Commerce Secretary Harry Lightsey joins Gavin Jackson to discuss the latest Scout deal and overall economic development in the state.
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Gavin Jackson: Welcome to This Week in South Carolina. I'm Gavin Jackson. With the announcement of Scout Motors investing $2 billion to open a plant in Richland County, South Carolina continues to see a manufacturing boom in the state. Commerce Secretary Harry Lightsey joins me to discuss the process of landing the deal and the state of economic development in South Carolina. Secretary Lightsey thanks for joining me today.
Secretary of Commerce Harry Lightsey: It's my pleasure. Great to see you.
Gavin Jackson: So we've been meaning to get you on the show for some time now. I know you became Secretary back in 2021, and a lot has happened during your time here, since you took the reins from longtime Secretary Bobby Hitt, but before we get into economic development talk, I just want to get some of your background, if you could just explain your background, where you came from, I think this is a second or third act for you coming from the private sector.
Secretary of Commerce Harry Lightsey: At least the second or third act. So, really spent the majority of my career in telecom, mostly with the regional Bell operating company in the southeast region, Bell South, and then after Bell South and AT&T merged, retired from AT&T and then joined General Motors, and spent about eight years with General Motors retiring from there. In 2019, I did a brief, some brief work with a small consulting firm called Hawksbill advisors that some friends of mine who had worked with at both at AT&T and at General Motors, and then COVID hit and we kind of went through that like everybody else, and about the time we were coming out of COVID, Secretary Hitt decided to step down and I had this opportunity, and I was very, very blessed to be able to spend some time serving my home state.
Gavin Jackson: Secretary Lightsey let's just start with the biggest news here so far this year, and that's a Scout Motors deal, that $2 billion deal 4000 new jobs coming to the Midlands in the coming years. Tell us about the significance of this deal, and just what it means for the region at this point.
Secretary of Commerce Harry Lightsey: Well, so I think the Midlands is one of the areas that really and of course, it's my hometown, Columbia is my hometown I grew up here, but it has, it has lacked an industrial identity. If you think about BMW in the Upstate, and Boeing and Volvo in the Low country, the Midlands has been identified largely as the state capitol, the seat of state government, and once upon a time, it was kind of a financial center of the state, but that eroded with interstate banking, and so I think the Midlands has kind of lacked that industrial identity, and I think Scout Motors really provides that opportunity for the Midlands, to establish itself, just as the Upstate has been able to, and the low country has been able to so I think it's really exciting. Scout Motors' home is going to be here in the Midlands, and I think that is very significant. You know, they are just getting started with this brand, but it is a brand owned by the largest automobile manufacturer in the world, which is Volkswagen, and this will be their home facility, and you know, that I think is going to be substantial in terms of identity as well. So I think you know what BMW has meant to the Upstate over the last 30 years and going forward, what Boeing and Volvo have established in the Low country just in the last 10, 15 years. That's the kind of identity that we're talking about, I think for the coming years and decades for the Midlands as well with Scout Motors.
Gavin Jackson: So transformational investment right there. Can you give us a little background sir, about how this deal materialized and what made the Blythewood site so appealing to Scout Motors?
Secretary of Commerce Harry Lightsey: Well, I think the Blythewood site is appealing for a lot of reasons and certainly that's what we continue to stress with the company once they started looking at us. You know, it is a great location on I-77, which is a major interstate highway, which provides a high level of visibility, particularly for people who are traveling from the north and Midwest, to the south to come to our beaches in South Carolina and Georgia and Florida. So I think that is definitely important. Our location really is the center of the southeast, which is the fastest growing region in the country and so the logistics of being able to reach the entire southeast are, were incredibly important, and frankly, just our location, Columbia is almost exactly halfway between Miami and New York City, and from their site, literally they can, over two thirds of the US population is within a one day's drive. So, you know, the all of that is, is very, very important to them, and I think, you know, this is going to be an American vehicle Made in America for the American market, they want to be identified with that, and South Carolina's location is perfect for that.
Gavin Jackson: We can stick with Scout for a little bit too, and because a major factor in this deal, too, which was really kind of came together, I think, in about two months after we were passed over originally. But one of the big factors was the $1.3 billion incentive package that we offered them. Can you tell us where that money's coming from and how you ensure that taxpayers get the most bang for the buck and return on investment here?
Secretary of Commerce Harry Lightsey: Yeah, so first of all, I'll say that, you know, this is a very competitive process, and we learned that Scout had looked at 74 other sites and in a variety of other states, and so we think our incentive package, as it turned out, was very competitive with other states. I don't know, officially, if we were offering any more or less than other states, I think we were all very competitive, but the other thing about our incentives that I think I can't stress enough is that we are not just providing money to the company. This is actually money that is being invested in the site in South Carolina. So, for example, this will pay for a highway interchange in addition to serving Scout Motors will also serve the residents of the fast growing Blythewood area, it will pay for railroad infrastructure, and additional roadwork and site work itself. So the money is going to be spent in South Carolina, on the site on South Carolina, and as such, the taxpayers of South Carolina have the benefit of that investment, in addition to Scout Motors. So it's not like we're just handing a big company check. There has been some misinformation about that. But I just want I would love for the viewing audience to know that we're going to be very careful in terms of how this money is spent. All of the money has to be I guess vouched for. We have to have documentation that proves how they've spent the money before it will be dispersed. So, you know, we will make sure that it is spent appropriately and on the right things.
Gavin Jackson: Yes, Secretary because there's always been some heartburn over offering incentives, some call it corporate welfare, especially when deals fall apart, like we saw with the Panthers deal up in Rock Hill, you know, there's fears of wasted money being spent. But is this basically the cost of doing business these days when it comes to these incentive packages, and making sure there are callbacks in there, so we get that money back?
Secretary of Commerce Harry Lightsey: Yeah, that's a great point about the clawbacks. We do have clawbacks in this agreement. So if Scout Motors fails to, to reach the performance hurdles that it has agreed to contractually, we are, we do have the right to get the money back that we have invested in the site for them. So in addition to having a much improved site, we have the ability to actually get up to almost $800 million of that investment back. So we would have the benefit of all the improvements on the site plus the $800 million back, and those clawbacks are guaranteed by Volkswagen, which, as I said previously, is the largest automobile manufacturer in the world and the seventh largest company in the world. So, very substantial company, we feel very secure with their guarantee of the clawbacks and the payback of a $200 million loan that they're going to use to make further improvements on the site itself.
Gavin Jackson: Secretary Lightsey, when we look at having another auto manufacturer in the state, I think this will be our fourth, what does that signal to the country? I mean, are we...? How is that position our state going forward? Are we pretty much an automotive state at this point? I know we build planes as well, but how do we stack up when we look at other states when it comes to the automotive industry?
Secretary of Commerce Harry Lightsey: Well, I think this certainly puts South Carolina on the map as an automotive powerhouse having a third major global OEM here in our state. We're a small state geographically, but having a three major global OEMs, located here in our state, certainly positions us with some much larger states, like Michigan and Tennessee, and Georgia and others. So I think that this sends a great signal in terms of suppliers. who want to locate here to be close to these global OEMs. You know, we also have several other companies that are producing vehicles. As part of this mobility revolution. Proterra makes transit buses, Oshkosh Defense will be making the next gen- eration postal delivery vehicle, Mercedes makes vans the sprinter vans in the low country as well. So, if you add all that together, plus the over 500, suppliers that we have here in this state 75,000, plus South Carolinians already working in the auto industry, and I think we're positioned for tremendous growth going forward into the future. It's a key part of our economy. I think it's also important to stress that, you know, the automobile industry is undergoing its biggest change since the days of Henry Ford. You know, they're making this changeover from the gasoline combustion engine to the battery electric vehicle, and in order to protect the jobs that we do have here in this state and the automobile industry, we have to make that pivot with the industry or else, all the folks that are working here, their jobs are at risk, as they are identified as working with an outdated technology. So I think it's very important for us to send the signal that we are embracing this feature for the automobile industry, we want to be part of it. At the same time, I will say you know, the automobile industry is certainly a very significant part of our economy, and our GDP, but we do have a very diversified economy in our state, and as you mentioned, you know, we have, certainly Boeing and Lockheed Martin in Greenville, producing F-16, fighter jets, Boeing producing the 787, Dreamliner in Charleston. So the aerospace industry is a big part of our economy. The fastest growing part of our economy, the last two or three years, has been in the life sciences area. So we've seen tremendous, tremendous growth there. So our economy is very diversified, and I think that's important. We'll continue to look to diversify our economy so that we're not subject to the ups and downs of any one sector of industry.
Gavin Jackson: We've seen that in the past for sure there, and I did want to just talk about how you're talking about this revolution, mobility revolution. We're talking about electric vehicles, too, because that is huge, when it comes to these suppliers. You're also mentioning, of course, also our OEMs like BMW and Volvo, which are pivoting massive investments too, to their, electrifying their vehicle lines too, but you've also seen massive investments when it comes to EV batteries, Redwood materials, for example, Envision AESC, I mean, those are all related to these big investments, which I think is all pretty much spawned because of that bipartisan infrastructure law that Joe Biden signed in 2021 to really incentivize a lot of this to be happening in America.
Secretary of Commerce Harry Lightsey: Yeah, I think there certainly are two dynamics that are going on, I think, in the pandemic taught many companies that they need to have their supply chain close by. So I think that because of the pandemic, there was already significant momentum toward onshoring supply chain in multiple industries, and that included the automobile industry as well, but there are, as you pointed out incentives as part of the inflation Reduction Act, there are incentives there that are there to promote investment in the United States in bringing the EV supply chain here. You know, frankly, before the pandemic, China controlled over 90% of the battery manufacturing capabilities in the globe, and over 90% of the materials that go into batteries, and so I think having the United States develop its own capability so that we're not subject to another country's capabilities is certainly very important.
Gavin Jackson: Especially when you look at stacking up against other states too, I know, we're talking about just, the cost of doing business with incentives, but how do we stack up when it comes to these suppliers, these manufacturers I mean, in terms of competing for these, what are some of the advantages that we have? Obviously, you're talking about location being the big one. How do you how do we really compete with the Georgias and the Tennessees when it comes to these jobs?
Secretary of Commerce Harry Lightsey: Well, it's all for different ones, they're going to be different characteristics, but I think one of the things we have in South Carolina is, we have a very robust set of geographic advantages. In addition to that the Port of Charleston, is very important to many companies, the largest and eighth largest port in the United States, the deepest port on the East Coast. Now, with the dredging finished. So I think Charleston is a tremendous asset to our state and we use that every day when we're talking to companies. I think the closeness now to all of these global OEMs, who are located so we have those that we just talked about, that are located here in South Carolina, but we also are very close to a Hyundai, which is located is building a major facility right outside of Savannah, Kia, which is already which has been in Georgia for a number of years, you know, Volkswagen, Nissan, and General Motors, and then soon Ford are establishing major facilities in Tennessee. There are Mercedes and Toyota have facilities in Alabama and Mississippi. So, you know, the southeast in general has become a very core part of the automobile industry in the United States, and you know, if suppliers choose to locate here in South Carolina, they have access to all of those businesses.
Gavin Jackson: Secretary, let's pivot to our workforce because obviously, our state's growing, the southeast is growing, but our workforce population is set to shrink over the coming years, according to budget forecasters in our state. So we've talked about record investments, we're also talking about big job numbers, like Scout, we're talking about 4000 jobs, and thousands of other jobs for a lot of these other investments. Are we going to have enough people to fill these jobs?
Secretary of Commerce Harry Lightsey: Yeah, I think we're confident that we will, you know, our schools, our tech colleges are, are really excellent facilities and training people with the right skill sets to meet the jobs that are that are available in the marketplace, and we work we have a tremendous program called Ready SC that really works with businesses that are locating here in our state, and understands what skill sets they need to succeed, and then works to train students with those skill sets. So the tech colleges, which are globally recognized as leading institutions are very important, but also our four year colleges have established strong reputations. Clemson University has the only undergraduate automotive engineering degree in the country, and that is, that's a huge asset. Clemson also has the net International Center for Automotive Research, which is a recognized global leading center of research in the automobile industry. University of South Carolina right here in the Midlands and close to Scout, has the McNair engineering school, and engineering school. You know, they produce engineering graduates every year, which are very important to these companies. In addition to that we have six of the seven HBCUs in the state are located in the Midlands area, and Benedict College, Allen, SC State, Claflin several of those have engineering programs as well. So, you know, the diversity that's available through the HBCUs is very important to these companies as well.
Gavin Jackson: So do you think that we'll be stopping this brain drain that everyone always seemed to complain about for years until we got a lot of these big manufacturers, I mean, people getting their degrees moving on to somewhere else. Do we see maybe some more capture now that we have these huge manufacturers in the state, these attractive, high paying jobs?
Secretary of Commerce Harry Lightsey: It's certainly our hope that our students will stay here. You know, that is, that's very important. Obviously, it will be important to developing our workforce and providing our citizens with great jobs, and, you know, I think that it a big part of what we're trying to do is, is provide the kind of jobs that lead into the future that are going to make our students excited about the possibilities of working with these companies that are located here, and provide the kind of opportunities they want to stay here. So that is a big part of what we're trying to do.
Gavin Jackson: Secretary, when we talk about these big manufacturers, we talk about Greenville. We talk about big centers of commerce here in the Midlands, we talk about things down in the low country like Boeing and Volvo. But there's of course, the rural areas of our state, too, that sometimes feel like they've been neglected in some ways. How do you see those areas growing? Obviously, we've seen an influx of federal money to help support local infrastructure out there. Are we going to make these places a little bit more attractive to big manufacturers or to more jobs? What's commerce doing to address that?
Secretary of Commerce Harry Lightsey: Well, so you know, it's the rural areas of the state are certainly an economic challenge and something we work on every year. I will say that, very proud to say that, we have met our goal for creating rural jobs in the state for the last three years in a row, and this year, we're very much on track. We just had a huge announcement in Allendale, South Carolina, A Vietnamese tire manufacturing company, is going to locate their first facility outside of Vietnam, outside of Southeast Asia, in Allendale, which is really one of the most distressed parts of our state. So, it's going to produce a thousand jobs in Allendale, and I think that is every bit as significant as the 4000 jobs that Scout is bringing to the Midlands, for that part of our state. So we do work on that. There are efforts underway to enhance the infrastructure in the rural parts of the state. We work very closely with our sister agency, the rural infrastructure authority, and they have just been in the process of being given a billion and a half dollars to provide water and sewer infrastructure, primarily in rural parts of our state. We work very closely with the Office of Regulatory staff, which is working very hard to deliver a broadband across our state including to rural parts of our state. So I think, as that infrastructure starts to fill in, and frankly as these rural areas start to adjoin the areas of major development, more opportunities will come. So, if you look at Scout Motors, for example, it is in the northernmost part of Richland County, which is a very considered a very urban developed County, but it's within a few miles of Fairfield County, Newberry County, Lexington County, Orangeburg County, you know, all of these areas that, you know, once are considered rural, but I think they will have opportunities to land companies that produce jobs for those areas as well.
Gavin Jackson: Yeah, we're talking about the suppliers too like we even saw last year with like we said, Envision AESC going into to Florence bringing a lot of jobs and investment there too to that growing region. We have about two minutes left. Sir, I just want to ask, when it comes to prospective projects, do you see economic headwinds getting, you know, affecting recruitment and expansion efforts in the state when we talk about potential slowdowns with the global and the national economy?
Secretary of Commerce Harry Lightsey: You know, we really haven't seen that. We've open, we're continuing to see large numbers of projects that are looking at our state. I think that these macro factors, like the desire to onshore supply chain, the conversion in the automobile industry, these macro factors are outweighing the short term possibilities of a recession in the US economy, and they're spurring investment for the long term. So these companies are making these investments for years and decades to come, and so far, they are not looking at kind of what is likely to happen in the - in the US economy in the next year or two and letting that impact their decisions.
Gavin Jackson: Then we'll just get on out of this with less than a minute left. I just want to ask you what your outlook is for the rest of the year. Should we expect some more big announcements coming forward?
Secretary of Commerce Harry Lightsey: Well, we'll see. We'll see what happens. You know, we never know when a business is going to decide to locate here until they tell us that they've made that decision we have. We're working on a large number of projects. We're working on a large number of very big projects. We would be very excited to have any of them decide to locate in South Carolina, but it is a very, very competitive world out there. Other states are vying for these projects as well, and we'll just see what happens as the year progresses.
Gavin Jackson: All right. We'll be watching too. That's South Carolina Commerce Secretary, Harry Lightsey. Thank you so much, sir.
Secretary of Commerce Harry Lightsey: Thank you.
Gavin Jackson: To stay up to date with the latest news throughout the week. Check out the South Carolina Lede. It's a podcast that I host on Tuesdays and Saturdays that you can find on South Carolinapublicradio.org or wherever you find podcasts. For South Carolina ETV, I'm Gavin Jackson. Be well, South Carolina.