Southern Recreational

In October 2005, top management of Southern Recreational Vehicle Company of St. Louise, Missouri, announced its plans to relocate its manufacturing and assembly operations by constructing a new plant in Ridgecrest, Mississippi. The firm, a major producer of pickup campers and camper trailers, had experienced 5 consecutive years of declining profits as a result of spiraling production costs. The costs of labor and raw materials had increased alarmingly, utility costs had gone up sharply, and taxes and transportation expenses had steadily climbed upward. In spite of increased sales, the company suffered its first net loss since operations were begun in 1982.

            When management initially considered relocation, it closely scrutinized several geographic areas. Of primary importance to the relocation decision were the availability of adequate transportation facilities, state and municipal tax structures, an adequate labor supply, positive community attitudes, reasonable site costs, and financial inducements. Although several communities offered essentially the same incentives, the management of Southern Recreational Vehicle Company was favorably impressed by the efforts of the Mississippi Power and Light Company to attract “clean, labor-intensive” industry and enthusiasm exhibited by state and local officials, who actively sought to bolster the state’s economy by enticing manufacturing firms to locate within its boundaries.

            Two weeks prior to the announcement, management of Southern Recreational Vehicle Company finalized its relocation plans. An existing building in Ridgecrest’s industrial park was selected (the physical facility had previously housed a mobile home manufacturer that had gone bankrupt due to inadequate financing and poor management); initial recruiting was begun through the state employment office; and efforts to lease or sell the Stylus property were initiated. Among the inducements offered Southern Recreational Vehicle Company to...