Southern Auto Corridor News Summer 2004

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QUIZ

There are over 5,000 significant automotive-related manufacturing plants in the Southern Auto Corridor. How many automotive-related plants with 150 jobs or more have closed in the Southern Auto Corridor since the economic downturn of 2001? (a) 152 (b) 667 (c) 88 (d) 10

(Scroll down for answer)

Alabama Expected to Jump to Third in Auto Manufacturing

According to a report done by the Council of State Governments, Alabama, which now ranks sixth among auto-producing states, will vault to the third spot when Hyundai starts production in 2005. Since Mercedes announced it would build an assembly plant in Alabama in 1993, the state has spent over $800 million in incentives for original equipment manufacturers' Mercedes, Honda, Toyota and Hyundai and the hundreds of suppliers those automakers have attracted.

Missouri Awards Training Funds for Auto Workers

Automakers in Missouri are receiving a total of $3.6 million to train 6,200 workers through the state's Customized Training Program. DaimlerChrysler's two St. Louis-area assembly plants, the General Motors plant in Wentzville and the Ford Claycomo assembly plant in Kansas City will benefit from the funding. Each of the four plants will receive $900,000 in customized training funds. Motor vehicle production makes up three percent of Missouri's Gross State Product, with a total annual impact of $5.5 billion a year.

GM Cutting Jobs in Tennessee

Just a week after General Motors announced it was investing $500 million at its Saturn plant in Spring Hill, Tenn., it said it would eliminate about 400 jobs at the facility. On August 12, GM officials said one of the three job crews that builds the Saturn Ion, a compact model, would be dissolved. In July, the local autoworker union agreed to a new contract that essentially gave total control of plant decisions to GM. GM employs over 5,500 workers at its Saturn assembly plant in Spring Hill.

Saturn Workers Approve New Contract in Tennessee

A labor deal written up by General Motors exclusively for its huge Saturn plant in Spring Hill, Tenn., was approved by union workers at the facility by a 3-to-1 margin. The new deal essentially ends the local labor union's power in decisions made on plant operations. The new deal also allows layoffs at the plant, a first in the history of the 20-year facility. However, bending to GM's efforts to cut costs at the Tennessee assembly plant may ensure the plant's future. The concessions made by workers at the Saturn facility also require GM to make new investments at the plant. GM has lost hundreds of millions of dollars in its Saturn line in the last few years. However, the Saturn facility remains one of the automakers most efficient and productive assembly operations.

Ford Moving Production from Ohio to Missouri

Ford Motor Co. is moving assembly work of its Mercury Mariner and Ford Escape models from its plant in Avon Lake, Ohio to its facility in Claycomo, Mo. The Kansas City-area Ford plant currently builds the F-150 pickup, the Escape and the Mazda Tribute. Ford is consolidating its Lorain, Ohio plant with the one in Avon Lake. The relocation of production to Missouri will not lead to additional jobs at the Claymoco facility, but it will ensure that no layoffs are made at the 6,000-employee plant.

Kansas GM Plant Expanding

Up to 300 new jobs will be created at the General Motors Fairfax Assembly plant in Kansas City, Kan. by 2007 if the city and county governments there approve tax breaks for the automaker. Officials with Wyandotte County and Kansas City, Kan., announced in August that GM plans to produce a third mid-sized model at the plant. It has been reported that GM wants to add 55,000 additional square feet for the expansion. The plant currently totals about three million square feet. GM recently retooled the Fairfax facility with a $722 million investment to build the Malibu sedan and its sports model. The automaker has announced it will build a hybrid powered Malibu beginning in 2008.

Nissan Continues Love Affair with Tennessee

Few companies have shown their love for a state more than Nissan has for Tennessee. In the early 1980s the Japanese automaker invested hundreds of millions in its first U.S. assembly plant in Smyrna, Tenn. That plant has expanded numerous times to the tune of several billion dollars. The assembly plant in Smyrna has also drawn hundreds of suppliers to the Volunteer State. Nissan has also made significant investments throughout the state, especially in the rural town of Decherd, where it built an engine plant. That plant saw a $500 million expansion announced in 2003. In late July, Nissan again expressed its love for Tennessee when it announced it would build a $47.3 million crankshaft facility next to its engine plant in Decherd. The crankshafts coming from the Decherd factory will eventually be installed in every vehicle Nissan makes at its assembly plants in Smyrna and in Canton, Miss.

Will Mercedes-Benz Add Third Vehicle to Production Line in Alabama?

Mercedes officials have said the new $600 million expansion at its assembly facility in Vance, Ala. will add another vehicle to the plant's production lines. The M-Class has been the only vehicle built there since the plant opened almost 10 years ago. The new Mercedes product is the GST, a quasi-SUV, minivan, sports car and station wagon. But rumors persist that a third vehicle will be built at the Alabama plant. The G-Wagen, or Galaendewagen, a large, sturdy, high-priced, four-wheel-drive vehicle that is comparable to the Hummer and Land Rover, is expected to be added to the GST and M-Class at the plant. The new name and a new revamped product would be called the G-Class.

No New Plant for Georgia: Ford to Retool Hapeville

In the last year DaimlerChrysler backed off building a new truck assembly plant near Savannah and now Ford has decided not to build a new facility in Georgia as well. But at least economic development officials in Georgia got the next best thing. After considering sites for a new assembly plant east and west of Atlanta, Ford officials have decided to retool their plant in Hapeville, Ga. The plant, which produces the Ford Taurus and Mercury Sable brands, will apparently assemble a new sedan and SUV under the Lincoln nameplate. As of mid-July, Ford officials have not announced the retooling of the plant. However, suppliers to Ford said the cost of refurbishing the 56-year-old facility located near Atlanta could reach $750 million.

Honda Rolls Out New Odyssey

The first redesigned Honda Odyssey rolled out of Alabama's Lincoln, Ala. plant on August 12. The Lincoln plant is now the exclusive manufacturing site for the Odyssey minivan as Honda of Canada ceased production of the model with the end of the 2004 model.

GM Texas Plant Marks 50 Years in Texas, $160M Investment Announced

In 1954 General Motors opened its assembly plant in Arlington, Tex., which is located in the center of the Dallas/Fort Worth marketplace. At the time Arlington had a population of 8,000 persons. By 1964, Arlington's population topped 60,000. GM celebrated the 50th anniversary of its Arlington facility by announcing it would invest $160 million into the assembly operation "for future production." The plant employs over 3,000 workers and produces about 250,000 SUVs annually. The Arlington assembly plant was recently named in the Harbour Report as the most efficient producer of full-size SUVs in North America.

Chrysler Spending $113 Million in St. Louis

Chrysler is adding a new robotic line at its St. Louis plant that will represent an investment of over $100 million. The automaker is adding flexibility at the plant that will allow it to build Stow 'n Go seating in minivan models. The Stow 'n Go technology enable seats to be stowed in the minivan's underbody.

Will BMW Build Minivans in South Carolina?

Officials with BMW AG are considering launching a minivan and the German automaker may build the new model at its plant in Greer, S.C. Automotive News reported this summer that BMW is expected to announce a new minivan in 2006.

Toyota Begins Foundation Work in San Antonio

Japanese automaker Toyota has begun work on the foundation of its new facility in San Antonio. The foundation for the plant is expected to be completed by November. Toyota officials have set a target date of fall 2005 for the completion of the facility, which will assemble about 150,000 Tundra pickup trucks annually.

Editorial

Texas' Future in the Southern Automotive Corridor Could be Huge

The growth of the Southern Automotive Corridor (www.SouthernAutoCorridor.com) has been nothing less than remarkable over the last 25 years. The world's largest industry has a true love affair with the American South. Today, nearly 5,000 major automotive suppliers call the region home and 21 major assembly plants operate profitably with no hint of closure. Two new assembly plants are under construction in the SAC. Hyundai is putting the finishing touches on its new plant in Montgomery, Ala. and the other, Toyota, just poured its slab in San Antonio, Tex.

So far in 2004, automotive parts suppliers have averaged significant new plant announcements at a rate of almost two a week in the Southern Auto Corridor. That's a similar if not exact pace seen in 2003 when the automotive industry posted more significant deals (85 projects with 100 announced jobs or more) than any industry sector has in any year in the South since 1992. No other industry sector can come close to making the claim that it turns two good-sized deals a week, not only in the South, but anywhere else in the country.

But where is the Southern Automotive Corridor? The South is a big place, stretching from El Paso in extreme west Texas to the Washington, D.C. region of Maryland, Virginia and West Virginia. Without question, the spine of the Southern Auto Corridor is Interstate 65, which begins in south Alabama and runs north through Tennessee and Kentucky. Currently, those three states are landing the lion's share of automotive deals in the region.

However, with the opening of Nissan's assembly plant in Mississippi in 2003 and Toyota's announcement in the same year of a new plant in San Antonio, Tex., it's possible that the future of the Southern Auto Corridor is moving west of the spine. Of all the states located west of the Southern Auto Corridor's current center, no state has more potential at landing new assembly plants than Texas.

Assembly plants, or original equipment manufacturers, are what drive the South's automotive industry. For example, in the year before Mercedes-Benz announced it would build a plant in Alabama -- that would be 1992 -- the state saw $21 million in automotive-related plant announcements or expansions. In 2002, after Alabama landed Mercedes, Honda and Hyundai, automotive-related investments rose to $2.1 billion in the state. Fact is, the automotive industry has single-handedly transformed Alabama's economy in just over 10 years.

Currently, major automotive plants operate in the Southern Auto Corridor in 14 of the South's 17 states. Only Arkansas, Florida and North Carolina are void of a major automaker producing cars, SUVs, minivans or pickups.

As for Texas, it is one of only three Southern states that are home to both domestic and foreign assembly plants. General Motors has operated an assembly plant in Arlington, Tex., for 50 years. That plant is undergoing a $160 million expansion. Soon, Toyota will be making pickup trucks in San Antonio.

But Why Texas?

Foreign automakers have targeted the Southern Auto Corridor in recent years because of the region's many attractions, such as low operating costs, low union activity and an outstanding quality of life. The region is the logical place to gain a new foothold in the U.S. consumer market. Let's not forget that only a handful of foreign automakers and suppliers operated in the U.S. just 20 years ago. Hundreds of foreign suppliers have announced new facilities in the South since. In fact, for several years now almost every month has brought at least one new foreign supplier announcing its first U.S. plant being located in the Southern Auto Corridor.

Domestics, on the other hand, haven't announced a new assembly plant in the South in over 20 years. The last was Saturn's Tennessee plant built in the early 1980s and before that GM in Oklahoma City and Shreveport in the early 1970s. Yet, domestic parts suppliers have come to the South in good numbers in the last two decades.

With the incredible success of foreign automakers' decisions to create ground-up, highly technological plants in the Southern Auto Corridor (SAC), it's no stretch to predict that domestic automakers will do the same soon. And Texas just might be the first state in the SAC to land a domestic automaker since Ronald Reagan was President.

One of the reasons why Texas might land a domestic automaker soon centers on the decision by Toyota, the world's third-largest automaker, to build a plant in the state to produce pickups. Texas is the nation's largest pickup truck market by far and that was a huge factor in the Japanese automaker's decision to produce the trucks in the Lone Star State as opposed to other states in the SAC, specifically Arkansas, which offered a more cost-efficient site across the river from Memphis.

Obviously, GM and Ford also build pickup trucks and the Texas market is huge for them as well. GM and Ford produce pickup trucks in the Southern Auto Corridor, but only GM builds them in Texas. That being the case, will Ford or Chrysler brands such as Dodge leave the Texas pickup truck market to Toyota and GM?

Toyota's announcement in the winter of 2003 that it had chosen San Antonio not only brings more attention to Texas by foreign automakers, it brings attention to suppliers who call Mexico home. There are hundreds of automotive parts suppliers and several OEMs located just across the border in Mexico. It's an easy conclusion to make that at some point, Texas' automotive industry will eventually merge with northern Mexico's automotive industry.

But not only is Texas a huge truck market, it is a massive market, period. It is the South's largest state by nearly 8 million people. Toyota made its decision to locate a plant in Texas primarily so it could operate in the nest of a market with 23 million people. We've never heard of a plant location decision based primarily on how many vehicles will be sold in the state in which the product is built. Apparently that was the case with Toyota.

Here's What We Believe Will Occur in Texas

The automotive industry will continue to find new homes in the Southern Auto Corridor. States that are currently landing most of the auto-related deals in the South, such as Kentucky, Tennessee and Alabama, will at some point yield to other Southern states. That transition has already begun with Nissan opening in Mississippi and Toyota choosing San Antonio.

Texas is large enough to cater to both the domestic and foreign auto assembly markets. With GM in Arlington and Toyota in San Antonio, the two plants are far enough away not to clash in terms of labor. Texas has numerous large sites available and it's our opinion that if 10 auto assembly plants are to locate in the Southern Auto Corridor in the next dozen years, Texas has a excellent shot at half of them.

Lee Burlett, Managing Editor

ALABAMA

Tier-One Supplier Picks Selma, Ala.

Lear/Kyungshin Sales and Engineering (LKS), a tier-one supplier to the new Hyundai plant in Montgomery, is leasing 40,000 square feet of space at Selma's Craig Industrial Park. LKS will produce and sequence wiring harnesses for Hyundai. The company expects to hire about 35 individuals initially. LKS represents the 31st Hyundai supplier to locate in Alabama.

Canadian Supplier to Open Plant in Alabama

Fleetwood Metal Industries, based in Ontario, Canada, announced in early August it will locate its first U.S. plant in Sylacauga, Ala. The company will create 100 new jobs and will supply stamped metal parts to Honda's plant in Lincoln, Ala. The Tier 1 supplier is the first to locate in Talladega County, home to the Honda assembly plant.

Tier-Two Supplier Locates in Troy, Ala.

CNC Enterprises, a metal fabricator that will supply parts to several tier-one suppliers to the Hyundai plant in Montgomery, is locating in Troy, Ala. The company will hire 40 employees, most of them welders and electricians.

Michigan Supplier to Open Plant in Alabama

Johnson Controls, based in Plymouth, Mich., announced it will open a plant in Montgomery to produce vehicle interior products to Hyundai when its new assembly plant opens in 2005. The company will supply center floor consoles and interior trim components to Hyundai. Its the first interior components contract Johnson Controls has earned with Hyundai.

German Parts Supplier Announces First American Plant

Officials with Germany-based Eissmann GmbH, announced in late July the company is building its first U.S. plant in Pell City, Ala. Eissmann makes automotive interior components and will supply the Mercedes plant in Alabama with 160 dashboards a day when the new plant opens in October of 2005. The company expects to hire about 85 workers.

Supplier Building in Alabama

TW-Fittings, a supplier of tires and wheels for the expanding Mercedes-Benz plant in Vance, Ala., has begun construction on a $10 million plant in Tuscaloosa. The new 100,000-square-foot building will house 35 workers initially.

Korean Supplier Expands in Alabama, Moves HQ There

Mando America Corp., a South Korean automotive supplier, is investing $35 million more in Opelika, Ala. The U.S. subsidiary of South Korea-based Mando Corp., just completed a 150,000-square-foot parts facility to supply Hyundai's new assembly plant in Montgomery, Ala. and other carmakers in North America. The $35 million expansion includes the relocation of its U.S. headquarters from Detroit to Opelika. The move will result in a doubling of its Opelika work force to nearly 400.

ARKANSAS

Hino Motors Breaks Ground in Marion, Ark.

Hino Motors Manufacturing USA, a division of Japan's largest producer of medium-duty and heavy-duty diesel trucks, has broken ground on a new assembly plant in Marion, Ark. The new 400,000-square-foot facility will manufacture differential, rear axle and suspension-related parts for Toyota vehicles. Toyota has an assembly plant in the Southern Automotive Corridor in Georgetown, Ky. and is building another in San Antonio. The Japanese automaker also operates two engine plants located in Alabama and West Virginia and a third is about to be completed in Jackson, Tenn. Hino officials have hinted at a larger presence in Marion. However, the parts plant alone is expected to employ 300 workers.

GEORGIA

Nissan Moving SE HQ to Atlanta

Nissan North America is relocating its Southeastern U.S. headquarters from Jacksonville to Atlanta. The subsidiary of Nissan Motor Co., provides marketing and sales support for the Japanese automaker's 150 dealerships in Alabama, Florida, Georgia, Kentucky, the Carolinas and Tennessee. Regarding the move, Nissan officials cited Atlanta's central location and air service. Almost 20 percent of Nissan's U.S. sales come from the Southeast. Just over 50 employees will relocate from Jacksonville to Atlanta in the move.

Toyota and Denso JV Announced in Georgia

TD Automotive Compress Georgia is developing a 334,000-square-foot facility in Jefferson, Ga. that will house an estimated 300 workers. The new $100 million factory will produce air-conditioner compressors. The company is a joint venture between Denso Corp. and Toyota.

KENTUCKY

Japanese Supplier Announces First U.S. Plant

Konsei USA is locating a facility in LaRue County, Ky., near the rural town of Hodgenville. It's the first U.S. facility for the Japanese automotive company. Konsei, which makes pneumatic air grippers and other parts, will employ 20 workers initially.

Canadian Parts Supplier Selects London, Ky. for Plant

Toronto-based ABC Group announced it is building a 140,000-square-foot automotive parts plant in London, Ky. ABC is investing about $20 million in the deal and will employ over 150 workers at the facility. The global parts supplier operates plants in Europe, Asia and North and South America.

NORTH CAROLINA

Penske Racing Expanding in North Carolina

Penske Racing South is staying and expanding in Mooresville, N.C., after considering offers from other North Carolina communities to relocate. Penske, which fields NASCAR teams that include Rusty Wallace and Ryan Newman, is consolidating its operations into the 440,000-square-foot former Matsushita industrial plant. Mooresville, located near Charlotte, calls itself Race City USA for the large number of NASCAR teams operating in the city.

SOUTH CAROLINA

Hella Expanding in S.C.

Germany-based Hella Lighting, a maker of headlamps for the automotive industry, is expanding its plant in York, S.C. The company is adding 100 workers and 16,000 square feet to its 120,000-square-foot facility.

Racing Supplier Expands

Richmond Gear, a manufacturer of high-performance ring and pinion sets for the automotive racing industry, recently completed a 60,000-square-foot expansion of its facilities in Pickens County, S.C. The expansion represents a $3 million investment and will create 40 new jobs.

Fabric Maker Expanding

INVISTA, a global polymers, intermediates and fibers company, has announced plans to invest $30 million in its Winnsboro, S.C. site. The facility, which produces and treats polyester fabric used in tire manufacturing, has a multi-year contract to supply Michelin with fabric for its tire manufacturing operations. Winnsboro is located in rural Fairfield County.

TENNESSEE

GM Announces Major Investment in Spring Hill Plant

General Motors announced in August "a major capital investment" in their Spring Hill/Maury County, Tenn., manufacturing plant. GM will invest $500 million upgrading and retooling the plant for multiple products using the same production system. In April 2000, GM announced a $1.5 billion investment in the Spring Hill factory. To date, GM has invested more than $4 billion at the facility in Spring Hill, Tenn.

Bridgestone Metalpha Announces $45M Expansion in Tennessee

Bridgestone Metalpha USA announced in late July a $45 expansion project at its facility in Clarksville, Tenn. The expansion will result in 35 new jobs and 125,000 square feet of additional space. The company, which makes steel cord used in radial tires, currently operates in 690,000 square feet of space in the Clarksville-Montgomery County Corporate Business Park. It's the third expansion for Bridgestone Metalpha in Clarksville.

Tower Automotive Moves Unit

Tower Automotive is moving production of its suspension link arm operation from Bowling Green, Ky., to one of its plants in Milan, Tenn. The move will result in about 70 lost jobs in Bowling Green.

TEXAS

Koyo Steering Picks Texas

Koyo Steering Systems, a subsidiary of Koyo Seiko Co. of Osaka, Japan and no stranger to the Southern Automotive Corridor, has chosen Ennis, Tex. for its latest U.S. manufacturing facility. Koyo Steering also operates plants in Virginia, Tennessee and South Carolina. Koyo will invest $30 million in the first phase of the new Ennis facility and hire approximately 200 employees. The facility will produce up to 1,000,000 steering system units per year. The company will supply Toyota's new plant in San Antonio as well as GM's expanding plant in Arlington, Tex. Ennis is located about 20 miles south of Dallas on Interstate 45.

Lift Truck Maker Selects Arlington, Tex.

Crown Equipment Corp., the leading brand of electric lift trucks in the U.S., has chosen a site in Arlington, Tex. for a regional sales and service branch. The company expects to employ over 100 workers at the new $3.5 million facility.

QUIZ ANSWER

The answer is (d), 10. Yes, we have found but 10 significant automotive plant closures in the Southern Auto Corridor (www.SouthernAutoCorridor.com) since the beginning of 2001.