Fall 2005

Courtesy of www.SouthernAutoCorridor.com

QUOTE

"New auto plants in the South have resisted union organizing efforts for fear of jeopardizing good-paying jobs in regions where work is scarce."

Brett Clanton of the Detroit News, Fall 2005

QUIZ

True or False

Using October 2005 data, no state in the South had a higher unemployment rate than Michigan's rate of 6.1 percent.

(Scroll down for answer)

UAW Says New DaimlerChrysler Plant to be Organized

The director of UAW's Region 8, which includes South Carolina, said in the fall quarter that the new DaimlerChrysler van plant announced in November will likely be organized. DC announced that it will assemble Dodge Sprinter vans at an existing facility in North Charleston, S.C. Gary Casteel, director of UAW's Region 8, said that the new 220-employee plant will likely be run by DaimlerChrysler subsidiary Freightliner, which has over 10,000 unionized workers at four facilities in neighboring North Carolina. DaimlerChrysler has taken a neutral stance on union organization at its U.S. plants. It will do the same, company officials said, at the new South Carolina factory. Rolf Bartke, executive vice president of DC's commercial sector, said that the North Charleston facility will begin as a non-union facility, but if the employees vote to organize, the company will accept it. All Dodge assembly plants in the U.S. are currently UAW organized.

DaimlerChrysler's Search Ends in South Carolina

More than three years ago rumors swirled that DaimlerChrysler was on the verge of announcing a huge, $750 million commercial van plant near Savannah, Ga. Roy Barnes, the governor of Georgia at the time, was in the tail-end of a campaign for a second term with current Georgia Gov. Sonny Perdue. Barnes chose to announce that DC had made the decision to build the plant on a site near Savannah in Pooler, Ga. The only problem was no DaimlerChrysler officials were with Barnes when he made the announcement shortly before the Governor's failed reelection bid in November of 2002. But in November of 2005, DaimlerChrysler officials did attend a ceremony with South Carolina Gov. Mark Sanford to announce it will retool an existing facility in Ladson, S.C., located in the Charleston-North Charleston metro area, to produce the Sprinter van model. The deal, though, is much smaller than the project announced by former Ga. Gov. Barnes in 2002. DC revealed it will invest $35 million in the restructured project and hire 200 workers initially. The first vans, which will be sold under the Dodge nameplate, will be assembled at the site in late 2006. DC also operates a small commercial truck operation in Gaffney, S.C. Employment levels at that facility will not be affected by the new project in Ladson.

Chrysler Spending $1 Billion on St. Louis Plants

The Chrysler Group announced in mid-December it will invest up to $1 billion in its St. Louis North and St. Louis South assembly plants in Fenton, Mo., over the next several years. The $1 billion investment will be shared between the two plants and is expected to give both facilities additional state-of-the-art manufacturing capabilities and modernization. The St. Louis South plant currently employs 3,200 people and produces the Chrysler Town & Country, Dodge Caravan and Grand Caravan Minivan. The St. Louis North plant is home to the Dodge Ram Standard and Quad Cab pickup trucks and it houses about 2,300 workers.

GM Closing Two Plants, Eliminating Line in Southern Auto Corridor

On Monday, November 21, GM CEO Rick Wagoner announced the domestic automaker will close eight North American plants, two of which are in the Southern Auto Corridor. Scheduled to close are GM's plant in Oklahoma City in early 2006 and the Doraville, Ga., facility in 2008. Also, GM will shut down its No. 1 line at the Saturn plant in Spring Hill, Tenn. The closures will eliminate an estimated 7,500 jobs in the Southern Auto Corridor. GM plants located outside the corridor slated for closure are located in Michigan (3), Ontario (2) and Pennsylvania (1). In addition to reduced production at its Tennessee auto works, GM will eliminate shifts in Ontario and Ohio. Over the last five years, GM has invested over $2.3 billion at its Oklahoma City, Doraville and Spring Hill facilities.

Nissan's Relocation to Tennessee

Nissan President and CEO Carlos Ghosn announced on November 10 that the Japanese automaker is relocating its North American headquarters from Southern California to a site in Williamson County, Tenn., which is located just south of Nashville. The relocation is expected to include several hundred employees from the staff of 1,300 workers at the current Gardena, Calif., headquarters facility. Nissan will move to temporary facilities in downtown Nashville in the summer of 2006, until the construction of its corporate headquarters can be completed in Cool Springs. The Williamson County site is located about 25 miles west of Smyrna, Tenn., where Nissan operates a 5.4-million-square-foot assembly plant. Nissan also operates a 1-million-square-foot engine and transmission plant in Decherd, Tenn., and another large assembly plant in Canton, Miss. California Gov. Arnold Schwarzenegger and other state officials met with Nissan executives on October 31, in an effort to retain Nissan, one of nine Asian automakers doing business in the U.S. that have their headquarters in Southern California. Honda, Mitsubishi and Mazda are included in that group.

Nissan is relocating its headquarters to Tennessee to cut costs. CEO Carlos Ghosn recently announced the relocation of its global headquarters from Tokyo's pricey Ginza district to the port city of Yokohama, Japan. Nissan currently leads all automakers in the world with a better than 10 percent operating profit margin. Regarding the move, Ghosn said, "We made a strategic decision to relocate our corporate headquarters here because of the long-term benefits associated with overall investment and operational costs. By bringing key functions closer together, we also aim to create synergies, nurture creativity and enhance our performance in the North American auto industry." The automotive industry currently employs about 125,000 workers in Tennessee with an annual payroll topping $3.5 billion.

U.S.-Made Foreign Brands Top Mark

According to the Michigan-based Center for Automotive Research, for the first time ever more foreign brand vehicles sold in the U.S. were made in the U.S. than made overseas. The non-profit research firm reported that of the 7.1 million foreign brand vehicles sold in the U.S. last year, 3.7 million were made in the U.S. at 15 foreign automaker assembly plants. The rest, 3.4 million, were imported from plants overseas. J.D. Power estimates that in 2005 4.8 million of the 7.1 million foreign brands sold in the U.S. will have been built at foreign-owned U.S. factories. Eight of the 15 foreign-owned assembly plants in the U.S. are located in the Southern Automotive Corridor.

Audi Considers Relocation of its HQ to the Southern Auto Corridor

Audi of America is looking to relocate its headquarters from Detroit to either Atlanta, Chicago or New Jersey. The German automaker wants to gain some autonomy from its parent company, Volkswagen of America. Audi of America employs about 260 workers at the VWofA headquarters in Auburn Hills, Mich.

Volvo Official Claims U.S. not a Manufacturing Option

Magnus Hellsten, a senior vice president with Volvo, said in September the company may never consider building a U.S. plant. Hellsten said the Swedish carmaker is sourcing from low-cost countries and the "U.S. is not low cost" even with currency exchange losses still being experienced in Europe. Rumors of a a new Volvo assembly plant in the U.S. have surfaced from time-to-time for at least two decades now.

Is Honda About to Announce Expansion of its Alabama Plant?

Rumors are thick that Honda Motor Co. will announce another expansion of its assembly plant in Lincoln, Ala. in the first quarter of 2006. It is expected that Honda's U.S. production will come to full utilization sometime in early 2006 and that a third line and shift at the Alabama plant would be the first step in meeting increased demand for the popular Odyssey and Pilot models. Koichi Konda, who manages Honda's North American operations, said in September of 2005 that the Japanese automaker could expand the Alabama plant by 100,000 units a year within one year. Honda currently employs about 4,800 workers at the plant who produce 310,000 vehicles a year.

ALABAMA

Supplier Doubling Size

Brose Tuscaloosa is doubling its footprint in Tuscaloosa, Ala., adding 38,000 square feet to its existing facility and adding more jobs. The company makes door systems for Mercedes in Vance, Ala., and is expanding to accommodate a new contract for a yet unnamed assembly plant. Brose is investing $5 million in the deal.

Alabama's Automotive Industry Employment Revealed

It's no secret that Alabama's automotive industry has grown faster than any state in the U.S. over the last decade. That growth was revealed in a recent report published by the University of Alabama's Center for Business in Economic Research. In 1991, about 2,000 Alabama residents worked in the automotive field. In 2005 that figure had grown to more than 35,000.

Supplier Expanding

KTH, a parts supplier in Leesburg, Ala., is adding about 45 workers for its second shift. The company manufactures steel chassis for the Honda Odyssey and Pilot models, which are made at the Japanese automaker's huge plant in Lincoln, Ala. The added workers will bring employment at KTH's facility to almost 400.

M-Tek Creating 200 New Jobs

In Prattville, Ala., M-Tek is creating 200 new jobs. The Japanese parts supplier purchased the Arkay Plastics plant in Prattville and expects to add another 300 jobs within four years.

Korean Supplier Building Facility in Rural Alabama

A new parts supplier announced in October it is building a plant in Conecuh County, Ala. Guyoung Tech USA, a Korean company that will serve the Hyundai plant in Montgomery, is investing $10 million at the Evergreen Industrial Park and will create about 200 jobs at full production.

Panalpina Opens Logistics Center

Swiss logistics and transport company Panalpina Welttransport Holding Ltd., has opened a logistics service center in Montgomery. The facility supports Hyundai's new plant with supply chain and transport logistics services.

Mercedes Adding New Model in Alabama

The Mercedes-Benz plant in Vance, Ala., will soon be producing another model, it's third in a year. Following the redesigned M-Class and the new R-Class will be the G-Class, Mercedes answer to the Land Rover and Hummer. Called the G-Wagen, Mercedes is expected to put the vehicle into production trials in early 2006. The vehicle is currently being made in Austria.

Hyundai Begins Test Production on SUV

Korean automaker Hyundai is gearing up for production of the redesigned Sante Fe sports utility vehicle at its new plant in Montgomery, Ala. The plant, which is less than a year old, currently produces four and six-cylinder Sonata sedan models. Test production for the Sante Fe began in early December with commercial production of the vehicle expected to begin in April of 2006. Hyundai's Alabama plant is operating two shifts of 2,500 workers and is producing 800 to 1,000 Sonatas each day.

Toyota Engine Plant Ramping Up V6 Production

Toyota's new engine plant in Huntsville, Ala., began V6 engine production during the fall quarter. The new V6 engines will be shipped to Toyota's assembly plants in San Antonio, Tex., Fremont, Calif., and Baja California, Mexico. The Huntsville plant has produced V8 engines since 2003 for Toyota's assembly plant in Indiana. Toyota's Alabama plant has the capacity of produce 120,000 V8 and 130,000 V6 engines annually. The Japanese automaker is currently boosting employment at the facility from 500 to 800 workers.

ARKANSAS

WSJ Announces Hino Truck Plant

On November 1, the Wall Street Journal reported that Hino Motors Ltd., a subsidiary of Toyota, will build a truck assembly plant in Marion, Ark., with production beginning in 2007. The WSJ quoted Hino CEO Tadaaki Jagawa in the story, however, no official announcement has been made by Hino as of this writing. Hino is currently building a 400,000-square-foot parts plant in Marion that will be operational next year. The company currently operates its only U.S. truck assembly plant in Long Beach, Calif.

Cooper-Standard Closing Arkansas Plant

Novi, Mich.-based Cooper-Standard announced in late October it will close its auto body sealing systems plant in El Dorado, Ark. within 18 months. The facility houses about 400 workers. Cooper-Standard makes a variety of body sealing, noise, vibration and fluid handling systems at the plant. The company is consolidating the plant's production to other facilities.

Denso Officially Opens Arkansas Facility

Japanese auto parts maker Denso officially opened its new plant in Osceola, Ark., in late October, even though the company has been operating some lines at the facility since March of this year. The plant, which produces heating and air conditioning components and radiators, currently employs about 375 workers. That number is expected to increase to 500 within two years. The 217,000-square-foot, $35 million facility is Denso's 23rd in North America.

GEORGIA

Parts Supplier Closing Georgia Plant

Cooper-Standard Automotive, a Michigan-based automotive parts supplier, announced it is closing its plant in Griffin, Ga. The decision means 350 workers will lose their jobs. The plant produces window and door sealants, vibration dampers and fluid conveyance systems. Officials with Cooper-Standard, a division of Ohio-based Cooper Tire & Rubber, said a drop in business and a corporate restructuring are behind the closing.

Pirelli Expanding Presence in Georgia

Italian tire manufacturer Pirelli is expanding its Georgia operations. In 2002 the company moved its North American headquarters to Rome, Ga. from Connecticut and in 2004 a 247,000-square-foot tire distribution center opened in Henry County, located south of Atlanta. In late September, Pirelli officials announced it has entered into research and development partnership with Georgia Tech.

KENTUCKY

Supplier Opens up Shop in Kentucky

Daicel Safety Technologies of America (DSTA), a Japanese manufacturer, had its grand opening ceremony at its new facility in the city of Beaver Dam, Ky., on October 28. The company makes gas generated inflators for airbags used in automobiles and trucks. The deal is expected to result in 100 new jobs.

Ford Ends Production of Excursion in Louisville

The super-sized SUV craze of the late 1990s and early 2000s apparently has come to end. In September, Ford ceased production of its 19-foot-long Excursion sport utility vehicle at its truck plant in Louisville. The Excursion carried a 44-gallon fuel tank and had been on the market since late 1998.

MISSISSIPPI

Tower Automotive Building Second Mississippi Facility

Novi, Michigan-based Tower Automotive announced in mid November a new plant in Meridian, Miss. The company operates an automotive frame plant in Madison County, Miss., that serves the Nissan assembly plant in Canton. The new plant is expected to provide about 200 jobs producing frame and body components. Once renovated, Tower will move into the 310,000-square-foot former Delco Remy building in Meridian.

SeverCorr Breaks Ground in Columbus

After more than a year of planning and negotiation, SeverCorr Inc., a new steel manufacturer headed up by John Correnti, the former president of Charlotte-based steelmaker Nucor, announced it is building a new $880 million, 1.2-million-square-foot plant in Columbus, Miss. The startup steel producer, which is expected to be operational in less than two years, will use more electricity than the entire city of Columbus uses annually. Power to the plant will be provided by TVA. SeverCorr will produce high-quality steel for the automotive industry in the Southern Auto Corridor (www.SouthernAutoCorridor.com) such as BMW, Honda and Mercedes. Investors in the new company include Russian steel manufacturing company OAO Severstal and GE Capital.

Japanese Supplier Opens Engineering Office

Yazaki North America, a parts supplier for Nissan in Canton, Miss., has opened a new office for its engineering division in Gluckstadt, Miss. The company supplies wire harnesses and electronic devices for Nissan. The new office will include hiring engineers and management staff to support the company's operations in Canton.

NORTH CAROLINA

Continental Teves is spending $100 Million in Western N.C.

Michigan-based Continental Teves, a producer of brake systems, is investing $100 million in new equipment and machinery at its plant in Morganton, N.C. The company has agreed to an incentive package that will be based on the parts supplier keeping its employment at 500 workers or more over the next eight years.

Racing Team Announces New N.C. Facility

Haas CNC Racing, which fields a NASCAR NEXTEL cup team, will begin construction early in 2006 on a new 140,000-square-foot facility on 23 acres near Charlotte in Kannapolis, N.C. The facility is being built at the Kannapolis Gateway Business Park. Haas CNC Racing currently employs 85 workers and the new deal is expected to create 70 new jobs within two years.

SOUTH CAROLINA

Toyota Partners with Savannah River National Lab on Hydrogen Storage Technology

Toyota announced in September it is investing $2 million in the development of hydrogen fuel storage systems for vehicles. The deal is a partnership with the Savannah River National Lab, located at the Savannah River Site in Aiken County, S.C. In 2004, Aiken officials announced the building of a $9.2 million, 60,000-square-foot facility dedicated to hydrogen technology research, development and commercialization. The facility is called the Center for Hydrogen Research and Toyota's work will be done there.

TENNESSEE

Bodine Aluminum Begins Production in Jackson

On November 9, Toyota's president Seiichi Sudo and Bodine president Bob Lloyd were present when the first engine block rolled off Bodine's line at its new factory in Jackson, Tenn. The company currently employs 55 workers at the plant, with about 220 expected to be employed by 2007. Bodine plans to cast about 1 million engine blocks annually at the plant. The V6 aluminum blocks will be used by Toyota at its Georgetown, Ky. plant and will be placed in Camry and Avalon sedan models. Over 250,000 aluminum transmissions will also be produced at the Jackson facility. Bodine was founded in 1912 and became a Toyota subsidiary in 1990. The company operates two other plants in Troy, Mich. and St. Louis, Mo. The new Jackson plant represents an investment of $164 million.

Nissan's New Headquarters to Cost $70M

Nissan's new headquarters is being built in the Cool Springs area of Williamson County, Tenn., just south of Nashville. Nissan officials have said the company will invest $70 million in the new headquarters campus, which is expected to encompass 400,000 to 500,000 square feet. The arrival of Nissan will mean 1,300 new jobs with an annual payroll exceeding $100 million, with an overall economic effect on the Nashville area of over $500 million. Currently Nissan employs over 8,000 people in mid-Tennessee.

West Tennessee Site Earns Fifth Certified TVA Mega site

The more than 1,600-acre industrial site known as the West Tennessee Auto Park, has been certified by McCallum Sweeney Consulting of Greenville, S.C. The site, located in Fruitvale, Tenn. in Crockett County, has been certified as suitable for major automotive manufacturing. The mega site is the second in Tennessee and the fifth in the Tennessee Valley to earn certification. The other sites are located in Columbus, Miss., near Tupelo, near Hopkinsville, Ky., and in Chattanooga.

TEXAS

Suppliers Announced for Toyota Plant

In the fall quarter, economic development officials in San Antonio announced that on-site suppliers for the new Toyota plant will top earlier projections. Eighteen on-site suppliers were announced initially, however, three more were added in October. Kautex, MetoKote and Tokai Rika, which produce fuel tanks, coatings and seat belts respectively, announced they will be part of the plant's supplier mix that is expected to employ over 2,100 workers. Toyota will employ 2,000 at full production, for a on-site total of over 4,000. The redesigned Toyota Tundra pickup will be assembled at the facility, which is expected to open in the fall of 2006.

VIRGINIA

Lear Closing Door Panel Plant in Virginia

Lear Corp. officials announced in late August plans to close its Covington, Va., plant, which will result in 220 lost jobs. The Michigan-based company is cutting back operations throughout the world and is in the process of shuttering a parts plant in Winchester, Va. The Covington facility, which makes injection-molded door panels and trim, is expected to close by the end of the year. Lear operates two other facilities in Virginia, one in Russell County and the other in Strasburg.

QUIZ ANSWER

False

Because of hurricanes Katrina and Rita, Louisiana's and Mississippi's unemployment rates rose sharply in October. Louisiana's rate rose from 5.8 percent in August to 11.3 percent in October and Mississippi's rose from 6.9 percent to 9.6 percent during the same period. The only other Southern state with a higher unemployment rate than Michigan's 6.1 percent in October was South Carolina, at 6.9 percent. The states with the newest automotive plants, by the way, (Alabama, Mississippi and Texas have garnered all new plants announced in the South over the last dozen years -- see quote from Detroit News at the start of SouthernAutoCorridor.com News), had an average unemployment rate of 5.5 percent. The South as a whole had an unemployment rate of 5.08 in October. Michigan's unemployment rate, primarily as a result of domestic automaker cutbacks, is expected to rise above 7 percent in the first quarter of 2006.