Supported By a Megadeal, Volvo Choses South Carolina

May 18, 2015

Swedish automaker Volvo has chosen South Carolina over Georgia and North Carolina for its first car-making facility in the United States. A hefty subsidy package of more than $200 million helped the state close the deal.

Volvo, owned by a Chinese investment company but still managed from Sweden, will locate in Berkeley County, about 30 miles north of Charleston. The company is planning to invest $500 million and to hire 4,000 workers by 2030 (the first hiring benchmark will be 2,000 workers in about a decade).

The $208 million package will include $120 million that the state will borrow to pay for infrastructure and road improvements around the plant. The economic development bonds still need to be approved by the legislature. The South Carolina Commerce Department will provide about $30 million in grants, most likely via Job Development Credits. State-owned energy company, Santee Cooper, will spend $29 million to buy the land for the plant and will provide an additional $24 million in loans and grants to the company. Berkeley County will chip in $5 million toward the purchase of the land as well. The reported value of the subsidy package is about 41 percent of Volvo’s investment.

The final cost of the subsidy package, however, might be much larger than what has been reported. The package amount includes neither funds for workforce training nor the value of local property tax breaks.

By locating in South Carolina, Volvo has chosen a state that not only has a “right-to-work” law but also a governor who is openly anti-union . It remains to be seen whether Volvo, which has strong ties to unions in Sweden, will join the long line of European and Japanese companies that gladly operate non-union in the U.S. or will follow the exception to the rule, Volkswagen, in being receptive to some sort of worker representation.

Based on what has been announced, the Volvo subsidy package would rank as the third largest megadeal ever awarded in South Carolina (behind the $900 million to Boeing in 2009 and the $250 million to Continental Tire in 2011), according to data compiled by Good Jobs First for our Subsidy Tracker . Another automaker, BMW, has been located in South Carolina since 1992; it received $150 million in 1992 and another $103 million in 2002.

Learning the full value of the Volvo package will be difficult, given the state’s poor disclosure practices. Now would be a good time for South Carolina to improve its transparency.