Summer 2006

Automotive Industry Leads 2006 Southern Business & Development 100 Again

The web site, www.SouthernAutoCorridor.com, is owned and operated by Southern Business & Development magazine. Each year SB&D comes out with its ranking of the top deals announced in the South the previous calendar year. It's called the SB&D 100. Go to www.SB-D.com for this year's results.

Once again the automotive industry performed exceptionally well in our ranking, with 61 projects announced in the South in calendar year 2005 with 200 jobs or more and/or $30 million or more in investment. Only the call center sector saw more activity than did the auto sector in 2005. There were 63 call center operations announced in the South with 200 jobs ore more and/or $30 million or more in investment. Other industries that made up the top five in the South in 2005 included distribution, financial services and headquarter expansions and relocations.

Nissan Tops Toyota in Manufacturing Efficiency

In 2005, Nissan produced a complete vehicle at its North American assembly plants in 28.46 hours, according to the annual Harbour Report. The manufacturing hours per vehicle topped rival Toyota to earn No. 1 in efficiency among all automakers in North America. Toyota produced its vehicles at an average of 29.40 hours followed by Honda at 32.51 hours.

MG Motors' Oklahoma Announcement Breaks Drought in Southern Auto Corridor

The Southern Auto Corridor has been on a remarkable roll for years now. In fact, since this decade began a good month saw more than a dozen new or expanded parts supplier announcements in the region. In an average month you could expect about seven or eight major deals coming from the automotive industry sector. Of course, mixed in there's been 13 new automotive assembly plants built in the South over the last 26 years and dozens of assembly plant expansions.

But in April, May and June of this year there were only three significant automotive supplier announcements made in the South. And in just the last three years, Ford and GM have either closed or announced to be closed five assembly plants in the South. It's been a long time since we've seen anything that could be described as a drought in the South when it comes to activity in the auto sector.

The announcement made July 12, 2006 by MG Motors North America that it will revive the historic British MG brand in Oklahoma is certainly encouraging news. The new company, which is part of the Nanjing Automobile Group of China, will place its headquarters in Oklahoma City, its auto assembly and distribution in Ardmore, Okla., and its research and development at the University of Oklahoma in Norman. About 500 jobs -- 325 at the assembly plant, 150 at the headquarters and 35 in R&D -- are expected to be created.

Oklahoma Gov. Brad Henry had this to say about the new MG facilities: "Landing this project is a testament to our state's pro-business climate, highly skilled work force and commitment to excellence. This is a major investment in Oklahoma that will mean hundreds of good-paying jobs. The unique partnership between Ardmore, Norman and Oklahoma City is indicative of the cooperation that exists in Oklahoma." The deal represents the first announced by a Chinese automaker in the U.S.

Models reported to be assembled in Oklahoma include a newly designed MG TF Coupe and TF Roadster. Powertrains for the small cars will be shipped to the U.S. from China. Officials with Nanjing reported they have secured $2 billion in financing for the project in Oklahoma. Job One is expected to roll out of the new auto works in 2008.

Before He Leaves Office, can Arkansas Gov. Mike Huckabee Turn the Biggest Deal in Arkansas History?

Mike Huckabee has been the governor of Arkansas since the beginning of 1997. No Southern governor has held his or her post longer than Huckabee during that time. Luring a major automaker to Arkansas has not become an obsession for Huckabee, even after the state just missed on a Toyota facility three years ago.

But to us, the window of opportunity to land an assembly plant has never been better for the Razorback State. After all, voters in Arkansas approved a legislative amendment to create a big deal incentive fund a couple of years ago. There's no question that bill was presented to voters in order to assist in the landing of an automaker.

Mike Huckabee, like Bill Clinton before him (both are from Hope, Ark.), is without a doubt one of the South's most popular governors. Last year Huckabee was named by Time magazine as one of the five best governors in the U.S. He has accomplished plenty in his long administration and he's not done with politics.

One thing Huckabee hasn't accomplished yet is a new auto assembly plant for Arkansas. As of this writing, there are four months left in the Huckabee administration. Can Mike Huckabee turn the biggest deal in Arkansas economic development history before he leaves office? We'll see. If Arkansas doesn't land the big Kahuna in the form of an assembly plant from Toyota in the next six months, look for the next best thing; an engine plant or Toyota subsidiary Hino finally breaking ground on its truck plant in Marion, Ark.

Editorial

Honda's Choice of Indiana Hurts

In the winter 2004-2005 edition of Southern Business & Development (owner/operator of SouthernAutoCorridor.com), I reviewed an article I wrote in 2003 that predicted 12 new automotive assembly plants in the South between 2003 and 2012 (10 years). In that winter 2004-2005 article, I revealed which automakers would make up those dozen new plants. Honda, of course, was one of those. You can read the entire article by going to http://www.sb-d.com/issues/Winter2005/southbound/index.asp

There's no question we felt very confident that Honda's next plant would be announced in the Southern Auto Corridor. I even wrote, "It's our belief that no foreign automaker will build a U.S. plant anytime soon anywhere but in the Southern Auto Corridor. Will Honda and Nissan build new plants in the SAC (Southern Automotive Corridor) by 2012? Do pigs squeal and mullet jump?"

To date, Toyota (San Antonio), Kia (West Point, Ga.) and now Nanjing (Ardmore, Okla.) have announced significant assembly operations in the South since I wrote that article. In 2005, DaimlerChrysler picked a site near Charleston, S.C. for a truck plant, but we won't count that one as significant. So, three down and nine to go with six-and-a-half years left. With Toyota and Ford expected to land in the South within a year, we should have five down and seven to go in 2007.

While we did predict Honda would be one of the dozen new plants projected to be built in the Southern Auto Corridor by 2012, it still could be one of those even though the Japanese automaker picked a site in southern Indiana in June for its latest U.S. assembly plant. That decision hurts and we (me) admit that we were wrong with at least one of our predictions. Oh well, we've been right much more often than not in the last 15 years.

Mike Randle
mike@sb-d.com

ALABAMA

Honda Expands in Alabama

Honda is expanding its Alabama operations again. On August 14, officials with the Japanese automaker revealed a $40 million expansion of the company's engine manufacturing facilities that will result in at least 20 new jobs. Honda recently completed a $70 million expansion of its engine plant in east Alabama, located next to its assembly operation in Lincoln that employs almost 5,000 workers. The Odyssey and Pilot Honda models are made at the Alabama auto works.

Union, BF Goodrich Agree to Wage Cuts

In late summer, workers at two BF Goodrich plants in Alabama agreed to wage freezes and wage cuts. The company and its employees at facilities in Opelika and Tuscaloosa, Ala., signed off on a three-year deal that freezes wages for current employees and cuts benefits and pay for future workers at the plants.

FLORIDA

Bridgestone/Firestone Building Distribution Center in Jacksonville

Bridgestone/Firestone North America Tire announced in early summer it is investing $44 million in a 1,000,000-square-foot distribution center at Cecil Commerce Center North in Jacksonville. The deal is expected to create about 250 new jobs and is the first private investment made at Cecil Commerce Center, a former Navy base.

KENTUCKY

Japanese Company Building Plant in Kentucky

Riken Elastomers, a Japanese joint venture between Mitsubishi and Riken Technos, has chosen Hopkinsville, Ky., for a new facility. The company, a producer of thermoplastic elastomer compounds used in the auto industry, is investing about $20 million in a new 58,000-square-foot plant being built in Hopkinsville/Christian County's Commerce Industrial Park. Twenty-five new jobs are expected to be created in the deal.

New Mather Metals Completes Expansion in Kentucky

New Mather Metals, a subsidiary of NHK Spring Co., Japan's first producer of industrial springs, celebrated its latest expansion in Simpson County, Ky. The deal represents a $29 million investment, 180,000 square feet of additional space and 93 new jobs. New Mather, which has operated in Simpson County since 2001, manufactures stabilizer bars for the automotive sector.

Kyosan Denso Doubling Plant Size in Kentucky

Kyosan Denso is adding 84,000 square feet to its 81,000-square-foot fuel systems parts plant in Montgomery County, Ky. The Japanese company, which produces fuel pump modules, fuel filters and flanges for Toyota, Honda and other automakers, is adding 145 jobs to its current work force of 280. About $27 million is being invested in the deal.

Continental Tire Closing in Kentucky

Charlotte, N.C.-based Continental Tire North America, a German subsidiary, disclosed in August it is closing its Mayfield, Ky., facility by the end of the year. The company employs about 350 workers at the plant. Tire manufacturers in the U.S., not unlike the textile and apparel industry in years past, are currently finding it difficult to compete with foreign tire-makers, specifically Chinese producers. But cost factors are not exclusive to the U.S. or the South. Bridgestone-Firestone, which operates its U.S. headquarters in Nashville, announced in August it is closing a plant in Chile, citing competition from low cost tire manufacturers in other countries.

Michigan Supplier Picks Louisville for new Facility

Auburn Hills, Mich.-based Android Industries signed a lease in July for 51,000 square feet of space at a small industrial park going up near Ford's truck plant in Louisville. The company will supply cooling systems to Ford. The project will create about 100 new jobs when completed.

Japanese Supplier Breaks Ground in Kentucky

Sekisui S-LEC America broke ground in June on its new plant in Winchester, Ky. The Japanese company produces interlayer and sound acoustic film for use in automotive glass. Investment in the new facility will total $43 million and about 80 new jobs will be created initially.

NORTH CAROLINA

Motor Sports Added to New North Carolina Incentive Program

In late summer, North Carolina Gov. Mike Easley signed a bill tweaking the state's incentive program for new and expanding industry. More funds are now available for companies investing and creating new jobs in the Tar Heel State and manufacturers in the motor sports industry are now eligible for new incentives provided by the state.

German Supplier Expansion Official in N.C.

Germany-based Hella Lighting officially opened its newly expanded facility in York, N.C. in July. The company added 105,000 square feet to its plant in York, which produces automotive headlights. The expansion added 150 employees.

OKLAHOMA

Eagle Suspensions Picks Durant, Okla.

Eagle Suspensions, a division of Dallas Spring Corp., announced in the summer 2006 quarter it has chosen Durant, Okla. for a new leaf spring manufacturing facility. The company makes springs for a variety of truck manufacturers. About 150 new jobs are expected to be created in the deal.

SOUTH CAROLINA

BMW Investing $50M in S.C. Parts Plant

German automaker BMW announced in mid-August it is investing $50 million in the new LSP Automotive Systems facility that is going up in Union County, S.C. LSP's new stamping plant will form exterior steel parts for a new model BMW will produce at its South Carolina assembly factory beginning in 2008. LSP broke ground on the plant in December and is investing an additional $96 million in the facility. About 130 workers are expected to work at the plant. BMW has about 50 parts suppliers in South Carolina.

Automotive Services Company Creating 100 Jobs in Palmetto State

2AM Group, a provider of project management, engineering and product assembly services, announced it is locating its new headquarters in Duncan, S.C. The company, which will hire about 100 workers, recently won a contract with BMW.

Australian Firm Opens Plant

INC Engineered Materials, an Australian-based company that specializes in acoustic insulation products, is locating its first U.S. facility in Lexington, S.C. The company is opening a 60,000-square-foot facility at CAE Airport Park. The deal represents a $2.5 million investment and 10 new jobs initially.

Horry County, S.C. Gains New Automotive Supplier

Team Metal Finishing of South Carolina announced in early summer it is locating its new aluminum anodizing operations in Horry County, S.C. The deal is expected to result in 15 new jobs and represents an investment of nearly $2 million.

TENNESSEE

Fiber Manufacturer Opening Plant in Rural Tennessee

Hobbs Bonded Fibers, a producer of acoustic thermal insulation for automakers, has chosen Trenton, located in West Tennessee, for a new plant. In addition to contracts with several automakers such as Ford and Toyota, Hobbs also manufactures fiber products for the military. The company is expected to hire about 25 workers.

auto2auto.com Brings Corporate HQ to Columbia, Tenn.

auto2auto.com, a full service online used car dealership, announced in late May it will open its corporate headquarters in Maury County, Tenn., creating 200 new jobs in the first year and up to 300 more over the next three years. The company is purchasing the 341,000-square-foot former GE/Accuride building in Columbia, Tenn. auto2auto.com allows consumers to browse, finance and buy certified used vehicles online. The new middle Tennessee facility will also serve as the company's customer support center.

Bridgestone Signs Huge Lease in Wilson County, Tenn.

In the summer, Bridgestone Americas Holdings leased 456,000 square feet of space at Commerce Farms Three in Lebanon, Tenn., located just east of Nashville. The facility will be used to store tires. Bridgestone Americas is headquartered in Nashville and employs almost 5,000 workers in middle Tennessee.

More than 1,300 Saturn Workers Take Early Retirement in Tennessee

Saturn's huge assembly plant in Spring Hill, Tenn., is not slated for closure by GM, even though you may have heard otherwise. In fact, new Saturn models will be coming off the lines in Spring Hill next year. But the plant is currently downsizing as over 1,300 workers at the facility agreed to GM's early retirement and buyout offer. About 5,000 workers at the Saturn plant were eligible for the early retirement package GM first proposed in March of 2006.

Nissan Supplier Breaks Ground in Middle Tennessee

TACLE Seating USA broke ground recently on a new 90,000-square-foot facility in Mt. Juliet, Tenn. The company will make car seats for Nissan's assembly plant in Smyrna. TACLE is a joint venture between Japan-based Tachi-S Engineering and Michigan-based Lear Corp. The deal will result in about 170 new jobs.

Another Automotive Seat Manufacturer Investing in Tennesseee

Modern Industries is expanding its Chattanooga plant, investing over $10 million and hiring 145 workers. The company makes wire frames and automotive seat components.

TEXAS

Toyota Begins Trial Production in Texas

Japanese automaker Toyota has begun production of its newly designed, full-size Tundra pickup truck model at its new San Antonio assembly plant. While assembly of the trucks has begun, the products being made are not for sale as the company will undergo trial production up until November of 2006. Employees at the plant and at more than 20 parts suppliers located at an on-site supplier park are expected to help Toyota deliver the first Tundra to dealers in January of 2007.

WEST VIRGINIA

Toyota Celebrates 10 Years, Five Expansions in W.Va.

In the summer quarter, Japanese automaker Toyota celebrated the 10th anniversary of its engine plant in Buffalo, W.Va. The company has expanded the plant five times in those 10 years, representing a total investment of over $1 billion. The plant in Buffalo, which employs 1,050 workers, has earned "best engine plant productivity" honors three times by The Harbour Report.