By now, most everyone knows about the Nissan plant in Canton, Mississippi. The much-heralded, enormous automotive manufacturing project was announced in November, 2000. Initial plans for a $930 million, 2.5 million-square foot plant that would produce 250,000 cars a year were soon superseded by the 2002 announcement of an additional $500 million investment for a one million square-foot expansion. The staggering numbers involved in what the Nissan plant will do—and what the state of Mississippi offered to get it—are nothing short of mind-boggling.

Preliminary reports indicate that 5300 people will ultimately be employed by Nissan North America. Already, 78 of Mississippi’s 82 counties have employees on the payroll. Moreover, the jobs are of the higher wage, high tech variety with excellent benefits.

So: What about the Delta? The closest Delta community to Canton, Yazoo City, is a mere few miles from the plant. Will the promised Tier Two and Three suppliers arrive? Will the unprecedented investment made by the state ultimately help the Delta—or hurt it? The Delta Business Journal talked to those closest to the situation to find some answers.

“I don’t think we have any begun to scratch the surface in the Delta with attracting Tier Two and Three suppliers.” So says Robert Ingram, an economic developer in Greenwood. “It may be a ten year time span before we see the growth, but the gains will be there. There are hundreds of Nissan suppliers in Tennessee as a result of the plant there, but it took a twenty year period for a lot of that to materialize.”

Ingram says that, as the South continues to grow as a major automotive market, the Delta is well-positioned for potential suppliers.

“Arkansas will no doubt be landing a plant sometime in the near future,” Ingram says, “and I can see, over the next 10 years, another 50 or 60 suppliers locating here in the Delta.” Ingram also disputes the claim some critics have made that the state gave away too much in the form of incentives to land Nissan.

“Most of the incentives are in deductions, costs, taxes and so forth,” Tommy Hart, of the Industrial Foundation of Washington County says. “I don’t think anybody wrote Nissan a check as some statements have implied. Workers at the plant are going to pay a lot of taxes and support local government units. Multiply that tax revenue by all the workers at the plant and with the suppliers.”

“This plant will be a net positive for the state, there’s no doubt,” he says. “I read the Goodwin study out of Hattiesburg as well as various other similar studies and they are all based on estimates, of course. However, you look at how aggressively Alabama has gone after two more auto plants after having landed Mercedes. They are ecstatic over there and are reporting benefits throughout the state.”

Like others, Ingram says the true value of Nissan’s coming to Mississippi lies in its intangible meaning. “This type of event does not show up on any impact studies,” he says. “Other companies and industries will look at the state a little differently now that Nissan has arrived.”

Sherry Vance, Director of Communications for the Mississippi Development Authority, puts the same point a different way.

“The significant influence the Nissan project has made on the state’s image is vital,” she says. “We have appeared in worldwide publications, from the New York Times to the Wall Street Journal and every major newspaper in between. There is absolutely no way, with the budget the state has to promote economic development, that we would have ever been able to purchase the amount of advertising and exposure a project of this nature has brought us. Millions of people know about this and that is a tremendous advantage.”

Jimmy Heidel, former head of MDA and currently a Warren County economic developer, agrees with Vance. “We could have spent 30 or 40 million dollars marketing the state trying to change those misperceptions that have haunted Mississippi for a long time. Now, with Nissan, we have a test scenario and a great opportunity to erase those erroneous perceptions. The fact that Nissan is in Mississippi is world news. Others are taking serious interest in us.”

Heidel, who has had two major Japanese suppliers locate to Vicksburg because of the plant, praises Nissan CEO Carlos Ghosn. “He is undoubtedly one of the smartest business people in the world,” Heidel says. “His choosing Mississippi speaks volumes to the international business community.”

However, not everybody shares Ingram, Vance and Heidel’s rosy picture of Nissan manna falling on the state. Newspaper publisher Wyatt Emmerich has been a vocal critic of the project since the beginning.

“It cost Mississippi too much,” Emmerich says. “Yes, new hires will pay taxes, but they will also consume government services, so we might break even on that point. The idea that these people are going to create greater revenue is false because, first of all, most of these workers will already employed in the state, thus already taxpayers.

“Second, even if they come from outside the state,” Emmerich continues, “they will still need garbage collected, they drive on our streets, their kids will go to public schools, i.e., they consume services. You don’t make money off of taxpayers.”

Emmerich goes so far to say that Nissan might even hurt the growth of the state in the long run. “Studies have shown that company-specific subsidies have negative impacts on long term growth,” he says. “We opened up the whole state treasury for a private company and, to my mind, that’s corporate welfare, pure and simple. Have we spent half a billion dollars to help a few Mississippians get over their inferiority complex?” Emmerich asks.

Tommy Hart is more optimistic. With Greenville the recipient of a Nissan supplier, the Brown Corporation, he believes that more opportunity is within reach for the entire Delta. But, he says, the Delta has to be prepared and be ready for the call if and when that time comes.

“The theory is that the immediate area in Canton around the plant will see its labor market soaked,” Hart says, “and that will lead to these suppliers looking at other regions in the state for their workforce needs. There’s no doubt the Delta will get looks, not only because of local incentive programs, but also because of the availability of manpower we have here.”

William Shughart, Barnard Distinguished Professor of Economics at the University of Mississippi and noted author, claims that people are too caught up in the sexiness of the project and don’t see the possible economic downsides he believes are real.

“We’re looking at a $363 million subsidy that the state has granted to Nissan,” Shughart says. “While it’s true that we didn’t write the company a check, the state did issue bonds in that amount. The proceeds from these bonds financed construction, roads, access ramps, and a satellite building to the main plant. These bonds have to be serviced and eventually paid off as they mature. So, looking on the horizon, a tax increase is certainly going to be required to pay off this debt.”

Shughart goes on to say those higher taxes will have a detrimental effect on the state’s economy. “I’ve calculated those taxes to average about $292 for every taxpayer in the state. Plus, the inevitable tax increase will prohibit existing firms from expanding and new firms from locating here. Moreover, I see any marginal benefits from the plant to be very localized, only in the Canton area. So while the whole state is paying for it only Canton will see gains.”

Shughart says he also has some fundamental problems with the way Nissan was brought in. “I find it repugnant that taxpayer money, public funds, are being used for private benefit. Tax dollars are supposed to be used for broad, spill-over benefits like police and fire protection, schools and so forth. In my opinion, there is no justification in using tax moneys to subsidize a private firm.

If tax concessions and incentives are good for Nissan then they’d be ever better for the Delta,” Shughart continues. “I have recommended that Mississippi really take some bold steps, like eliminating the corporate income tax altogether, zero it out completely. That could be done statewide, or in a selected region like the Delta. This alone would generate lots of activity. But, the political problem would be the state losing tax revenue in the short run; it would take time for the offset to take place. Unfortunately, politicians are much too short-sighted and pragmatic to give up tax revenue on any margin.”

Buzz Canup, of Canup & Associated, was the project director of the Nissan Implementation Team of the Mississippi Major Economic Impact Authority and MDA. He has been responsible for all of the work/activity related to Nissan’s construction, recruitment, expansion, etc. He disputes Shughart’s prognosis and claims that Mississippi will be in a cash-positive profile in the year 2007.

“The state did indeed commit $363 million for Phase I and II out of general obligation bonds,” Canup says. “But these funds are managed like a mortgage on a house. The money is not put out on the front end.”

Canup, who is contracted to work on the project until June 30, 2004 calls Nissan “great news for Mississippi. Starting in 2005, this plant will manufacture 400,000 vehicles a year which will no doubt lead to the establishment of a greater number of suppliers. I believe that these new suppliers will actively seek to distance themselves from the Canton facility in order to avoid competition for labor.

“The counties and communities in the Delta, who stand to benefit from this fact, must be prepared for the attention they will be receiving,” Canup goes on to explain. “Most of these suppliers are going to come in here on a fast track. Up and running industrial sites are a must; that will help the suppliers save time. They will be on a tight schedule, just as Nissan was. It may take these suppliers a year to make a decision to get contracts in place, but once they do, typically, they will only have about to year to start manufacturing.”

Canup says that Nissan will put Mississippi on the map for more mega-projects in the future. “This is truly a situation beyond anyone’s imagination,” he says. “We will get more looks here just as Alabama did after Mercedes came in.”

In fact, Nissan’s Canton plant manager, Dave Boyer, made the statement recently at a press conference that since the Smyrna, TN Nissan plant opened 20 years ago, there are now over 850 suppliers throughout that state. Boyer has indicated that the same type of supplier-network is possible for Mississippi.

The bottom line is that only time will tell what Nissan’s Canton facility will ultimately mean to the Delta. Economic development experts agree that the Delta must be prepared for when the time comes—and it could come suddenly—when suppliers hopefully begin lining up to locate here.

“The rest of the world has noticed what’s happening here,” Governor Ronnie Musgrove stated as the first vehicle rolled off of Nissan’s assembly line in May. The hope is now that the Delta will be noticed, as well. DBJ