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Everything is looking up down South

The Southern United States began this year very strongly. Despite the global slump in petroleum prices, the region’s oil-producing states, such as Texas and Louisiana, have lessened their dependency on the commodity and diversified their investment bases. Georgia and Florida, for instance, are positioning themselves as logistics hubs and are building industrial parks to accommodate high-tech manufacturers.

Consul General of Japan in Atlanta Kazuo Sunaga

“In the South, Japanese companies are growing in number and increasing the value of their investment and employment. Many Japanese manufacturers have decided to come here,” said Consul General of Japan in Atlanta Kazuo Sunaga.

Japan has a very high profile in the Southern United States as each state deepens that bilateral relationship based on their unique strengths. Over time, the region has attracted investment in the automotive, manufacturing, oil and gas, energy, petrochemicals, technology, aerospace, agriculture and logistics sectors.

“As of December 2014, we cover five states — Alabama, Georgia, North Carolina, South Carolina and Virginia. There are roughly 1,500 Japanese companies in these five states. In Alabama, the number of Japanese companies almost tripled in the last 12 years, while in Georgia, it doubled,” said Sunaga.

From Nashville, Tennessee, the consulate general of Japan attends to another five southern states that have intensified efforts to lure more Japanese investments to their respective regions.

“Our consulate covers Arkansas, Kentucky, Louisiana, Mississippi and Tennessee. Every state is providing great incentives, a good geographical location, great taxation systems and the right to work,” explained the former Consul General of Japan in Nashville Motohiko Kato.

Among its many advantages, the region is a valuable transportation and logistics hub, given its proximity to the Panama Canal, which is increasing its capacity next year, and to Cuba, which will see an end to the long trade embargo with the United States.

From Nov. 14 to 17, the city of Birmingham, Alabama will host the 38th Annual Joint Meeting of the Southeast U.S./Japan and Japan- U.S. Southeast Associations (SEUS Japan), which will bring together business leaders from the two countries.

Florida: The prefect location

In 2013, Gov. Rick Scott led a local delegation to Japan to invite companies to invest in the state. Currently, there are more than 200 Japanese companies in Florida employing more than 20,000 people.

Consul General of Japan in Miami Shinji Nagashima

“Florida has a lot of advantages. Many Japanese companies have established their Latin American headquarters in Miami because of the access to Central and Latin America,” said Consul General of Japan in Miami Shinji Nagashima.

“We were one of the earlier manufacturing-focused companies that chose to locate in Florida. The state government of Florida supported us coming here. Looking at our success, Florida remains keen on increasing high-tech and basic manufacturing,” said Mitsubishi Hitachi Power Systems America President and CEO David Walsh.

Japanese companies aside, the state is also the preferred base of operations for many other American and international investors because of that geographical advantage.

Florida has become an essential springboard to Latin America, thanks to its world-class ports and international airports.

“Florida has become a more cosmopolitan state, where the international community has come to invest. Florida’s economy continues to grow at a very high rate. It has an unbeatable quality of life, low taxes, a great pro-business environment and a governor very keen on helping businesses,” said Dave Woodward, executive director of the Florida delegation of the Southeast U.S.-Japan Association.

 Georgia: Expanding its base

Two years since his first trade mission to Japan, Gov. Nathan Deal has seen his efforts pay off. Regarded as the center of Japanese industry in the Southeast United States, Georgia is working to diversify its economy and improve its infrastructure to attract more Japanese capital, which has reached $10.4 billion to date.

Georgia Gov. Nathan Deal

With 547 Japanese-affiliated companies providing jobs to more than 20,000 Georgians, the Asian giant has become an important partner to the growth of the state economy.

“Georgia’s world-class infrastructure, top-notch workforce and accessible resources provide an ideal business climate for international companies looking to relocate or expand. We work hard to advance partnerships and improve existing ties with successful international markets,” Gov. Deal said.

Georgia’s Department of Economic Development has identified new areas of growth (international trade, tourism, film, arts and innovation centers), while building on existing ones (agriculture, aerospace, automotive, energy technology, IT, logistics and manufacturing). 

“In terms of the international projects we currently have going on right now, Japan is number one. Our Japanese partners are critically important in the automotive sector here in Georgia,” said Georgia Department of Economic Development Commissioner Chris Carr.

Georgia and Japan have enjoyed fruitful cultural and economic ties ever since the state opened an office in Tokyo more than 40 years ago. While Japan remains the world’s fourth-largest importer and exporter, Georgia can rely on business from

Louisiana: A logistical dream

Dating back to the 1930s, ties between Japan and Louisiana have grown deeper over the decades. The state ranks No. 1 in

Louisiana Gov. Bobby Jindal

attracting foreign direct investment, and Japanese companies have emerged as important pillars in that development.

With 42 Japanese companies operating more than 160 facilities in Louisiana, Japan represents more than half of all Asian foreign direct investment projects in the state.

“There are a number of Japanese companies that have started their operations here, especially in the petrochemical and manufacturing industries. It’s a growing list,” said Baton Rouge-based construction firm Turner Industries Group CEO Roland M. Toups.

In 2014, Gov. Bobby Jindal traveled to Japan to meet with some of the country’s top business leaders and invite them to invest in Louisiana.

“As the gateway to North America, through the Gulf of Mexico and the Mississippi River, Louisiana’s extensive infrastructure of ports, pipelines, Class I railroads and interstate highways is unrivaled,” Gov. Jindal said.

“We look forward to deepening and strengthening the relationship between our cultures and the bonds that keep our economies strong,” he added.

Tennessee: Focused on Japan

Accounting for 60 percent of total foreign investment, Japan has poured in more than $15 billion into Tennessee’s economy, which has resulted in more than 40,000 jobs for local residents. 

Nashville Area Chamber of Commerce President and CEO Ralph Schulz

“Japan is Tennessee’s number one source of foreign direct investment, and no other country comes close. We feel that we are the Japanese epicenter for this region in the United States,” said Nashville Area Chamber of Commerce President and CEO Ralph Schulz.

As the first Japanese carmaker to set up shop in Tennessee and the Southeast in the 1970s, Nissan blazed a trail for Japanese businesses and other companies as it attracted a host of automotive-related manufacturers and suppliers.

“We have a really strong base in the automotive sector with more than 900 suppliers and manufacturers. One of the things we would like to do with our existing partners is to help them expand their research and development capabilities in this state. We are creating the infrastructure to make that happen through the investments in education,” said Commissioner Randy Boyd of the Tennessee Department of Economic and Community Development.

“Japan is our number one partner in the world today. We want to continue building on that relationship. We look forward to welcoming new businesses and helping our existing partners expand their operations here. We are committed to creating the infrastructure and ecosystem to be able to do so,” Boyd also said.

Texas: Going high tech

During former Gov. Rick Perry’s visit to Japan in September 2014, he highlighted the importance of his state’s relationship with the country and urged businesses from both sides to further expand their collaboration.

Texas Gov. Greg Abbott

Later that year, at an event hosted by the Japan-America Society, the Consul General of Japan in Houston Nozomu Takaoka issued a similar call: “It’s very important for Texas and Japan to strengthen their relationship. Those ties are the cornerstones of U.S.-Japanese relations.”

Arguably the flagship Japanese investment in Texas, global car giant Toyota will move its U.S. headquarters from Southern California to the city of Plano. The carmaker plans to build a $300 million campus that will employ nearly 4,000 people by 2017. Kubota Tractor Corp., announcing relocation of its U.S. headquarters earlier this year, followed this move.

Aside from a low tax system, flexible regulatory environment and highly competitive business climate, the state’s central location and proximity to Mexico and other Latin American markets have encouraged other Japanese companies to invest in Texas.

Takaoka elaborated on the state’s attractiveness: “As the geographic center of America, Texas has become one of the premiere destinations for Japanese investment in the United States. Last year, Latin America opened up its energy sector to foreign investment. With the Panama Canal increasing its capacity by 2016, Texas has become a very strategic location for Japanese energy companies.”

As a leader in the aerospace, aviation, biotechnology and life sciences, energy and agriculture industries, Texas has also built one of the country’s largest IT and communications centers.

With the influx of Japanese investment into Texas, there is much anticipation for greater collaboration, particularly in the game-changing high-speed rail link, which will be the country’s first ever when inaugurated, that will connect Dallas and Houston.

“The Lone Star State offers a chance to thrive in an economic environment free of over-regulation and overtaxation that limits success. In Texas, we are cutting the burdensome business franchise tax by 25 percent, freeing businesses to invest more in new jobs, higher wages and stimulating the Texas economy,” said Gov. Greg Abbott.

“And with Texas already offering one of the lowest overall tax burdens in the nation, with no corporate income tax, no individual income tax and no property tax at the state level, I welcome the opportunity to meet with any company considering a move to our great state to explore what Texas has to offer,” the governor added.

Southern USA 2015 was prepared for and originally printed in The Japan Times Newspaper.

PDF of the printed report

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