Saturn, a car that won't even roll off the production line until sometime during the next decade, has forever altered the drive of U.S. cities and states as they seek new jobs for their residents.
It's been three years since the war for the Saturn plant ended, yet the fallout from the fight to get the hottest industrial prospect of the decade continues to influence public and private efforts to spur economic development."Saturn got everybody working together toward a common goal. The proposals were put together in ways never done before," said Robert M. Ady, president of Chicago-based Fantus Co., one of the largest site selection firms in the nation. "The information generated and relationships established will carry on well into the future."
Scott Eubanks, executive vice president of the Dallas Partnership - the privately funded economic development arm of the Dallas Chamber, said the competition for Saturn "has had the most impact" on the business of economic development of any major prospect.
When Saturn was first announced in January 1985, the stakes were high.
The state-of-the-art plant would produce vehicles for General Motors Corp.'s first new car division since the Chevrolet was introduced in 1918. It was to be GM's answer to foreign imports. Saturn would employ 6,000 workers, and estimates were that more than 15,000 indirect jobs would result from suppliers locating near the plant.
And the response was overwhelming.
"There was pressure on every state and local official in America to get Saturn, even though many knew it was not realistic," Eubanks said. "They had to try."
And try they did. Enticing site proposals from 38 states and hundreds of communities filled rooms at GM headquarters. Twenty-five governors personally visited Saturn executives in Detroit. The competition for Saturn prompted many states and communities to offer incentives they believed matched the plum.
Iowa proposed to pay the plant's wages for the first six months of production. New York officials offered Saturn what they estimated was at least $1 billion worth of free electricity delivered through the New York Power Authority. Minnesota assembled a $1.3 billion incentive package for the $5 billion Saturn project.
It was an emotional competition, and when word leaked out that the tiny hamlet of Spring Hill, Tenn., was the winner, egos were bruised nationwide.
After the initial disappointment, business leaders and politicians began re-evaluating their efforts to retain and attract business. Economic development became a high-priority issue, and many local and top level state officials have been elected on strong economic development platforms since the Saturn episode.
More important for the professionals and civic leaders in the business of economic development, it brought to the forefront the controversial issue of whether to offer expensive incentives.
"It changed economic development permanently for the United States. The key word it brought to the equation is incentives," Eubanks said.
Not to be left out, U.S. and foreign companies inspired by the deals offered GM, became bold in their requests for incentives. It was no longer taboo to ask a community what it was prepared to offer.
Prior to Saturn, many firms regarded the pursuit of incentives as beneath them, Eubanks said. But when one of the largest companies in the world was being wooed with grandiose packages, "every company in the world felt it could go to the highest bidder."
Incentives have "gotten out of hand," said Joe Healey, a senior real estate project manager for Amoco Corp. "Some communities promise too much, and the whole thing becomes a detriment to the state or city where the project was located."
Most economic development groups, both at the state and community level, are still confused about incentives, "but all of them are still thinking about it," Eubanks said. "Politicians - many for the first time - had to face the question: `Do we want to buy an industry?' "
The kinds of expensive incentives offered to Saturn couldn't be raised in the private sector - but tax-collecting governments could raise them.
Those big-time incentives offered for Saturn have left yet another lasting influence on economic development: the increasing involvement by government.
That was especially true in Texas.
Texas is undergoing a "tremendous transition from a reactive marketing approach to a pro-active marketing approach," said Fantus' president Ady, who has personally worked with several economic development groups in Texas.
During the 1985 race for Saturn, the staffs of the former Texas Economic Development Commission and the Governor's Office of Economic Development pushed hard to get Saturn, devoting much of their time and resources to the effort.
"The agency just wasn't given visibility, resources or the political support to be effective and that stimulated a whole series of events that evolved into the Texas Department of Commerce," said Daron Butler, a former assistant city manager of Austin.
"Then after the oil price plunge, it all came home to us in Texas," said Butler, now a partner in an industrial site-location firm in Austin. "All we had was a state agency with a little budget and a small staff, and we only had that because other states had them."
The old Texas Economic Development Commission "didn't need to be important because in Texas the thought was we didn't need any help," he said. "It created a false sense of security."
Last year, the Legislature and Gov. Bill Clements created the Texas Department of Commerce, a consolidation of seven previously disjointed state economic development agencies.
The agency is still too new to be declared a success and many still believe it is comparatively underfunded.
The response in Texas to a need for stronger economic development efforts "has only occurred recently," Ady said. "I think the swell for economic development bodes well for the future."
But a delayed response in Texas to the need for organized statewide efforts has set the state back two years, Ady said.
"It's taken two years to fill the pipeline," Ady said. "The prospects dried up as they re-evaluated Texas or postponed their decisions about Texas while the rest of the country was perking along reasonably well."
However, in 1987, Texas ranked second behind California in the number of new industrial facilities and expansions of existing ones, according to an annual survey by the Site Selection Handbook, an economic development trade publication. Last year, Texas had a total of 263 new facilities and expansions of existing companies in the state, just behind California's 264. Florida was third with 222 facilities.
Ady said his experience with clients revealed "a great concern about where the bottom was in Texas."
"Wherever there is uncertainty, companies worry that taxes will go through the ceiling, infrastructure will collapse. They start saying, `I don't want to build my headquarters in a state that's going down the tubes."'
Had a strong marketing effort been in place, many people could have been reassured, he said. From the perspective of being on the receiving end of economic development efforts, Ady said, "These groups help us in terms of generating information and making sure a community has the infrastructure to attract industry."
The heightened competition for Saturn forced communities to know where they rank and how they compare to cities nationwide, resulting in the creation of data bases that include the most minute infrastructure details.
As a site location professional, Amoco's Healey said he appreciates this post-Saturn improvement. "Before Saturn it was sketchy.
"Since Saturn, these groups have become much more professional in their approach," he said. "They have large data bases with hard facts because they themselves want to know where they rank in different categories that we're interested in."