COLUMBIA - South Carolina's ability to cement a deal for a Singapore-based tire company's first North American manufacturing plant gives a key shot in the arm for the Port of Charleston and is a game changer for the rural county where it's going to be built, state officials say.
Gov. Nikki Haley announced this month that her administration had inked three major deals, totaling around $800 million in investment for 7,100 new jobs in the Palmetto State. For the Charleston port, the news that Giti Tire plans to build a manufacturing plant on a 1,200-acre Chester County site comes at a crucial time.
Ports up and down the eastern seaboard are battling for supremacy. Combined with the federal green light at the end of last month that allows the state to move ahead with plans to deepen Charleston Harbor for a wave of larger container ships, the deal helps put Charleston in a position to best its competitors, officials say.
"I think the ports are doing a tremendously good job," said Gov. Nikki Haley in an interview. "We're incredibly proud we can brag about having that Port of Charleston there. They see this is going to be a huge, valuable asset and it's one we have to make sure we play up as much as possible."
The Giti (pronounced "G-T") deal was inked by personal relationships, a push by retail giant Wal-Mart for American-made products and a growing understanding that tire manufacturing and South Carolina go together, officials said.
Rep. Jim Merrill, R-Charleston, said that he's proud that the state's ability to offer incentives played a role. The state and both governors Haley and former Gov. Mark Sanford at one time shied away from incentives, particularly the state's "closing fund," he said. The Giti deal was closed with $35.8 million from that fund, which will help officials ready the site for the new plant.
"We're back in the game on things," Merrill said. "I believe that you shouldn't give away the farm, but you've at least got to have some tools to compete with."
Haley said that she worked closely with the family owners of Giti to ensure they were comfortable. "They could tell this was a community that took care of each other, and that's what sells South Carolina," Haley said. "At the end of the day, what's going to sell an international company to your state is trust and relationships."
Julianto Djajadi, a U.S.-based Giti executive who worked on the deal, echoed that sentiment. The company looked at dozens of sites in North America. He said it came down to being comfortable with where they were going.
"It's not that we don't feel good about the other sites," Djajadi said. "It's like when you buy a house. You just kind of know this is the location. We felt the connections with the people there, and that's why we chose the site."
Customers such as Wal-Mart - which has the buying power to command any company's attention - wanting products quickly helped convince the company to come to the U.S. in the first place. Wal-Mart has pledged to buy $250 billion in U.S.-made products throughout its "Made in the USA" effort. It is looking to convince international manufacturers to put facilities in the U.S. to meet that goal.
Haley said she first met the family owners of Giti at a Wal-Mart event.
For the port, how much of Giti's business it will command isn't entirely known, but there will be an effect. Raw materials for rubber doesn't come from the U.S., and other raw goods also have to be shipped in.
"It is a difficult question," Djajadi, the Giti executive, said of how much volume the Charleston ports would command. "We don't own ships. We can help and influence the supply to making the Port of Charleston as one of their ports."
The State Port Authority is in the midst of an aggressive billion-dollar spending program that includes the construction of a new shipping terminal in North Charleston and improvements at existing terminals over the next decade.
A big piece of the State Port Authority's goal means additional cargo volume,
"By having more tire manufacturing here we get more ship calls that will handle break-bulk cargo and increase container volume," said Jim Newsome, CEO and president of the port authority.
The Giti deal is one of several recent developments in the state's tire manufacturing market that could mean more cargo flowing through the port. It also further solidifies the state's reputation as a good place to make tires.
Bridgestone recently built a new 1.5-million-square foot tire plant in Aiken County, and several months ago Continental Tires opened the first phase of a $500 million Sumter plant that's expected to employ 1,600 workers by 2021.
The increased shipments of steel coils and other materials for tire production prompted SPA to revive its once-dormant cargo-handling operations at Union Pier in downtown Charleston.
"What is good for the port is that it's a two-way flow of traffic," Newsome said of the tire industry. "There are no rubber trees here in South Carolina because they're all in Indonesia and Thailand and places like that, so it generates imports and has potential to generate exports."
The port's importance can't be understated, officials said.
"If the port is not here, practically all of the companies you know of would not be here," Commerce Secretary Bobby Hitt said. "The port is a vital part of the manufacturing system in South Carolina. It gives us an edge over North Carolina and Georgia. Business needs to move and it needs to move faster and cheaper all the time."
Reach Jeremy Borden at 843-708-5837.