Oklahoma is not an automotive hub, but the state hopes to put its best foot forward toward greater involvement with the sector, sending an official this week to the Southern Automotive Conference in Nashville.
Jennifer Springer is the director of Global Investment and Trade at the Oklahoma Department of Commerce, and she has staked out booth 716/714 at SAC2019 hoping to drum up automotive business, and specifically supplier business, for her state. It’s not her first stop on the goodwill tour. The interview has been edited for clarity.
Q: Tell me about your journey to increase Oklahoma’s share of the automotive pie. I know you’ve been traveling.
JS: Yeah, doing a lot of traveling – trying to get the message out. So one of the things that we noticed through the data that’s been coming out for foreign direct investment is that a lot of the companies in the Southeast that are clustered around the automotive industry, there’s a couple of phenomena that are going on. First, wages are being pushed up because those employees are moving back and forth to different companies with different job openings that have better, you know, better opportunities, and so it’s causing wage pressure on these smaller to mid-size parts manufacturers. And so we noticed that that corridor is shifting to the west. And so that puts Oklahoma in a prime spot.
Q: What are you hoping to see?
JS: Automotive parts manufacturing suppliers in the state of Oklahoma that could feed through our transportation system to the Southeast where most of the OEMs or the Tier 1 companies are.
Q: What makes Oklahoma the right place for that shift?
JS: Our geography is unique; we are right in the middle of the United States but we’re also at the crossroads of I-35, which goes from Canada to Mexico, and then I-40, which goes east coast to west coast. Plus we have a port system and rail system, so we really have an advantage for those parts manufacturers that are not just-in-time to the OEM suppliers, but have a little bit more length in their deadline that allows them to locate a little further away being able to hire quality workers and not have to compete with some of the OEMs and Tier 1 companies for wages. So …it’s a good opportunity for us there.
Q: Does your proximity to Mexico and the NAFTA-replacement treaty – the USMCA – figure into your approach?
JS: I think another opportunity that we have for Oklahoma is with the new Mexico and Canada agreement – trade agreement that should be coming to the floor here in the next month or so in Congress. There’s a couple of things that ended up in the Mexico portion of that treaty. … By 2023 auto workers in Mexico are going to have to be paid at least $16 an hour, and then 75% of automotive parts are going to have to be manufactured in the United States for cars built in the United States as opposed to, I believe, 62 or 63%. So there’s a lot of automotive parts manufacturers that are across the border in Mexico that are looking probably to reshore into the United States, and I think that really gives Oklahoma an opportunity there to feed into the Southeast corridor – automotive corridor – yet still [have] good wages, good workforce.
Q: Talk about your workforce.
JS: You know, we’ve got a robust workforce system that’s being reworked, and we have the dollars with our career tech that helps put together specialty programs to train them. So I think it’s just a really good time for us to be involved in the automotive parts manufacturing industry.
Q: How much of your economy is connected with automotive at the present?
JS: I don’t have that figure off the top of my head, but … Oklahoma is a very large aerospace state; it’s arguably our biggest industry. But there is a lot of crossover in parts manufacturers and capacity…machining capacity. So there’s companies that may be labeled as [aerospace] that are doing a little bit of work in the automotive industry, as well. So we’re working right now to identify the amount of companies who we have in the state that’s doing that, and then feed that information into parts manufacturers.
Q: How did Oklahoma sort of come to the conclusion that this was a sector of industry that you wanted to go after?
JS: Well, I think two things. You know, watching the data, seeing the movement of the corridor to the west, but secondly one of the things about automotive parts manufacturing it at least 20% of those companies coming into the United States locate in rural areas. Oklahoma has a very unique geography where we do have two metropolitan areas that are very robust, that are heavy into aerospace and energy, but we have a lot of rural areas that would have sites and a workforce that could support these automotive projects.
Q: Tell me about your travels to recruit business in the industry into your area. Where have you been? How’s it going?
JS: So, a couple of things. First, we’re conducting research and looking to see the automotive industry as a whole, where could Oklahoma play in the subsector surrounding the automotive industry – what would be advantageous and where would we have an opportunity as a state to participate in those industries? And then, working with our workforce and establishing programs proactively that would help us recruit. That has to be done here in the state. We were lucky that the Oklahoma legislature had a line-item budget to help us break into the automotive industry, and so we’re utilizing those dollars to conduct research. But then we also have an aggressive recruiting campaign. And so we’re visiting some shows around the United States that are going to be automotive-centric, and then we also will be at the Stuttgart Automotive Show in the spring and working with various chambers of commerce around the world, especially in Germany and the UK and France where automotive plays a bigger role in the economy – working with their chambers to show off what Oklahoma has to offer and then help make connections with Oklahoma businesses here in the state.
Q: So how would you say it’s going in terms of your outreach to European manufacturing of the European interests?
JS: Well, it’s going very well. We’re in our early stages. You know, we just launched this initiative at the end of last year, but it has been a very well-received message; they’re very curious about the state of Oklahoma and what we have to offer. And I think this dovetails nicely with the lieutenant governor’s [goals] …He has a project to rebrand the state of Oklahoma to give everybody around the state – all industries and all efforts on tourism and commerce a clear and consistent message. So really, utilizing that launching into our recruitment strategy, so far we’ve seen a really good response with companies that are interested and want to know more about Oklahoma, so we’re working through that with them.
Q: Talk about the engineering tax credit and how that drives your initiatives.
JS: Yeah, so one of the items that was completed by the Oklahoma legislature last year was the Automotive Engineering Tax Credit, and that is very similar to the Aerospace Engineering Tax Credit, which has been very successful for Oklahoma for recruiting engineers to come to the state and work at advanced technology aerospace companies. And so we passed that legislation last year, and it went into effect. And what that does is that it not only assists companies that are hiring engineers in the state, it gives a credit to the engineer that locates here or stays in the state and works at one of these companies. It helps uphold the message that Oklahoma invests in its workforce and we’re here for them, too. And so this is really a first of its kind that we’ve found in the automotive industry, and we think it will be a very helpful recruiting tool going forward.
Q: So the companies hiring these engineers get tax credits equal to 5% of the compensation paid to an engineer, and 10% if the engineer graduated from an Oklahoma college or university. Is that right?
JS: Right. Correct.
Q: And another 50% of the tuition reimbursed to the employee, and the engineer gets a tax credit of $5,000 a year, is that right?
JS: That’s correct. … And I can tell you on the aerospace side, the engineering tax credit, which is similar, has been a very good recruiting tool for companies like Boeing who have moved engineers into the state, and have expanded drastically what they’ve been doing in the state of Oklahoma.
Q: When you are at the Southern Automotive Conference next week, how will you be getting your message across? What will you be doing primarily when you’re there?
JS: So we’ve scheduled meetings with companies that will be attending, talking to them about kind of their business plan and model. We understand that companies are mostly working with the assets they have and then at a certain point that they are able to expand…so building those relationships with those Tier 1, Tier 2, Tier 3 companies, talking through kind of their business strategy, doing a little bit of research, learning kind of what their plan is and how they see the industry going, and then talking about Oklahoma and some of the assets that we have available to help them be successful in the state.
Q: To sum it up, is there anything that you would like readers to know about Oklahoma and about your effort here at outreach?
JS: I think I would say Oklahoma is open for business. We aggressively are working with companies to find a location in the state. We invest in our workforce. This is the most important asset that we have in the state, and we are implementing programs to help companies be successful. And we have a top down – from the governor down to the Department of Commerce – a very flat relationship that allows us to mobilize and move quickly and invite companies to come to the state.