Japan's Isuzu Motors Ltd.'s interest in establishing a light-truck assembly facility in the Middle Atlantic region may deserve more than casual interest locally. It's just possible that the Japanese auto maker's interest in Baltimore and "other locations" in the mid-Atlantic may provide an opportunity for the Washington area to broaden its economy.
Suggesting that a light-truck assembly facility be built in the area may seem like heresy to those who insist upon maintaining a more traditional services sector-based economy. After all, the Washington area traditionally has not been a center for large-scale manufacturing operations. But outright opposition to an assembly plant presupposes that Isuzu would establish a precedent for smokestack industries in Washington's suburbs.
The operative phrase is "assembly facility" -- not heavy manufacturing plant. A review of similar assembly operations suggests that an assembly plant would pose no greater threat to the quality of life in the region than a printing plant or an auto repair shop.
A light-truck assembly facility obviously lacks the appeal of the high-technology firms that local economic development officials and business leaders covet so highly, but there is much to be said for a jobs-producing, "clean" industry that makes use of advanced technology.
High-tech may be the more prestigious choice but, can local officials really afford to pass up an opportunity to attract a major foreign investor to the area? Is the region's economy so well-structured for the future that it can support employment and income growth without diversification?
A study conducted almost a year ago for the Greater Washington Research Center suggests there is an inherent weakness in the region's economy as federal employment declines. Nobody, thus far, has challenged that conclusion or its corollary, which says that "Washington's emerging economy is no longer stimulating and supporting employment and income growth that far outpace growth rates in the national economy."
Nor has there been a successful challenge to the finding that "an economy having occupational specializations which emphasize high educational and skill levels will have trouble absorbing local labor resources with lower skills and educational levels and, hence, could have a serious structural unemployment problem."
In a video teleconference with British business executives earlier this week, officials of the Greater Washington Board of Trade extolled the area's highly educated labor pool and its numerous educational and research facilities. It was a pitch calculated primarily to woo British high-technology firms. On the very same day, another image of the area's labor pool and economic structure unfolded at the Sheraton Washington Hotel. An estimated 700 persons crowded into the hotel's lobby, hoping they would be among the lucky 250 who would be hired by the new Sheraton Grand Hotel. That shouldn't surprise anyone, given the fact that the District's unemployment rate, though considerably lower than a year ago this time, still is well above 8 percent.
While a 3 percent unemployment rate in most suburban jurisdictions indicates a possible labor shortage, studies show that structural changes are occurring in the region's economy. Dealing with those changes may be the biggest chal- lenge facing local governments.
An aggressive marketing effort to attract a firm such as Isuzu could be a smart first move in accepting that challenge.
"It would be a significant change for this area, but that's not to say it can't be done," acknowledged a local official who asked not to be identified.
It could be done, for example, in Prince George's County, and what better place than the county's foreign trade zone? Prince George's foreign trade zone is a natural location for an assembly operation, and the advantages of being there make it competitive with Baltimore or other Middle Atlantic-area sites. Only 20 miles from the port of Baltimore and at the hub of the mid-Atlantic region, the zone is located in a 1,200-acre industrial park on Route 301. Like other foreign trade zones, it was established to encourage international commerce.
Goods brought into a foreign trade zone are not subject to duty payments until they are removed from the zone. An automobile manufacturer, for example, can assemble components in a foreign trade zone and pay a lower duty when the finished product is shipped out of the zone. A company with facilities in the zone can also store or assemble goods without paying state inventory tax, or it may re-export goods without paying a duty charge.
With a resource like the trade zone, Prince George's County should arrange for a delegation to be on the next plane to Isuzu's headquarters.