Mike Randle, Editor

The Southern Auto Corridor May be About to Expand like Never Before

A year before we launched www.SouthernAutoCorridor.com in January of 2004, SB&D claimed as many as a dozen new automotive assembly plants could choose the South within 10 years, or by 2012. Most people, especially the so-called experts, scoffed at that notion. In the last couple of years a majority of the economists and economic development consultants who make a living on the rubber chicken circuit have kept a consistent total of new assembly plants going. Almost all agree that five or six new assembly plants could announce in the Southern Auto Corridor in 10 years. One well known consultant said just that a few weeks ago. We disagree. We still say there will be twice that number, maybe more.

From 1993 to 2002, or the 10 years prior to our assertion that between 2003 and 2012 12 new plants will be built, there were four new assembly plants announced in the Southern Auto Corridor (SAC). Those were Mercedes, Honda and Hyundai in Alabama and Nissan in Mississippi. In 1992 BMW announced in South Carolina, but we won't count that one since it was announced outside of our 10-year time frame. Every single one of the other 18 existing assembly plants in the South expanded, all more than once and a few four or more times between 1993 and the end of 2002.

The last automaker to announce a plant in the SAC was Toyota in February of 2003. Toyota's new plant, its sixth in North America, is under construction in San Antonio. Word got out about that deal in early 2002. Now we hear Toyota may build its seventh N.A. assembly facility in Ontario, Canada. Word got out about that possibility the last week of February. Soon after the news about a new Canadian-based Toyota plant broke, someone, most likely an official with the Japanese automaker, leaked the news that an eighth North American plant is also a possibility soon.

So, let's see, news on the street has it that Toyota, which is building a new plant in Texas, may have two more following right behind that one. If the seventh and eighth are announced within five years, and we think they will, at least one of those is going up in the Southern Auto Corridor. That means Toyota could be finishing up one plant and breaking ground on another in the SAC at the same time. Two down, 10 to go.

Project Pinetree is a large deal that's out there right now. Pinetree is a project that requires an East Coast port, which means a European automaker. We've heard sites have been narrowed down to one in S.C., one in North Alabama, Chattanooga, and Savannah. If you recall, the site in Savannah (Pooler, Ga.) was the site DaimlerChrysler bailed out on two years ago for a truck plant. We believe Project Pinetree is a renewal of the DC deal but one that will build cars and SUVs not commercial trucks. Then again, Pinetree could be Audi and not DC. Regardless, it's a dadgum assembly plant. Three down, nine to go.

If Toyota announces two deals in the SAC in four or five years -- San Antonio in 2003 and another one in say 2007 -- what do you think Honda and Nissan will do? Both will need tons more capacity by 2012 in the U.S. and it's our belief that no foreign automakers 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 by 2012? Do pigs squeal and mullet jump? Five down and seven to go.

What about those foreign automakers that don't have plants in the SAC? What about Audi, VW, Volvo, Suzuki, Kia, Mitsubishi (OK, not them), and Porshe, among others? Common sense tells us at least Audi and Kia will build in the U.S. soon. Rumor has it both are currently looking at sites in the South and those same rumors indicate Kia could announce this year. That's seven out of 12 and that's being conservative.

We believe BMW and Mercedes will also announce new plants in the South by 2012. After all, both of their SAC plants have been incredibly successful and have expanded numerous times. Those sites in South Carolina and Alabama won't be able to accommodate the expected increase in capacity by 2012. Nine down, three to go.

Finally there's the big three: GM, Ford and DaimlerChrysler. The aforementioned Volvo is an interesting case. Partnered with Ford, the Swedish automaker would be a perfect fit to break the ice for a new "domestic" plant in the Southern Auto Corridor. But let's really cut to the chase. If the big three are to continue to compete in the U.S. with all of the foreign automakers and the plants they are expected to build in the South over the next 10 years, they are going to have to be down here, too. A new domestic plant hasn't been announced in the South in 22 years.

New facilities to replace outdated ones in "Detroit" are likely to be built in the Southern Auto Corridor. The United Auto Workers know that, domestic automakers know that, foreign automakers know that and we know that. We believe three of those new domestic assembly plants will be announced in the South by 2012 and they will be UAW plants as they should be. That's 12 new automotive assembly plants announced in the Southern Auto Corridor by 2012. Any questions?

mike@sb-d.com