Fall 2009
QUIZ:
When completed, Volkswagen's new plant going up in Chattanooga will total (a) 1,000,000; (b) 1,500,000; (c) 2,000,000; or (d) 2,500,000 square feet under roof? BONUS QUESTION: The Enterprise South site where Volkswagen is building its assembly plant is expandable to (a) 1,500,000; (b) 4,500,00; (c) 12,000,000; or 6,000,000 square feet?
(Scroll down for answer)
Editorial
Finally, Business is picking up in the Southern Automotive Corridor
By Mike Randle
In the fall 2009 quarter good news bestowed the South's automotive industry. We saw more suppliers add jobs last quarter than we’ve seen in quite a while. There were also several important OEM announcements as automakers gear up for a recovery that could result in 11 to 13 million vehicles sold in the U.S. in 2010.
In the fall quarter, Mercedes-Benz announced it is bringing C-Class production to its Alabama plant, Kia opened its first U.S. assembly plant in west Georgia; GM added a third shift in Kansas; Toyota said it is moving its California production to Texas; Nissan broke ground on its $1 billion lithium-ion battery plant in Tennessee; VW continued building its new factory in Tennessee unabated; Toyota announced more work at its engine plants in West Virginia, Tennessee and Alabama; the Chinese company that bought Hummer said it will continue to assemble the brand in Louisiana; and two Chinese-linked start-up automakers revealed their hopes in Mississippi and Alabama. Add to that the V-Vehicle start-up in Louisiana that was announced in mid-summer and what you get is the most active OEM period in the Southern Automotive Corridor in at least three years, maybe longer.
The Japanese (Honda, Toyota and Nissan), the Koreans (Kia and Hyundai), the Germans (BMW, Mercedes-Benz and Volkswagen) and possibly the Chinese, are all preparing for not only next generation vehicles in the South, but to grab their own shares of the what will be the lost sales of GM and Chrysler in the near future. In 2008, GM owned almost a quarter of the U.S. sales market, or about 3 million vehicles sold. Chrysler sold about half of GM's total in 2008.
Some are predicting that 2010 will match 2008 in total vehicle sales here in the U.S. If that is the case, how could a collapsed GM and Chrysler even come close to 4.5 million sales of its models in 2010? They won't. We predict that GM, with just three brands and Chrysler will sell about 2 million cars and light trucks in the U.S. in 2010. That means, if we get back up to 13 million vehicles sold annually in 2010 or 2011, other automakers will have to replace GM's and Chrysler's future lost sales. That figure is going to be significant. It could total 2.5 million vehicles annually by 2011 or 2012. For more information on the South’s automotive industry, go to www.SouthernAutoCorridor.com.
mike@sb-d.com
ALABAMA
Mercedes Bringing C-Class Sedan to Alabama, Adding 1,000 Jobs
Daimler announced plans in early December to move production of its C-Class sedan to its Mercedes-Benz assembly plant in Vance, Ala. in 2014. The Alabama plant currently assembles the M-class, R-class and GL crossover and SUV models. With the sales collapse of SUV models the plant has seen reduced volumes over the last two years. The addition of C-Class production will add 1,000 to 1,200 new jobs at the Alabama plant.
Kamtek Lands Volkswagen Parts Contract
Kamtek, an Alabama parts supplier to Mercedes-Benz, Nissan and Freightliner, landed a contract in late November to produce parts for the new Volkswagen plant being built in Chattanooga. The value of the contract and the work is not known as of this writing. Kamtek, which stamps parts such as fenders at its Birmingham, Ala. plant, is undergoing a $310 expansion. The plant has about 300 workers, but plans are to add as many as 300 more during the expansion.
New Automotive Supplier Bringing 195 Jobs to Alabama
Faurecia North America, a subsidiary of France-based Faurecia and one of the world's largest automotive parts suppliers, announced in late November it plans to build a $15 million plant in Tuscaloosa County, Ala. The deal represents 195 new jobs. The company will be a just-in-time supplier of parts to the Mercedes-Benz plant in Vance, Ala. Faurecia's major automotive products are exhaust systems, front ends, seats and interiors.
Kia Generating Over 3,600 Jobs in Neighboring Alabama
According to a report from the Alabama Development Office, Kia's new plant in west Georgia has created more than 3,600 jobs in neighboring Alabama, where dozens of Korean parts suppliers operate existing plants supporting Hyundai's assembly plant in Montgomery. The report stateed that when the Kia plant opened for business in November, 12 new parts suppliers, 22 existing supplier expansions and $704 million in capital investment was made in Alabama as a result of the Kia plant. The 3,600 new jobs do not include Alabamians that are working at the Kia plant or at its auto parts suppliers in Georgia. Kia is a sister company to Hyundai and many of the supplier expansions have been at plants that now serve both assembly plants.
Automotive Startup Announces Big Plans in Alabama
On September 23, Yung "Benjamin" Yeung, the former chairman of Brilliance China Automotive Holdings, announced that his new automotive venture, Hybrid Kinetic Motors (HK Motors), plans to build a $1.5 billion, 6,000-employee assembly plant in South Alabama. The site of the prospective plant is located north of Bay Minette in Baldwin County. At a news conference attended by local and state leaders as well as Alabama Gov. Bob Riley, details of the new vehicles were presented. HK plans to build cars, SUVs, crossovers and trucks at the facility that run on new technologies that combine compressed natural gas, gasoline and electricity. Officials with both the company and the state of Alabama said that the company has not raised enough funds as of yet to build the plant and that incentives will not be negotiated until more money is raised for the venture.
New Parts Supplier Picks Anniston, Ala.
Ohio-based Industry Products, Co., is setting up shop in Anniston, Ala. to supply the Honda plant in nearby Lincoln. The company's key product lines include watershields, trunk and cargo area systems and noise and vibration components. About 25 jobs will be created initially with the project.
Michelin Development Opens Alabama Office
Michelin Development recently opened an office in Opelika, Ala. to begin taking applications for $2 million in low-interest loans to qualified start-up and small businesses in East Alabama. The program, the second of its kind in North America, aims at stimulating economic growth and creating jobs in the area to offset over 1,000 jobs eliminated by the company when it announced it was closing the BF Goodrich tire plant in Opelika. BF Goodrich is owned by Michelin. The first Michelin Development office opened in Canada and over 800 jobs have been created by the program there.
Company Adding Jobs to Supply VW, BMW
Brose Tuscaloosa announced in September it plans to invest $4.1 million and create 30 new jobs at its Tuscaloosa, Ala. plant to accommodate future production of engine cooling fans for BMW in Greer, S.C. and seat components for the new VW plant in Chattanooga. Brose is adding 39,000 square feet of manufacturing space at its facility in Alabama. Brose also produces door systems for Mercedes-Benz at its plant in Vance, Ala.
Parts Supplier Grows in South Alabama
Alto Products, an Atmore, Ala.-based manufacturer of automotive clutch plates and automatic transmission parts, announced in October it is undergoing a $3 million expansion that will create at least 10 new jobs. The company will also add 40,000 square feet to its Atmore facility.
ARKANSAS
Cooper Tire Expands in Texarkana
Ohio-based Cooper Tire & Rubber announced in the fall quarter it will add 200 jobs at its Texarkana, Ark. operation and start running the plant around the clock, seven days a week. In September, Cooper announced a $6 million expansion of its Tupelo, Miss. plant.
Great Dane Trailers Temporarily Shutting Down Arkansas Factory
Layoffs began October 15 at Great Dane Trailers' Jonesboro, Ark. plant, one of seven the company operates. The company cited a "significant, continued downturn in trailer orders" as the reason to temporarily close the facility. Last year about 150 workers were housed at the plant.
GEORGIA
Kia Hiring 1,200 More Workers in Georgia
Kia Motors, which opened its plant in West Point, Ga. in November, announced it will hire another 1,200 assembly line workers for a second production line that will be operational in early 2010. Currently, the Korean automaker employs about 2,500 workers at its new Georgia plant that rolled out its first Sorento cross-over vehicle in the fall quarter.
KANSAS
Kansas GM Plant Gearing Up for Third Shift
General Motors' large-scale factory consolidations in 2009 are benefiting the automaker's plant in Kansas City, Kan. The plant is gearing up to go to 24-hour operations at its Fairfax assembly plant by adding a third shift in January. The Fairfax plant currently houses about 2,700 employees. The new shift will add about 800 new workers. The Kansas plant assembles the Chevrolet Malibu, Saturn Aura and the Buick LaCrosse.
KENTUCKY
Hitachi Automotive Expanding in Kentucky
In the fall quarter, Hitachi Automotive Products USA announced it will expand its Harrodsburg, Ky. operation, adding a new fuel system production line to the plant. The expansion could also result in an additional product line for hybrid electric vehicles. Hitachi Automotive opened its Harrodsburg plant in 1986 and manufactures electromechanical automotive parts. The company's plant has grown from 40,000 to 400,000 square feet and this latest expansion will add 100 new workers to the payroll of 600.
LOUISIANA
Hummer Sale Official, Vehicle Assembly to Remain in Louisiana
A definitive purchase agreement has been reached for the sale of Hummer from GM to China-based Sichuan Tengzhong Heavy Industrial Machinery Co. The acquisition is expected to ensure that Hummer vehicles will continue to be manufactured at the former GM facility in Shreveport, La., through at least June 2011.
MISSISSIPPI
GreenTech Automotive Announces Plans for Plant in Mississippi
In October, GreenTech Automotive Inc., a Mississippi company, announced plans to develop and manufacture automobiles on 1,500 acres in Tunica County Miss.’s Metro-Mega-site, with an option to purchase more land as needed. The initial phase of the project is estimated to cost $1 billion and provide 1,500 jobs. The plant is expected to assemble 150,000 vehicles annually. GreenTech's proprietary, mass producible technology will ensure that its vehicles will already meet the lower emissions and fuel consumption standards that the Obama administration has set for 2016. In addition to strategic investments, the investments made through Gulf Coast Automotive Fund (GCAF) in the project are an integrated part of GreenTech's overall funding strategy. GCAF is an USCIS-approved regional center and professional investment firm. GCAF has committed to working with GreenTech Automotive through the EB-5 immigration investment program and supporting the hybrid car project in Tunica.
SOUTH CAROLINA
Timken Announces New Distribution Center in South Carolina
Friction management and power transmission manufacturer Timken announced in the fall quarter it is investing $3 million and bringing 100 new jobs to Spartanburg County, S.C. The company is moving into a larger space in Duncan, S.C. and adding to the 50 employees it currently has in Spartanburg.
KEMET to Expand in South Carolina
KEMET Corp. announced in October it is expanding its facility in Greenville Co., S.C. to support manufacturing of capacitors for electric drive vehicles and alternative energy markets. The company is adding 113 new jobs at its Simpsonville facility in order to produce enough capacitors to make 100,000 electric drive vehicles.
Tire Company Building 1.1-Million-Square-Foot Distribution Center in S.C.
TBC Corp., one of the largest marketers of automotive replacement tires announced in October that it had chosen a site in Berkeley County, S.C. for a 1.1-million-square-foot distribution center. The company will build the center at the 400-acre Rockefeller Group Foreign Trade Zone/Charleston. Once built, the center will become the S.C. State Port Authority's fourth-largest business customer with tires being imported and exported both internationally and domestically.
Goodyear to Close South Carolina Plant
Goodyear officials announced in the fall quarter they plan to close the Spartanburg, S.C. plant by the end of the year. The plant houses about 90 workers and makes retread materials for commercial truck tires.
Dalkotech Announces New S.C. Facility
Canada-based Dalkotech, a maker of welded and machined parts such as hydraulic and fuel tanks, announced in late September it is locating a new facility in Newberry County, S.C. The deal is expected to create 50 new jobs.
TENNESSEE
VW's First Year Sales Goal for Tennessee-Made Car
In the fall quarter, German automaker Volkswagen said that it expects to sell about 130,000 of its new sedan model that it is preparing to assemble in Chattanooga, Tenn. when the plant opens in 2011. The new mid-sized sedan, which will be larger than VW's Passat model, will be priced at about $20,000. VW officials said they expect to sell about 30,000 of the vehicles in Canada and Mexico. The company is also considering assembling Audi models in Chattanooga. The Tennessee plant is part of VW's goal of selling one million cars and SUVs in the U.S. by 2018. Currently, that figure is just over 200,000 vehicles sold in the U.S.
Web Site Reports Bridgestone will Supply Tires for VW
In November, TicosLand.com, a Costa Rica-based Web site, reported that Bridgestone Costa Rica will produce 200,000 spare tires for the VW plant in Chattanooga and the company will produce the other tires for the car at its plant in Wilson, N.C.
Canadian Company Adding Workers in Rural Tennessee
Active Burgess, headquartered in Ontario, is expanding its precision moulds facility in Tullahoma, Tenn. The company produces plastic injection tooling projects for various uses in the automotive industry. The deal will result in 15 new jobs.
Nissan to Break Ground on Tennessee Lithium-Ion Battery Plant
Nissan is poised to break ground on a $1 billion lithium-ion battery plant at its massive facility in Smyrna, Tenn. The plant will include three "modules" which can produce 54,000 electric car batteries a year. Each module will cost $350 million to construct, which means the bulk of the loan the Department of Energy is giving to Nissan will be spent on battery production. The Japanese automaker is also retooling one existing assembly line in Smyrna to produce its first electric, zero emissions vehicle, the Leaf. Nissan is also making similar investments in battery manufacturing at other plants around the world, including one in northeast England. The Leaf, dubbed the world's "first electric car designed for affordability and real world requirements," is slated for launch in Japan late in 2010 and in the U.S. by 2012. Nissan operates assembly plants in the Southern Automotive Corridor in Canton, Miss. and in Smyrna and its North American headquarters is located in Nashville. The Japanese automaker also operates other facilities in the South, including distribution centers and engine plants.
Tennessee Approves Land Purchase for Megasite
The Tennessee State Building Commission has approved $40 million in state funds to purchase more than 3,800 acres of land for the West Tennessee megasite. The TVA certified site will now undergo an engineering assessment to determine further infrastructure improvements. The megasite is located in Haywood County, Tenn. between Jackson and Memphis.
TEXAS
Toyota Moving Small Truck Production to San Antonio
After announcing it is moving production out of the California plant it shared with GM, Toyota officials recently decided to move assembly of its Tacoma truck model to its plant in San Antonio. Since 2006 the Japanese automaker has produced only one model in San Antonio and that is the full sized Tundra pickup. Sales of the Tundra have declined over the last two years and news of a new model coming to the San Antonio plant will be welcomed by the 21 parts suppliers located onsite. Toyota will end production at its plant in Freemont, Calif. in the spring of 2010 and begin assembly of the Tacoma in San Antonio in the summer. GM has already stopped production at the California plant. As many as 1,000 new jobs are expected to be created at the San Antonio plant.
WEST VIRGINIA
Toyota to Produce RAV4 Engines in W.Va.
In the fall quarter, Toyota Motor Corp. announced it will produce about 2,000 RAV4 six-cylinder engines a month at its plant in Buffalo, W.Va. plant. The West Virginia plant also produces four-cylinder engines for the Toyota Corolla and Matrix and six-cylinder engines for the Highlander, Sienna and Lexus RX-350 models.
Hino Supplier Opening Facility in W.Va.
Fontaine Modifications announced plans in October to open a truck modification center dedicated to supporting Hino Motor's truck assembly plant in Williamstown, W.Va. The company will move Hino support work currently performed in Ohio to the new facility in West Virginia. Based in North Carolina, Fontaine modifies medium and heavy-duty commercial trucks.
QUIZ ANSWER
Volkswagen is building (c) a 2,000,000-square foot plant initially. With talk that it will add a SUV line to go with its sedan line and the possibility of Audi model production, the German automaker can reach 4,500,000 square feet, or thereabouts, if need be.
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