Right to Work States Dominate Auto Production

Investment in South Carolina BMW Plant Soon to Exceed $7 Billion

(From the August 2014 National Right To Work Committee Newsletter)

The extraordinary success of BMW’s factory located in Right to Work South Carolina, documented in considerable detail by reporter Christoph Rauwald in a July 13 article for Automotive News Europe, is illustrative of how states with laws prohibiting forced union dues dominate U.S. auto production today.

As Mr. Rauwald pointed out, BMW’s plant, located near Spartanburg in South Carolina, will employ 8,800 people by 2016 and is “already the biggest exporter of U.S.-made light vehicles” to markets outside of North America.

‘Good Cars Can Be Made at a Reasonable Cost in the U.S.’

Once an ongoing expansion is concluded, BMW will have poured $7.3 billion into the site. The expansion is expected to increase capacity by 50%, to “as many as 450,000 vehicles a year.”  Within two years, more BMWs will be made in South Carolina than anywhere else in the world.UAW and BMW plan to expand in Right To Work state of South Carolina

With regard to BMW’s “gamble” in investing in the South Carolina plant in the early 1990’s, Mr. Rauwald quoted Erik Gordon of the University of Michigan’s Ross School of Business:

“The plant overcame qualms to show the world that good cars can be made at a reasonable cost in the U.S. That led to a renaissance in carmaking . . . .”

More Than 70% of Current Auto Output in U.S. Occurs In Right to Work States

Besides furnishing compensation that is very attractive, especially given Spartanburg’s low cost of living, the BMW factory features state-of-the-art automation such as robots whose “flexible arms . . . help workers lock in plastic frames inside a door, relieving them of a task that can cause wrist injuries.”

National Right to Work Committee Vice President Matthew Leen commented that the very “flexible work rules” that Mr. Rauwald and many other industry observers recognize as key to BMW’s success in South Carolina are endemic to states that prohibit forced union dues.

“Right to Work states represent the future of the U.S. auto industry,” said Mr. Leen.

“As recently as 2002, U.S. Commerce Department Bureau of Economic Analysis [BEA] data showed that less than 21% of total U.S. output in automotive manufacturing took place in Right to Work states.

“Now it’s safe to predict, based on the latest available data and ongoing trends, that this year the 24 Right to Work states combined will yield more than 70% of the total U.S. production in this sector, in dollar terms.

“A large share of the Right to Work growth since 2002 can be accounted for by the fact that Michigan and Indiana, respectively #1 and #2 in automotive GDP, both passed laws prohibiting compulsory unionism in 2012. But this is far from the whole story.”

Right to Work Output Soars, Forced-Unionism Output Stagnates

Mr. Leen explained: “Excluding Indiana and Michigan from the U.S. total, and considering just the 22 states that had Right to Work laws from 2002 to 2012, the Right to Work share of nationwide automotive output grew from 36% to 52% over the decade.

“Real automotive manufacturing GDP in these 22 Right to Work states grew by 87% from 2002 to 2012, but it fell by 2% in forced-unionism states (again excluding Indiana and Michigan).

“The overwhelming advantage Right to Work states have enjoyed over forced-unionism states in attracting automotive manufacturing investment ought to put the burden of proof on Big Labor legislators in states like Kentucky, Missouri and Ohio.

“The union-label politicians claim it makes no difference to companies considering new plant construction or expansions whether unionism is voluntary or not.

“If that’s the case, how do they explain why automotive manufacturing output is soaring in Right to Work states as a group, but stagnant in forced-unionism states as a group?”