Winter 2006

Courtesy of www.SouthernAutoCorridor.com

QUIZ

What was the total value of the incentive package GM turned down from the state of Oklahoma to keep its Oklahoma City plant open?

(a) $80 million (b) $165 million (c) $0 (d) $200 million

(Scroll down for answer)

It's Georgia for Kia

After a search that took almost two years, Korean automaker Kia has chosen West Georgia for its first U.S. automotive assembly plant. The deal is huge for the Peach State as it begins to rebuild its automotive sector after Ford and GM announced in the winter quarter they are closing their Atlanta area assembly plants. The site is a greenfield location on Interstate 85 in Troup County, specifically West Point, Ga. The location is about 20 miles from Hyundai's largest supplier, Mando, which operates a plant and its North American headquarters in Opelika, Ala. Hyundai is Kia's parent company. Kia considered sites in Mississippi and the Florida Panhandle before choosing West Georgia. The deal is expected to include more than $1 billion in investments and will eventually result in over 2,000 employees. Kia represents the seventh major foreign-owned auto assembly plant to be built in the Southern Auto Corridor since 1992.

Kia is the Once-in-a-Lifetime Opportunity for Georgia

What an opportunity for Georgia! What an opportunity for Kia! The marriage between the Peach State and the upstart Korean automaker is a perfect fit. Landing Kia's first North American assembly plant within 120 days of the announcements made by GM and Ford that they are closing their assembly plants in the Atlanta metro is a huge win for the state of Georgia. The West Georgia location is also a perfect location for Kia. In January of 2004 we wrote, "If Kia builds in the Southern Auto Corridor, it won't be next to Hyundai's (Kia parent company) Montgomery, Ala. plant. But it won't be far from it either." West Point, Ga., Kia's choice, is 80 miles from Montgomery. The location will help both Hyundai and Kia use economies of scale that currently exist in the central Southern Auto Corridor in order to cut cost and control quality like no two plants anywhere else in country.

Honda, Nissan Slow Production

There's been one constant in the Southern Automotive Corridor as well as in North America as a whole when it comes to the automotive industry. Domestic automakers are contracting and foreign automakers are growing. Nowhere is that more true than in the South, where four domestic assembly plants are closing or have closed recently and several foreign plants have just finished expansions worth hundreds of millions of dollars. But when Honda and Nissan both announced in the winter they will reduce production at their plants in Alabama, Mississippi and Tennessee respectively, we noticed. Honda announced it is reducing production at its Lincoln, Ala. facility by 12 percent in the spring. Nissan said it will reduce production at its plants in Mississippi and Tennessee by about nine percent.

We Loved Missouri's Response to Ford's Plant Closure Announcement

On January 23, 2006, Ford followed GM as the latest domestic automaker to announce plant closures in North America. In the afternoon of that day, Missouri Gov. Matt Blunt had this to say: "Today's announcement is disheartening for our workers, our state and the local communities, but we believe it is not the end of the process. We are committed to working with Ford to reverse this decision and secure a long-term future for the Hazelwood workers. Our team of state, county and local officials visited Ford earlier this month with a business plan that reflected the needs of the company and the advantages of operating in the St. Louis region. Our communications continue with Ford on how Missouri fits into the company's future plans. Today, we rededicate ourselves to this effort and look forward to the opportunity to make our case with Ford."

Note that Blunt said he is "working with Ford to reverse this decision." If there ever was a Southern trait that is more admirable than never quitting then we don't know what it is. Gov. Blunt, who has only been on the job for a short time, refused to throw in the towel regarding Ford's decision to close its St. Louis plant. We just love that attitude. We wish we would have seen it with the other Southern governors that saw assembly plants close in their states.

GM, Ford Politically Correct in Plant Closings

What we thought was a fabulous opportunity for the domestic automotive industry to really make a statement didn't materialize when GM and Ford announced their recent plant closings. As a result of overcapacity, we had predicted several times over the last couple of years that domestic automakers might close plants located in Canada and the Midwest before they closed plants in the Southern Automotive Corridor and Mexico. We even suggested that GM and Ford may choose to close plants up north and consolidate by adding jobs at plants in Mexico and the South. We were wrong.

The plant closures announced by GM and Ford recently spread out the pain. Interestingly, job cuts and closures were announced in all three countries and in both Detroit and the Southern Auto Corridor in the U.S. In fact, the cuts in Detroit and in the South were almost equal.

GM Closing, Cutting Back Call Centers

An IBM subcontractor that does call center work for GM is closing a 400-employee center in Tampa and will eliminate jobs at a call center in Austin. Minacs Worldwide Inc., which handles customer service calls for General Motors at three centers in the U.S., will also close its operation in Portland, Ore. The company's Austin operations, which employ about 500 people, will remain open after the job cuts.

Another New Automotive Supersite gets certified

TVA officials announced recently that a more than 1,600-acre Crockett County, Tenn., industrial site has been certified as a megasite, a large industrial property suitable for major automotive manufacturing. The site, known as the West Tennessee Auto Park, is located in Fruitvale near Bells, Tenn. The site represents the fifth in a series certified by the large utility. Other sites certified are in Tupelo, Miss., Hopkinsville, Ky., Columbus, Miss., and Chattanooga.

ALABAMA

Alabama New Vehicle Totals for 2005

The only state in the U.S. to open three new automotive plants in the last 10 years is Alabama. Each of the three plants - Mercedes-Benz, Honda and Hyundai -- keep evolving and growing. Last year saw 479,000 new vehicles come from the three plants, with Honda accounting for almost 300,000 of that total. But Hyundai's plant is just coming up to speed and is expected to at least double its production in 2006 over 2005. The Korean automaker accounted for just 91,000 of the 479,000 total. The Mercedes plant produced 95,558 vehicles in 2005. Analysts have predicted as many as 650,000 vehicles could be produced in Alabama this year.

North American Lighting Building New Plant in Alabama

North American Lighting, a subsidiary of Japan-based Koito Manufacturing Co., Ltd., announced in late December it will build a $22 million facility in Muscle Shoals, Ala. The parts supplier produces automotive exterior lighting to a variety of automakers with Toyota being its largest customer. The facility is expected to open in 2007 and will be capable of producing almost 2 million tail lamps a year by 2010.

Delphi Expanding in Alabama

Bankrupt parts maker Delphi Corp. got some good news in the winter when it secured more work from Mercedes-Benz. The Troy, Mich.-based company announced it is assembling the cockpit for the new GL-Class sport utility wagon that is being manufactured at the Mercedes plant in Vance, Ala. Delphi will also provide wire harnesses for the GL. It does similar work for Mercedes in the M-Class and R-Class, which are also assembled at the Vance plant.

ARKANSAS

Crittenden County, Arkansas to Become Economic Development Zone

In the winter quarter, the U.S. Environmental Protection Agency identified Crittenden County, Ark., as a Clean Air Economic Development Zone (EDZ). Crittenden County is the first area in the nation to be identified under the 1990 Clean Air Act for treatment as an EDZ. The identification will allow the state of Arkansas to develop air quality permitting regulations that offer opportunities for the location of new industries in the county that benefit the local economy and still meet established air quality attainment goals and dates for the greater Memphis area. In the spring of 2004, the EPA designated Memphis, including Crittenden County, Ark., as not attaining the health-based national ambient air quality standards for ozone. The timing of that decision was unfortunate for Crittenden County since it was being scoped closely by an automaker as a location for a new assembly plant. Under the EDZ provisions, Arkansas will establish a limited growth plan for new industrial sources consistent with modeling performed. Any emission increases by new industry which do not qualify for or exceed the EDZ plan would remain subject of emission offset requirements.

Arkansas Parts Supplier Moving Production to China and Mexico

New York-based Sequa Corp. announced on Jan. 3 it is transferring production of airbag inflator components from Camden, Ark. to Mexico and China. Sequa's ARC Automotive unit, which has operated in Camden for more than 20 years, employs more than 300 workers. About 40 employees will continue to work at the Camden facility after the relocation.

KANSAS

KCK Approves Bonds for GM

Local Kansas City, Kan. officials have approved industrial revenue bonds and tax credits to General Motors if it decides to assemble a new midsize model at its plant, located in Kansas City, but on the Kansas side. GM wants $146 million in bonds and abatements for a $190 million expansion that will add 50,000 square feet. No announcement has been made on either side regarding the deal as of this writing.

KENTUCKY

Japanese Supplier Announces Kentucky Plant

Sekisui S-LEC America announced in late January it will build a new $43 million facility on 23 acres in the Winchester (Ky.) Industrial Park. The location is in Clark County. The Japanese company makes interlayer film and sound acoustic film for automotive glass use. The announcement will result in 80 new jobs. Sekisui S-LEC America is a subsidiary of Sekisui Chemical Co., which was established in Osaka, Japan and employs more than 17,000 people worldwide. Sekisui chose Winchester for its proximity to the company's customers on the Interstate 75 corridor. Japanese companies employ over 35,000 workers in Kentucky.

Toyota Training Facility Opens at Georgetown Plant

Toyota's $12 million, 98,000-square-foot North American Production Support Center opened in February. The new center will train managers and employees that work at the Japanese automaker's assembly plants in the U.S., Mexico and Canada. The center is located at Toyota's Georgetown, Ky., auto assembly plant.

MARYLAND

GM Hiring in Maryland

In the winter quarter General Motors chose Duke Realty Corp. to redevelop its closed Baltimore City assembly plant. The closure of that plant ended almost 70 years of automobile assembly in Maryland. The empty 2.8 million-square-foot facility set on 184 acres is a grim example of the current realities facing the domestic automotive industry in the U.S. It must get smaller to compete. But a portion of GM in Maryland grew in the winter. The automaker announced that it will manufacture a new hybrid transmission at its plant in Baltimore County, creating about 90 new jobs. GM plans to spend about $118 million in upgrading the transmission factory.

Ford Closing Maryland Service Center

Ford Motor Credit continues to consolidate its business operations, the latest move resulting in the closing of a customer service center in Columbia, Md. About 200 jobs will be lost in Maryland; however, some of those workers will likely take jobs at other FMC facilities in Tampa and Greenville, S.C.

MISSOURI

Daimler/Chrysler Supplier takes Spec Building

Kelsey-Hayes, a division of Michigan-based TRW Automotive, is expanding to a spec building in the St. Louis metro to serve the Chrysler plant there. DC announced in January it is spending about $1 billion on its plant in St. Louis. Kelsey-Hayes produces brake systems but officials with the company did not disclose what product they would be manufacturing at the Corporate 44 Business Park. New reports estimate about 100 new jobs will be created when the supplier opens this summer.

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.

Global Automotive Expands in Missouri

Global Automotive Parts, a division of California-based Walker Products, is expanding its facility in Pacific, Mo. The company makes fuel system components. The $1 million deal is expected to create 50 new jobs.

NORTH CAROLINA

Timken Expanding in Lincolnton

Automotive parts maker Timken Co. announced in late January it is investing $17 million at its Lincolnton, N.C. bearing plant. The company will add a new line that will manufacture wheel assemblies for several automakers in the South. The deal is expected to result in 40 new jobs.

Over 500 Lose Jobs at Charlotte Tire Plant

In March, Continental Tire will lay off 240 employees at its plant in Charlotte and another 270 in June. The company employs about 1,100 workers at the facility. Continental Tire, owned by the German company Continental AG, has recently closed plants in Germany and Scotland as well as a plant in Kentucky. It has recently opened or expanded plants in Brazil and Mexico.

Brazilian Automotive Supplier Lands in N.C.

Sabo USA, a Brazilian company that makes sealing and fluid transfer products, is investing $10 million for a new facility in Lincoln County, N.C. that is expected to create 80 jobs. Sabo is building its 30,000-square-foot plant, its first in the U.S., to be closer to its largest customer, GM.

SOUTH CAROLINA

South Carolina Launches Hydrogen and Fuel Cell Alliance

The South Carolina Department of Commerce announced in mid-January the introduction of the South Carolina Hydrogen and Fuel Cell Alliance, a statewide initiative designed to promote the development and use of quality, cost effective and accessible hydrogen, fuel cells and related technologies. Chartered as a 501 (c) (3) corporation, the Alliance will serve as the primary facilitator on hydrogen initiatives within the state, with stated goals of developing a governing strategy for hydrogen initiatives and associated economies to enable long-term growth; providing education on the state's available hydrogen resources and facilities; initiating and evaluating potential partnerships and collaborations for research initiatives; and supporting viable hydrogen demonstrations and projects for the state.

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.

TENNESSEE

Magna Sub Expands in Clinton

Eagle Bend Manufacturing, part of the Cosma International Group of Magna International, is expanding its facility in Clinton, Tenn., by 30,000 square feet. The project includes a significant capital investment and about 150 new jobs. Eagle Bend produces high strength steel automotive body structural components at its Clinton facility.

GM to Expand Saturn Line in Tennessee

General Motors, which announced in December it is closing nine plants by the end of 2008, is planning to expand its Saturn product line. The company, which also announced it is terminating the Ion sedan assembly line at its Saturn plant in Spring Hill, Tenn., eliminating 1,500 jobs, said the expansion of Saturn products will be significant. GM employs about 5,500 workers at its plant in Spring Hill.

Denso Expanding Again in Tennessee

Japan-based automotive parts supplier Denso Corp., announced in December an expansion of its Maryland, Tenn. factory. The $185 million expansion will add 220,000 square feet to the company's existing 1.5 million-square-foot facility. The deal is expected to result in about 500 new jobs sometime in 2007. Denso has invested over $850 million in the plant, which is located in the Blount County Industrial Park. The 2,500 workers at the plant produce starters, alternators and various electronic components for a variety of automakers.

TEXAS

GM to Build Hybrids at Arlington, Tex. Plant

General Motors, which is closing its Oklahoma and Georgia assembly plants in the Southern Auto Corridor, announced February 1 that is will build Chevrolet Tahoe and GMC Yukon hybrids beginning in late 2007 at its Arlington, Tex. plant. The hybrid system to be used in the aforementioned SUVs is being developed jointly by engineers at GM, Daimler/Chrysler and BMW. The Detroit automaker also announced the world's first light-duty hybrid transmission is currently under design at its transmission plant in Baltimore.

Toyota Supplier Locating in San Antonio

Sumitomo Electric Wiring Systems, a manufacturer and seller of power distribution systems for the auto industry, announced in January it will establish a distribution center in San Antonio's Interstate Business Park. The company is building an 87,000-square-foot facility that will supply Toyota with wire harnesses for the Tundra pickup, which Toyota expects to roll out in the fall of this year. The company, headquartered in Bowling Green, Ky., will use plants located in Mexico to supply the Texas pickup truck factory. Sumitomo will hire about 20 workers initially.

Toyota Picks Ryder as Logistics Manager for San Antonio Plant

Ryder Systems Inc. has won the contract to provide logistics management for the new pickup truck assembly plant that will open later this year in San Antonio. Miami-based Ryder will handle shipments of auto parts from Toyota's suppliers throughout North America. About 25 parts suppliers have already announced Texas locations, 20 of which will be located at the site of the plant. Ryder has provided logistic services to Toyota since 1987, serving plants the Japanese automaker operates in Kentucky, Tennessee, California, Michigan, West Virginia, Alabama, Canada, Mexico and South America.

WEST VIRGINIA

Parts Supplier Investing in West Virginia

Warren Distribution is spending $13 million to locate its lubricant blending operation in Marshall County, W.V., creating 46 jobs in the city of Glen Dale. The company, which manufactures and distributes aftermarket automotive products, will build a system to pump bulk lubricants from barges into tanks inside and outside a 250,000-square-foot building for blending and packaging.

QUIZ ANSWER

General Motors turned down (d) $200 million from the state of Oklahoma to keep its OKC plant open. The Oklahoma City plant opened in 1979 and in 2001 the company invested $700 million in the facility to convert it to SUV production. Even though the plant officially closed in late February, all 2,200 UAW hourly workers show up for their shifts at the facility to clock in and clock out. GM will continue to pay each worker on average about $130,000 annually in wages and benefits under the job bank agreement the union and the automaker signed in the 1980s.