Spring 2007

QUIZ

In fixed costs, how much money did GM claim to cut in fiscal year 2006?

(a) $779 million (b) $29 trillion (c) $9 billion (d) $32 billion

(Scroll down for answer)

Editorial

A Comment on Ford's Closure in Atlanta and the Future of Domestic Automaking in this Country

On Friday, June 15th and again on Monday, June 18th, I drove by the closed Ford plant in Atlanta that used to assemble the Ford and Mercury Taurus and Sable models. The old, closed plant that's pinned in on something like 150 acres by developments of all kinds, sits directly on I-75, just south of downtown Atlanta, near the airport. In fact, planes going in and out of the world's busiest airport fly directly over the now empty, sad-looking, outdated facility.

The reason I drove by the old Ford plant in Atlanta twice in a long weekend is because I rented an RV at a place that was located the next exit down from the facility. In other words, I picked the RV up on Friday and had to take it back on Monday. My sons, two friends from my college days at the University of Tampa and my oldest son's best friend were headed to Bonneroo. If you don't know what Bonneroo is, just Google it. I won't try to explain it here. There is nothing like it. I tell others who ask, "It's the modern day Woodstock that has done it right," and it's a huge, annual event in Manchester, Tenn. So, we went from Birmingham, to Atlanta, to Manchester and back again.

Anyway, I have written for years that one of the reasons foreign automakers have an edge on domestic automakers in this country is that their assembly plants are new and expandable. For the most part, the foreigns have built their facilities on greenfields over the last two decades. Domestic automakers built most of their plants many years before and not unlike Ford's closed Atlanta facility, they built them on tracts that were accessible and modern at the time, but not so today. 

Like with anything in life, especially business, there is a time to toss the old into the dirt and let it rot. That's what Ford did in Atlanta and in many other places. GM, and Chrysler to a lesser extent, have done the same thing in this country in an effort to compete with the new, expandable, foreign automaker trans-plants.

If the Big-Three would just close more of their outdated assembly plants, wherever they are, and invest in new facilities in the South, they would be able to compete so much better with the Koreans, Japanese and Europeans in North America. Remember, the first foreign automotive plant built in the Southern Auto Corridor was Nissan in the mid-1980s. The other nine foreign plants either operating or being built in the Southern Automotive Corridor broke ground in this generation, not three or four generations ago.

Mike@SB-D.com

BMW Increasing Production in South Carolina

Officials of German automaker BMW AG, announced in the spring quarter that its assembly plant in Greer, S.C., will increase production from the current 140,000 vehicles built annually to 200,000. No investment figure regarding the expansion was announced at press time. BMW assembles the Z4 and X5 models in Greer and there are rumors that the X3, currently made by Magna Steyr in Austria, could be another vehicle line added to the South Carolina plant.  

Mercedes Helped Recruit ThyssenKrupp to Alabama

Mercedes-Benz executives helped convince TK to choose Alabama, Mercedes’ choice in 1993 for an auto assembly plant. They discussed the quality of the work force and support the state’s industrial development training office could provide.

>From its $300 million investment in an SUV assembly plant in Vance, which went on line in 1997, Mercedes now has more than $1 billion invested in the 3 million-square-foot complex, with 4,000 workers producing three models. Last year, it churned out 173,600 vehicles.

ThyssenKrupp has long supplied steel to DaimlerChrysler, Mercedes’ former parent. But no decision has been made about the carmaker’s Alabama plant buying steel from TK’s Alabama facility.

Universities in Five Southern States Join Auto Research Alliance

Seven universities–in Tennessee, South Carolina, Mississippi, Alabama and Kentucky– joined an automotive research consortium, organized by the National Transportation Research Center, Oak Ridge National Laboratory and the Tennessee Valley Authority. Oak Ridge provided the initial funding. The alliance will be a clearinghouse for information on research and technology resources in the South.

“In the Southeast we've had automotive manufacturing grow, but not areas like design and testing,” said Kirk Schulz, Mississippi State University’s Research and Economic Development vice president.  “What we want to do is market the Southeast as a place where these things can occur as well.” In addition to MSU, the universities in the alliance are: Tennessee, Auburn, Clemson, Alabama, UAB and Kentucky.

ALABAMA

Honda Announces Another Expansion at Alabama Plant

Honda officials announced in late April another expansion of the Japanese automaker's plant in Lincoln, Ala. Honda is investing $64.5 million into the East Alabama facility that will create 20 new jobs and include 27,000 square feet of new space that will house and operate a steel banking facility alongside Honda's current steel stamping lines. Honda currently produces about 300,000 vehicles at its Alabama assembly operation.

Hyundai Montgomery, Ala., Plant’s Santa Fe Output Sets Record

Hyundai's Montgomery plant produced 11,181 Santa Fe sport utility vehicles in April, a new monthly record. Through four months, the plant produced 89,642 total vehicles, well ahead of last year's four-month total of 78,586.

Honda Supplier Plans Another Addition at Its Steele, Ala., Plant

Yachiyo Manufacturing of Alabama, a body-frame parts supplier to Honda’s Alabama assembly plant, said it will build a $16 million facility to make plastic fuel tanks for Honda. The new operation will begin in early 2009, with about 50 employees.

Four months ago, Yachiyo announced a $28 million, 72,000-square-foot stamping plant expansion, creating 42 jobs. It is to be completed next year and will nearly double the size of the 80,000-square-foot factory.

Hyundai Looking at Building Third Model at Alabama Plant

Officials with Korean automaker Hyundai said in April a third vehicle model manufacturing line may be added to its assembly facility in Montgomery, Ala. Hyundai officials reported that a strengthening Korean currency against U.S. currency would be the reason a third model would be added. If added, a third model probably would not be produced at the facility until 2009.

Auto Parts Maker Seohan Group to Employ 170 at New Auburn, Ala., Facility.

Seohan Group is investing $33 million to build a 250,000-square-foot plant in Auburn, Ala., for its Seohan Auto U.S.A. and Seohan Driveshaft subsidiaries, creating about 170 jobs. Seohan, which makes front and rear axle assemblies for Hyundai’s auto plant in Montgomery, Ala., expects production to begin at the new facility by year end.

VST-Keller Opens in Pell City, Ala.

Germany-based VST-Keller recently opened its first plant in the U.S. in Pell City/St. Clair County, Ala. The company's new operation treats stamping dies with a Pulse Plasma Diffusion machine, making stamping metals five times harder then hardened steel. VST-Keller officials narrowed sites down to those in Tennessee, Georgia and Alabama before settling on Pell City. At some point this year, the plant will house about 30 workers.

Panalpina Worldwide is Adding 140,000 Square Feet of space, 20 Jobs in Montgomery, Ala.

Panalpina Worldwide, an international logistics and warehouse firm, is adding 20 jobs and about 140,000 square feet to its Montgomery operation. Since it came to Montgomery in 2005, Panalpina has gone from 50,000 square feet and 35 employees to 600,000 square feet and 230 employees.

Panalpina's business in Montgomery primarily is serving Hyundai's Tier 1 and Tier 2 suppliers. The company provides logistics and warehouse services on six continents, including intercontinental air and ocean freight systems and associated supply-chain management.

Goodyear Tire Plans $125 Million Investment in Gadsen, Ala., Plant in Next Three Years.

Goodyear Tire & Rubber Co. will be investing a minimum of $125 million in the Gadsden plant over the next three years.Mike McCain, executive director of the Gadsden-Etowah County Industrial Development Authority, said the Gadsden plant was moved from being listed for closing to being protected during a three-year contract with the United Steelworkers as a result of incentives offered by the state.

"That's only good for three years," McCain said. "We want this plant protected for the next 30 years, and the only way to do that is a major capital investment to modernize it and that's what brought everybody together around this table."

Ohio Tire Plant’s Closing to Add 50 Jobs at BF Goodrich Factory in Alabama

Michelin North America’s decision to close a specialty tire plant in Ohio will result in 50 new jobs at Michelin’s BF Goodrich Tire plant in Tuscaloosa, Ala., which has 1,275 employees.

Auto Interior Maker KTNA Will Build Plant in Hollywood, Ala.

KTNA, a manufacturer of auto interior components, plans to construct a factory in Hollywood, Ala., that initially will create 20 jobs, eventually up to 100. Production is expected to begin by November 1, according to the Jackson County Economic Development Authority.

ARKANSAS

Toyota Supplier Investing $70 Million in Arkansas Plant

Hino Motors Manufacturing USA will invest an additional $70 million in new equipment for its 400,000-square-foot Marion, Ark., plant, bringing total investment to $230 million. Hino makes axles and suspension components for Toyota Tundra pickup trucks. Toyota is the majority owner of Hino.

With over 600 employees, the plant’s labor force is double the number Hino anticipated. The Marion plant opened in October 2006, and by April 25, 2007, had achieved its production goal of 1,200 axles a day.

GEORGIA

EFC Expansion Will Create 150 Jobs at its Rockmart, Ga. Site

Engineered Fabric Corps., a leading producer of flexible bladder fuel tanks, will spend $5 million to add a building at its Rockmart, Ga., operations and expects to increase the workforce there by 150. The company, a subsidiary of K & F Industries, currently employs 700 workers in Polk County, Ga.

KENTUCKY

Cannon Automotive Solutions Will Create 100 Jobs at Stamping Plant Being Built in Kentucky

Cannon Automotive Solutions, Inc., an affiliate of Canada-based Electromac Group, plans to spend $13.1 million for a new factory in Bowling Green, Ky.  The facility will produce component stampings for Ford’s 2009 F-150 pickup trucks. The 59,500-square-foot facility is expected to be completed in October, and employ up to 100 workers in its first five years of operation.

Toyota Boshoku America to Locate In Northern Kentucky

Toyota Boshoku is locating its North American home office in Erlanger, Ky. The location is in the Northern Kentucky Tri-ED region, which is across the Ohio River from Cincinnati. Toyota has a huge presence in Kentucky, with its massive plant in Georgetown and many other facilities and offices in the state.

Nifco Picks Central Kentucky for $14.9 Million Facility with 151 Workers

Japan’s big plastics manufacturer Nifco Inc. plans to produce plastic fasteners for the automotive industry in a new 43,000-square-foot building in Shelbyville, Ky. Gov. Ernie Fletcher announced. The company will invest $14.9 million and create 151 jobs. Nifco produces more than 20,000 types of fasteners, plastic parts components, electrical parts and electronic parts, which it largely supplies to the automobile industry, home electric appliance and white goods manufacturers. The company has five production facilities in Japan and 22 facilities in 14 countries.

Hendrickson USA Sees Summer Start-Up for $24.3 Million Somerset, Ky., Plant with 120 Jobs

Hendrickson USA, LLC, a supplier of heavy-duty transportation equipment, said its Hendrickson Trailer Suspension Systems division will begin production this summer at the 160,000-square-foot axle and suspension factory it has been building in Somerset, Ky. Hendrickson’s truck suspension division has operated a plant in Lebanon since 1998.

MISSISSIPPI

PACCAR Investing $300 Million in New Mississippi Factory

Truck manufacturer PACCAR will build an engine plant on a 394-acre site in Lowndes County, Miss. The company is investing $300 million in the factory, which will create 500 jobs. Production is expected to begin in 2010.

NORTH CAROLINA

North Carolina Snags Motor Racing Network from Florida

International Speedway Corp’s broadcast subsidiary Motor Racing Network said it will move from Florida to Cabarrus County, N.C., creating 50 jobs and investing $2.15 million in the next three years. MRN Radio is the primary source for NASCAR stock car racing radio programming. More than 700 radio stations receive, via satellite, MRN’s live coverage of the NASCAR NEXTEL Cup Series, NASCAR Busch Series and NASCAR Craftsman Truck Series.

Freightliner Reaches Agreement with Union

In June, Freightliner LLC and its UAW union workers struck a deal that will keep up to 1,500 from being laid off at the truck manufacturer's plants in North Carolina. The Oregon-based truck-maker has already cut 1,180, 478 and 260 workers at plants in Cleveland, N.C., Mount Holly and Gastonia respectively during the spring quarter.

VIRGINIA

Virginia Gov. Kaine Announces 172 New Jobs for Washington and Smyth Counties

Gov. Tim Kaine announced in the spring that Gates Corp., the largest non-tire rubber manufacturer of automotive and industrial products, systems and components in North America, will invest approximately $8 million to open its first Virginia facility in the Highlands Business Park, an industrial park jointly developed by Smyth and Washington counties. Colorado-based Gates announced it will create 172 jobs in the deal.

Virginia Tire Plant Certified ISO 14001

Yokohama Tire Corp.'s Salem, Va., tire plant has recently been certified to the ISO 14001 Environmental Management System standard. The ISO 14001 standard helps a company to reduce its impact on the environment's air, water and land. "Yokohama is pledged to work toward 'zero emissions,' a program that will eliminate industrial waste at landfill sites," said Shinichi Suzuki, EVP of manufacturing and plant manager of the Salem facility. "Our commitment to the environment is very important."

WEST VIRGINIA

NGK Spark Plugs Breaks Ground in W.V.

On April 28, NGK broke ground on a 75,000-square-foot expansion at its facilities in Sissonville, W.Va. NGK will add an underdetermined number of employees once the new building is completed.

QUIZ ANSWER

GM officials reported in the Spring quarter that the company cut out (c) $9 billion in fixed costs as a result of closing a dozen plants, eliminating 34,000 workers from its work force and lowering health care and pension costs.