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Summer, 2005
Courtesy of www.SouthernAutoCorridor.com
QUIZ
In the summer quarter, some news outlets and individuals in Canada took some shots at the South after Toyota announced in July it would build a plant in Woodstock, Ontario (see cover story this issue). This issue's quiz is: How many new automotive assembly plants have been announced in the Southern Auto Corridor since the last new assembly plant was announced in Canada prior to Toyota's deal this summer?
(Scroll down for answer)
Editorial
Apparently Kia's Plant Plans Easier to Predict than Hyundai's
By Mike Randle
In the winter 2003/2004 edition of Southern Business & Development (almost two years ago), we wrote an editorial with the headline, "Here's a Prediction: Kia will announce its First U.S. Plant in 2006 and we know where it will be Built." In the editorial (see http://www.southernautocorridor.com/Issues/Winter2004/departments/Editorials), we predicted that Kia will announce its first U.S. plant in the spring of 2006 and that the location will be Meridian, Miss.
Just last month (August 2005), much was made of Mississippi Gov. Haley Barbour's trip to Korea for a visit with Hyundai-Kia Automotive Group Chairman Chung Mong-Koo. Kia officials admitted that Mississippi is at the top of the list as a location for the Korean automaker's first U.S. plant. And Gov. Barbour revealed in August that Kia's first choice for a site in Mississippi is Meridian.
We have written for almost two years now that Kia will build its first U.S. plant in the Southern Auto Corridor, specifically in Mississippi and even more specifically in Meridian. But before Kia builds, its South Korean partner, Hyundai, must ramp up its new plant in Montgomery, Ala., and have at least a nine month sales history of vehicles made at that plant. When will that be? Spring of 2006. It may be that Kia is even more predictable than Hyundai when it comes to when and where it will announce its first North American assembly plant. Nine months before Hyundai announced its first facility in 2002, we wrote that it was going to Montgomery, Ala.
mike@sb-d.com
Where's the Money?
Nissan and Toyota recently announced they would begin their first ventures into gas-electric hybrid vehicle production in the U.S. at two of their plants in the Southern Auto Corridor. Toyota announced in May it would bring hybrid production to its massive plant in Georgetown, Ky. Nissan chose its gargantuan facility in Smyrna, Tenn., for its first U.S. foray into building hybrid cars. That announcement was made in June. What's interesting about the two announcements is this: both carmakers announced that about $10 million will be spent at each plant in order to fit them for hybrid production. We can't think of an expansion at either facility over the years that did not exceed $100 million. It was a little bit of a downer (to us anyway) that a puny $20 million is being invested by the two Japanese automakers into what many believe is the next generation automobile. Is that all it takes? If $20 million is all it takes then why haven't these cars been on the road for at least 10 years?
ALABAMA
Selma is the new Home of Hanil E-Hwa
In late 2003 and throughout 2004 Hyundai suppliers from Korea seemed to announce a new plant in Alabama every week. That activity slowed in 2005, but there continues to be announcements of parts suppliers for the newly opened Hyundai facility. The latest announced its intentions to invest $38 million and hire 240 workers in Selma, Ala. The deal represents the third supplier to land in Selma in the last 18 months. Hanil E-Hwa Interior Systems first U.S. plant will supply door trims, seats, head linings and other interior parts to the Hyundai plant in Montgomery, Ala.
Tallassee Lands Supplier
Hanil USA, a subsidiary of Michigan-based TI Automotive, announced in July it is building a parts plant in Tallassee, Ala., that will produce steel and plastic tube components for fuel system assemblies. The parts will be used by Hyundai as it continues to ramp up its assembly plant in Montgomery. Hanil USA is spending about $2.5 million in the deal and will hire about 30 workers.
Mercedes to Make Third SUV in Alabama
German automaker Mercedes-Benz announced in July it will build a third vehicle at its assembly plant in Vance, Ala. For more than a year there's been speculation that Mercedes would build a larger G-Class vehicle to compete with the Hummer and other larger SUVs. The M-Class SUV has been in production since 1997 in Alabama and the R-Class, a combination wagon-SUV, is slated for mass production this year.
Automotive News: Honda to Expand Alabama Plant
One of the automotive industry's leading publications revealed in July that Honda will expand its Alabama plant again. The Japanese automaker just finished putting in a $600 million second line at the east Alabama facility that houses about 4,500 workers. There have been reports in the Japanese media that Honda officials have already made the decision to expand the Alabama plant, citing lack of capacity of plants in Japan. The Alabama expansion means something else; it won't be too long before Honda will be in a full-fledged site search for another assembly plant in the U.S.
Honda Training Center Opens
Alabama Industrial Development Training (AIDT), which was ranked recently by Expansion Management magazine as the best training program in the U.S., opened a new training facility in Pell City, Ala. over the summer. The facility will train workers for Honda's assembly plant in Lincoln, Ala. AIDT already operates a training facility near the plant in Lincoln. Both facilities are part of the incentive package offered by the state of Alabama for Honda. Honda produces the Odyssey minivan and Pilot SUV models in Alabama.
ARKANSAS
Crittenden County trying to prove it's Memphis' Fault
Crittenden County, Ark., home to the super industrial site in Marion that was looked at hard by Toyota, is trying to prove to the EPA that its air quality problems are sourced across the river in Memphis, Tenn. The county is installing several new ozone monitoring systems that measure ozone while simultaneously figuring wind speed and direction. In 2004 Crittenden County was found in noncompliance with federal ozone level laws. The timing of the findings by the EPA was about as bad as it gets, as Toyota was site searching for its seventh North American assembly plant at the time. That plant landed in Ontario. If Crittenden County can prove that the source of the high level of ozone is indeed Memphis, there's a possibility the EPA will lift the noncompliance designation.
GEORGIA
GM Announces Layoffs at Doraville
General Motors has reduced production at its Doraville, Ga., plant from 60 minivans produced per hour to 54. The plant will continue operating two assembly line shifts, however, there will be layoffs at the 3,100-employee plant. The plant, one of GM's oldest, assembles the Saturn Relay, Chevy Uplander, Buick Terraza and Pontiac Montana models.
Georgia did the Right Thing
In measures of economic development, the state of Georgia has not performed as well as it should have since Sonny Perdue became governor in 2003. The biggest blow to the Peach State during that period can be described quite easily. Neighboring Alabama has beaten Georgia straight up in significant deals turned in 2002, 2003 and 2004. When we say "straight up," we do not mean on a per capita basis, which is the only way Alabama could have beaten Georgia in any economic development measure prior to 2002. Georgia's population is close to double Alabama's. There’s no question the Peach State could use a few big announcements. Back in April Georgia economic development officials passed on DaimlerChrysler's scaled down version of its van plant. If you recall, DC announced in 2002 it was considering building a $754 million, 3,300-employee van assembly plant at a site in Pooler, Ga. The state was so convinced the deal was done it spent about $60 million in improvements on the site, which is located in the northwest corner of I-16 and I-95. The scaled down version of the facility would have meant but a $100 million investment for a 400,000-square-foot facility at the Pooler site. Georgia passed on the deal and in our opinion made the wise choice. The Pooler site may be the best super site in the entire South. Ruining it with a mini-me version of the old DC deal, even though Georgia needs some economic development wins in the worst way, would have been a mistake.
Die Caster Building Plant in LaGrange, Ga.
Ae Group, a German automotive and aerospace aluminum die-casting parts manufacturer is building its first U.S. plant in LaGrange, Ga. The company is investing $15 million in the deal and creating about 300 new jobs. Ae Group's customers include DaimlerChrysler, Audi, Volkswagen, Porsche, BMW and GM and a variety of aerospace companies.
TI Automotive Opens Georgia Plant
Michigan-based TI Automotive has opened its $30 million fuel-tank systems plant in Hartwell, Ga. The 145,000-square-foot facility will produce plastic fuel tanks for vehicles made by Hyundai, DaimlerChrysler and BMW. The facility houses 100 workers. TI also operates a 250-employee facility that produces brake fluid lines in Cartersville, Ga.
KANSAS
GM Produces 10 Millionth Vehicle at Fairfax
GM's 60-year-old Fairfax assembly plant in Kansas City, Kan., rolled out its 10 millionth vehicle in the summer quarter. The car was a black 2006 Chevrolet Malibu. Next year the Fairfax plant will add the new midsize Saturn Aura to its production lineup. GM employs about 3,000 workers at the factory.
KENTUCKY
Supplier Announces in Somerset
UGN, a joint venture created in 1986 between Rieter Automotive Systems and Nihon Tokushu Tokyo Co., Ltd., announced it is investing $16 million and creating 300 jobs in Somerset, Ky. UGN manufactures acoustic and interior trim, as well as thermal management products for Japanese automakers located in the Southern Auto Corridor. The new 314,000-square-foot Somerset plant will produce UGN's first acoustical carpet system for 2007 production year vehicles.
NHK Investing $20M in Louisville
NHK Spring, another Japanese-owned parts supplier, announced it is investing $20 million and creating about 80 new jobs in Louisville. The company, headquartered in Yokohama, Japan, is the world's largest spring manufacturer, employing more than 14,000 people worldwide. NHK will build a 94,000-square-foot facility in the Jefferson Riverport in Louisville.
Benson International Breaks Ground in Cadiz
Benson International, a manufacturer of steel and aluminum truck trailers and bodies, broke ground on a 180,000-square-foot facility in the Trigg County Industrial Park in Cadiz, Ky. The $13 million investment is expected to create about 250 new jobs.
LOUISIANA
New Auto Assembly Site in Louisiana
Louisiana state economic development officials have begun marketing a 1,500-acre, single-owner site to potential automakers. The site, located west of Monroe on Interstate 20 in northeast Louisiana, features dual rail, interstate frontage and flat topography. The site is located about equal distance between Nissan's Canton, Miss. factory and GM's assembly plant in Shreveport, La.
MISSISSIPPI
Nissan Shipping Mississippi-Made Minivans to China
In the late summer quarter, Japanese automaker Nissan began shipping Quest minivans produced at its plant in Canton, Miss. to China. Nissan has set a mark of 4.2 million worldwide vehicle sales by fiscal year 2007 and China may the market that gets them there. It has been estimated that as many as 100 million vehicles could be sold in China over the next 10 years. The Quest models will be shipped fully assembled and will travel by rail from Mississippi to ports in California and then on to China.
SteelCorr Mill Looks Like Done Deal
Government officials in Germany have approved a $227 million loan to SteelCorr, a startup steel manufacturer headed up by John Correnti, the former president of Charlotte-based Nucor. SteelCorr plans to build a $725 million mill on 1,400 acres near Columbus, Miss., that will make steel products for the automotive industry based in the Southern Automotive Corridor. The deal is expected to create at least 450 new jobs.
Editorial
Kia Deal is revealed. Now, what about Project Pine Tree?
By Mike Randle
If you logged onto www.SouthernAutoCorridor.com in the summer you may have read an editorial we wrote titled "Babbling about Project Pine Tree is Baffling Us." While that article was not published in SB&D the magazine, we will review it here. In the editorial we wrote that most people believe that Project Pine Tree is the Kia project. We disagreed, pointing out that Kia would never look at sites near Huntsville or Chattanooga for a plant, two sites that we believe are at the top of the list for the Pine Tree project.
Why would Kia not consider those two sites? Almost all of Hyundai's suppliers (Kia's parent company) are located south of Birmingham, Ala., with most of those located south of Montgomery. If Kia built an assembly plant in north Alabama or near Chattanooga, most of the Korean suppliers, which have already set up shop in Alabama, would have to go through Montgomery and Birmingham to reach north Alabama or Chattanooga and there's no chance of that happening.
Now that we know that Kia has circled Meridian, Miss., on the map for its first U.S. assembly plant, something we wrote they would do in the winter 2003/2004 edition of Southern Business & Development, we'd like to once again turn our attention to Pine Tree. At a gathering of political and economic development officials in Tennessee during the summer, Tennessee Rep. Zach Wamp said that a "next generation" automotive plant is coming soon to Chattanooga's Enterprise South super industrial site. Of course it was Sen. Trent Lott who said early in 2004 that Kia is the next automaker to call the Southern Automotive Corridor home and Mississippi is going to get them (Kia). Now, if Lott's prediction comes true, as we believe it will, how can you discount what Wamp said this summer?
We believe that Project Pine Tree is the automotive plant Wamp is referring to. And we believe that automaker is a German company, either Audi or BMW. As mentioned, we never believed Project Pine Tree was Kia. The reason why is simple. Kia, nor Hyundai, can keep a secret. As mentioned, we wrote Kia was to announce a plant in Meridian, Miss., in December of 2003 and that plant would be announced in the spring of 2006 (see this editorial). In contrast, Pine Tree is the best kept project secret we have ever seen. That being the case, it's certainly not a Korean automaker.
The last time an automaker kept a deal this close to the vest was Mercedes-Benz in 1993. For example, the day before Mercedes announced it would build its first U.S. plant in Vance, Ala., articles were published in North Carolina celebrating the project's announcement in Mebane, N.C.
So, where are we with Project Pine Tree? Well, we're getting closer, albeit slowly, to an answer. Since site visits were confirmed in Limestone County, Ala. (near Huntsville) and Chattanooga, Tenn., in the spring, we have had little to go on regarding Pine Tree other than a rumored visit in June to a site in northeast Louisiana. In other words, if Pine Tree is a deal and not a dog, then a short list of two sites may have already been determined; Limestone County, Ala. and Chattanooga, Tenn.
Project Pine Tree is so confidential we may have to pass on a prediction regarding the project. That's a tough thing for us to admit considering our track record regarding automotive assembly plant projects. But, we'll go out on a limb on this one. We'll stick with our original prediction made in the spring; Audi in Chattanooga, Tenn. But if it turns out to be BMW, just remember we did say "German automaker."
mike@sb-d.com
MISSOURI
GM Spending $30 Million at Wentzville Facility
New Missouri Gov. Matt Blunt visited GM officials in Detroit in June and in August received word the domestic automaker will invest $30 million at its Wentzville, Mo., factory to upgrade two of the facility's stamping presses. The Wentzville plant, located near St. Louis, houses 2,700 workers and assembles GMC Savana and Chevrolet Express van models. GM's Wentzville plant was recognized in the 2004 Harbour Report as the most productive full-size van facility in North America.
Johnson Controls Cuts 80 Jobs in Earth City
Due to a loss of contract to make automotive door panels for DaimlerChrysler DR, Johnson Controls' Automotive Systems Group displaced approximately 80 employees in the summer quarter at its facility in Earth City, Mo. Those affected include assembly technicians, material handlers, quality auditors, line stockers, production managers and maintenance workers.
NORTH CAROLINA
BorgWarner Turbo Expanding
BorgWarner Turbo Systems, a producer of automotive turbo charging systems, is investing $40 million to expand its Buncombe County manufacturing facility, creating 111 new jobs during the next three years. The company, headquartered in Germany, currently employs 700 people in Buncombe. The $40 million investment will purchase and install new equipment to expand the factory's production capacity and help the company meet growing demand.
CK Technologies Opens Mount Airy Plant
CK Technologies, a maker of plastic component parts for buses and trucks is creating 50 jobs and investing $19 million over the next three years to build and equip a 165,000-square-foot facility in Mount Airy. The company produces parts for Volvo and Freightliner. Headquartered in Ohio, the company's products include engine covers, fender extensions, grilles and floor mounted consoles. The new facility is being built at the Piedmont Triad West Industrial Park.
Parts Supplier Announces North Carolina Facility
Dill Air Controls, a newly formed automotive parts supplier that will make air valves, tire repair accessories and valve parts, announced in June it will open a plant in Oxford, N.C. The company plans to invest $9 million in the deal and hire about 150 workers. The project earned about $150,000 in incentives from the One North Carolina Fund.
SOUTH CAROLINA
Japanese Supplier Expanding in Rural South Carolina
Musachi South Carolina is expanding its 120,000-square-foot Bennettsville, S.C. facility by 15,000 square feet and hiring an additional 120 workers. Musachi produces differential gears at the plant. Musachi has earned new contracts to supply parts to Visteon, Dana and Honda. The company's products are now being shipped to other automotive companies in the Southern Auto Corridor as well as to parts suppliers in the Midwest.
Startup Parts Maker Chooses Edgefield County
Trenton Plastic Products is investing $5 million to the purchase the former Carlisle facility in the Edgefield County, S.C., town of Trenton. The new company will produce blow mold and injection plastic components and parts for the automotive and lawn and garden industries. Trenton is expected to hire about 200 workers within three years.
TENNESSEE
Nissan Rolls off Seven-Millionth Vehicle in Smyrna
For all practical purposes the Southern Auto Corridor was invented when Nissan opened its first North American assembly plant in Smyrna, Tenn. in 1983. The roll off of the first vehicle, a pickup truck, represented the first time a foreign automaker produced vehicles in the South. Since then, foreign automakers’ BMW, Mercedes, Toyota, Hyundai and Honda have placed one or more assembly plants in the Southern Auto Corridor. They will soon be joined by KIA and Audi. In the summer quarter, Nissan announced it rolled out its seven-millionth vehicle at the 22-year-old plant, also a pickup truck. The Nissan plant in Smyrna houses 6,700 workers inside 5.4 million square feet of space and produces the Altima, Maxima, Xterra, Frontier and Pathfinder model vehicles.
TEXAS
Toyota Announces Expansion of San Antonio Plant
Toyota's new San Antonio, Tex., plant hasn't opened yet but the Japanese automaker has plans to expand it anyway. Toyota originally planned to produce 150,000 newly designed Tundra pickups at the facility each year. The company announced in the summer quarter that will increase to 200,000 trucks annually. The bump in production will mean Toyota will spend $850 million, not $800 million by the time the plant opens in late 2006.
Toyota to Create 9,000 Jobs at Full Production
A study completed over the summer by the Michigan-based Center for Automotive Research estimates that Toyota's new plant in San Antonio will create about 9,000 direct and indirect jobs when it goes into full production some time in 2007. The jobs created will represent about $500 million in annual wages. The center also estimated that in 2003 Toyota's U.S. operations supported 386,000 jobs and that payroll exceeded $14 billion.
Ennis, Tex. Snares another Tier 1 Supplier
ASMO Manufacturing Inc., a Michigan-based supplier with a plant in North Carolina, announced on June 24 it is building a major automotive parts facility in Ennis, Tex. The deal represents the second Tier 1 supplier to announce in Ennis over the last nine months. Koyo Steering Systems is building an advanced technology steering systems production factory in Ennis, which is located 20 miles south of Dallas. ASMO will manufacture windshield washer products for Toyota’s new plant under construction in San Antonio. Currently ASMO supplies parts to Toyota, Honda, New United Motors, Mitsubishi, Subaru, GM, Ford, Saturn and Chrysler.
San Antonio Auto Parts Supplier Enters Marine Sector
A division of a subsidiary of Pittsburgh-based Alcoa has begun supplying wire harnesses to the marine engine industry. AFL Automotive's Specialty Products Group, which is based in San Antonio, is producing the harnesses for EControls Inc., an engine control module producer. EControls also operates out of San Antonio.
VIRGINIA
Lumbee Invests in Rural Virginia
Lumbee Enterprises, a quality assurance provider of high-end inspection, sorting and engineering rework services in the automotive industry, is investing $2.6 million to open a facility in rural Pulaski County, The company will occupy the former Pfizer plant and perform post-manufacturing modifications for commercial trucks, with a potential of creating 30 to 50 jobs.
Virginia Forge Expands
Virginia Forge, a maker of steel forgings used in wheel structures, has announced a second expansion since locating in Virginia's Roanoke Valley in 1997. The expansion will double VFC's production capacity, from 5 million units to 10 million units annually, by adding a second automated forging press. The $18.25 million project is fueled by the growing demand for light trucks and SUVs, such as the Nissan Pathfinder and Frontier; DaimlerChrysler Ram Truck, Durango and Dakota; Ford Explorer, Ranger and Sporttrac. VFC is one of three businesses of the MFC Group based in Meadville, Pa.
WEST VIRGINIA
Joint Venture Brings 100 Jobs to West Virginia
A.K. of West Virginia, a joint venture between KSWV and Kato Seisakusho of Nagoya, Japan, announced in July it will invest $10 million in a new metal stamping facility in Ravenswood, W.V. The deal will result in 100 new jobs. The plant will produce small-to-medium-size parts for the automotive industry.
Editorial
If the Marion, Ark. Site is dead for an Automaker, then why has Toyota done what it has done?
By Mike Randle
At a recent economic developer conference I had dinner on three consecutive evenings with several different site consultants. Not to name names, but to a person they all believed that there's no chance now that Toyota will choose Marion, Arkansas for its eighth North American assembly plant. In fact, one consultant said, "the Marion site is dead."
We all know that Toyota chose Ontario for its seventh North American assembly plant this summer (see cover story) and San Antonio for its sixth back in 2003. We also know that Toyota will soon be in another site search mode for an eighth plant.
The Marion, Ark., site is located across the Mississippi river from Memphis. It's a well-worn story that Marion placed second to San Antonio for that facility.
But if the Marion site is indeed "dead" as a prospective site for an automaker, then why has Toyota done what it has done in the Memphis region? Listed here is just some of that activity from the Japanese automaker.
- Hino Motors Ltd., a Toyota-affiliated truck and parts maker, broke ground in July on a $160 plant in Marion. The facility will employ about 300 workers and produce parts for approximately 300,000 Toyota vehicles a year. Hino has been referred to in Japanese newspapers as Toyota's "advance team."
- Hino has teamed up with Mid-South Community College in nearby West Memphis and three other colleges in the area to advise on the curriculum to train future auto workers. In fact, Mid-South is building a new training center for automotive workers.
- Hino is sponsoring a trip to Tokyo this month to take auto worker training instructors from the four Memphis area colleges to observe how workers are trained in Japan.
- Hino has built a new parts distribution center in nearby Southaven, Miss.
- Another Toyota affiliate has built and now expanded an engine block plant in Jackson, Tenn., which is located 97 miles from the Marion, Ark. site.
- Toyota affiliate Denso is building a plant in nearby Osceola, Ark., to produce radiators and air conditioners.
- Last year Arkansas lawmakers passed Amendment 2, which is basically a big deal incentive fund. Arkansas has never had such a fund in the past.
Now, we're not saying a Toyota assembly plant announcement in Marion is imminent. But with all of this activity, what are Toyota, its affiliates and the state of Arkansas preparing for?
mike@sb-d.com
QUIZ ANSWER
The answer is 6. There have been six new assembly plants announced and built in the South since the last new assembly plant was built in Canada. They are BMW, Mercedes-Benz, Honda, Nissan, Hyundai and Toyota.
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