committed. Honda, which originally planned to hire 2,000 people at its Lincoln plant, received 29,000 requests for job applications. About 16,000 people returned them, and out of that number, 5,000 were invited to come for the training program. Some 3,000 completed the program, yielding the 2,000 people who eventually were hired by the factory. “You want the ones with drive and determination and stick-to-it-tiveness,” Sheridan said. The rigorous process “does allow you to hire the best people,” he added.
But getting hired is only the first hurdle. The Honda employees do not set foot on an assembly line for the first two months. First, they are sent back here for further instructions on actual assembly equipment sites. Here, they do what are called practice builds, getting a sense of what their workspace will be like, understanding just how much stamina will be needed to stay on their feet eight hours a day. At the same time, Honda managers are learning about their new employees—in ways they didn’t anticipate. Though Honda had the experience of having opened plants in Marysville, East Liberty, and Ontario, the plant’s human resources managers still had to adapt to Alabama life. “What hasn’t changed is the Honda philosophy, starting with Mr. Honda’s vision,” said Kathy Jones, senior vice president of business operations. “But we have to be sensitive to the Alabama community. It’s different in Lincoln versus Marysville.”
One of the first lessons the Honda managers learned was the proper way to deal with the enormous hospitality that the state wanted to offer. As the plant site was being acquired, the state assumed that Honda would want to be right next to the freeway, like the Mercedes plant and the Nissan factory that was built over in Canton. They were about to buy up a strip of land next to Interstate 20, where Honda could put up a big sign declaring the plant’s presence, when the Japanese company said no thanks. Instead, the Honda plant sits, virtually hidden from passersby, behind careful landscaping. There is still nothing on the highway that denotes the plant’s presence. “We spent a lot of time politely declining. Some who came before us had been a little more aggressive,” Jones said in an indirect jab at Mercedes’s high profile. “We don’t want to give the impression that Alabamans have to learn Japanese customs. We’d rather learn how Alabamans do things.”
In the same way, the plant has made many efforts to make its employees feel at home. Honda’s plants in the United States and Canada are nonsmoking, but in recognition of the fact that the South is a place where many people smoke, there are tables outside the plant’s doors where workers can have a cigarette during their breaks. “We could have had a no-smoking policy, but that would have placed a big burden on our employees,” said Andy Ritter, a division manager in the administration department. Likewise, the cafeteria features generous portions of southern specialties, from strawberry shortcake smothered in whipped cream to mounds of pork barbecue and Frisbee-sized slabs of chicken fried steak. It isn’t institutional food, either. “We found out that food is a little more important here than in the Midwest,” said Ritter, noting that a typical meal is “meat and three sides” of vegetables or starches. “We knew we had to have big portions.” Other sensitivities have shown up in the work
schedule. Honda learned that it should not hold meetings on Wednesday nights, known as “church night” throughout the region, set aside for Bible study and services. The auto company decided that it would observe the Martin Luther King Day holiday, because of its particular significance to Alabamans, even though it does not give workers at its other factories that holiday off. Since Honda had to make up the lost workday, it decided to keep the plant open on Good Friday, which is not as widely observed in Alabama as it is in Ohio.
The same low-key approach applied when Honda selected the plant. Honda was determined not to see a repeat of the circus that had surrounded the selection of Vance for the Mercedes factory. It had no aversion to incentives themselves. Since any number of states were vying for the plant, the company would have been silly not to have taken advantage of offers to acquire a site, clear the land, build roads and provide a training facility and the like. But Honda manufacturing executive Koki Hirashima was sensitive to the plight the state found itself in with Mercedes when the state fell behind on an incentive payment. Hirashima, in fact, was distressed to learn that the state was going to give Honda a tax abatement on the land it had obtained for the plant. He feared that the state’s education system might suffer without the tax revenue Honda expected to pay. Instead of accepting the abatement, he asked how much the state was going to give Honda in tax breaks, and sent a check for double the amount. “Honda didn’t base its decision on the incentive package, which was a bit of a mystery to them,” Jones said of state officials. “They were ready for us to throw our weight around.”
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