By David Pendered
It comes as no surprise that Moody’s Investors Service views Mercedes-Benz’s relocation to metro Atlanta as a “credit positive” for Atlanta and Fulton County.
What is interesting is the set of reasons for the relocation that are cited in Moody’s report. “Quality of life” ranks on the list of motives to move from New Jersey.
Incidentally, although the Jan. 15 credit outlook issued by Moody’s emphasizes the decision by Mercedes-Benz, it also mentions three other companies that have left New Jersey for sites in the South. Their departure is deemed a “credit negative” for the Garden State.
According to the statement:
- “Although tax incentives played a role in Mercedes’, Hertz’s and Sealed Air’s moves, corporate officials also cite quality of life and low cost of living for employees as major draws. “
The same paragraph of the report goes on to cite the comparative affluence of New Jersey residents – and the flat growth rate of the statewide income. It doesn’t specify how these factors may have factored into Mercedes’-Benz’s decision to relocate to metro Atlanta. The paragraph continues:
- “New Jersey remains a high-income state, with per capita income equal to $36,027, or 128 percent of the nation. But statewide income growth remains flat given recent job losses and increases in lower-paying industries, such as retail and hospitality.”
These themes outlined in Moody’s report differ from some common refrains among some metro Atlanta officials, who tend to focus on the region’s challenges. There’s plenty of talk about traffic congestion, ailing public schools, and the persistently high unemployment rate.
Moody’s doesn’t define, “quality of life,” as characterized by the corporate officials with whom analysts spoke. But having “quality of life” mentioned in the same breath as metro Atlanta is of note, especially when it comes from a company that plans to build a $93 million headquarters and employ up to 1,000 persons in an area thought to be Sandy Springs.
Gov. Nathan Deal touted the Mercedes-Benz decision in his State of the State address. According to the prepared remarks:
- “People don’t move to a state unless it provides them with opportunities. The Mercedes slogan is, ‘the Best or Nothing.’ The company that accepts nothing but the best chose Georgia … I’ll take that.”
Low taxes are cited as the primary reason for the relocation of Mercedes-Benz and other companies that have left New Jersey. According to the report:
- “The cost of doing busiess in New Jersey is the fourth highest in the U.S., while Georgia (Aaa stable) ranks 20th, Florida (Aa1 stable) ranks 14th, and North Carolina (Aaa stable) ranks 489th. Although New Jersey has a 9 percent corporate income tax rate, Georgia and North Carolina levy only 6 percent, and Floridas rate is 5.5 percent. Additionally, Florida does not levy a state personal income tax.”
Moody’s provided the following observation in its closing remarks:
- “Mercedes’ new $93 million headquarters will likely be built in Sandy Springs (unrated), just north of Atlanta. Metro Atlanta is attractive to Mercedes, as well as other companies such as Porsche, which recently broke ground on a new headquarters in the area, because of its strong connectivity to the Georgia Ports Authority (unrated) ports in Savannah and Brunswick and the Hartsfield-Jackson Atlanta International Airport (Aa3 stable), relatively low costs of labor and a low tax burden. Mercedes officials have also stated that proximity to the company’s manufacturing plant in Vance, AL (unrated), was a crucial factor in the decision.”