Rage On!

The Southern Auto Corridor: It's all the Rage

By Mike Randle

The Southern Auto Corridor is a phrase that has been used almost every year over the last 10 years by CNN, USA Today, The Wall Street Journal, Forbes, Fortune, BusinessWeek and The New York Times, among other major media outlets in various reports on the South and its remarkable rise in automobile and truck vehicle production. Every time a major automaker makes a major move in the South, "the Southern Auto Corridor" is where media reports the move was made. The phrase did not exist 20 years ago.

Not unlike the Silicon Valley or Silicon Hills and Biotech Beach and Biotech Bay, the Southern Auto Corridor is a relatively new industrial phenomenon. Furthermore, not unlike Wall Street, the Research Triangle, the Space Coast, the Rust Belt, the Sunbelt, or simply "Detroit," the Southern Auto Corridor has become an economic icon that will remain intact in some way, shape or form for 100 years if not many, many decades longer. Fact is, the Southern Auto Corridor represents an irreversible, sustainable and high-end manufacturing region. It represents strength.

All of the aforementioned great brands of regional commerce have been the rage at one time or another. In today's economy, the Southern Auto Corridor not only dominates the previously mentioned, well earned, easily identifiable economic brands in the national and international media, it is currently the No. 1 single industry rage among growing regional economies. And that newly earned crown is especially true when compared to "Detroit."

If anything, the Southern Auto Corridor is an absurdity of the current American manufacturing condition. While other manufacturing sectors are shuttering their doors throughout the U.S. in droves, automotive manufacturers are setting monthly, quarterly and annual single industry records by opening door after door of new and refurbished buildings throughout the American South.

You could even call the automotive rage in the Southern Auto Corridor America's new industrial revolution. I mean, how could the South, which held mere satellite, afterthought factories for the domestic automotive industry for 75 years, surge past "Detroit," home of the world's automotive industry, in any measure in just 20 years? The answer to that question can be explained in nine words: Japanese automakers, German automakers, Korean automakers and domestic automakers.

Yes, foreign automakers have forced the Big Three -- Ford, General Motors and Chrysler -- the biggest of the big American industrial machines, to re-think their manufacturing strategies. Because foreign automakers have chosen the South for almost all of their U.S. plants in the past 20 years, that re-thinking is the certain, absolute proof that the Southern Auto Corridor is all the rage. If you can get the largest industry in the world to re-think its entire business strategy, then you have earned the highest honor in the industrial recruitment game. In short, the Southern Auto Corridor has grown some very large cohoneys. Think of it as the "rage against the machine," not the great, disbanded rock band, but the still great, yet struggling industrial machine that is Detroit.

While "Detroit," or more accurately, the Midwestern Auto Corridor, continues to wear the automotive production crown in the first few years of the new millennium, the Southern Auto Corridor is making huge strides against the machine. In fact, over the last couple of years the Southern Auto Corridor has made its mark. Activity among automakers in the region in the form of job creation has more than doubled similar activity in the Midwest. The amount of money poured into the South by automakers over the last two years doesn't quite add up to double what was spent by automakers in the Midwest, but it's close (you can blame DaimlerChrysler's curious back out in Georgia for not reaching that level). Here are the details of automaker activities in both regions from Fall of 2001 to Fall of 2003.

Auto Assembly Plant Activity in the South from Fall 2001 to Fall 2003

* Fall 2001: Ford announces it's investing $375M to expand Norfolk, Va. plant.

* Fall 2001: GM completes $700 million retooling of Oklahoma City assembly plant and begins production of GMC Envoys and Chevy Trailblazers

* Fall 2001: As part of a $1 billion expansion, Nissan announces it is moving its Maxima line from Japan to its existing plant in Smyrna, Tenn.

* Fall 2001: Honda begins production at new plant in Lincoln, Ala.

* Winter 2001: Honda announces it is expanding its Lincoln, Ala. plant one month after opening it, adding 800 new jobs.

* Spring 2002: Korean automaker Hyundai announces it will build a new $1 billion, 2000-employee assembly plant south of Montgomery, Ala.

* Summer 2002: Carlos Ghosn, president of Nissan, announces the company is investing an additional $500 million to expand its unfinished facility in Canton, Miss. The expansion will result in 1,300 additional jobs.

* Summer 2002: Honda announces it is doubling production at its Lincoln, Ala. plant, investing an additional $400 million and adding 2,000 new jobs.

* Fall 2002: BMW announces a $500 million upgrade of its assembly plant in Greer, S.C. that will add 400 new jobs.

* Fall 2002: GM announces it is investing $500 million to retool its Kansas City, Kan. facility to build Malibus.

* Winter 2002/2003: Ford Motor announces it is spending $50 million to expand its Louisville truck plant.

* Winter 2002/2003: Ford announces it will retool its Kansas City-area plant in Claymoco, Mo. to build multiple models. Investment is estimated to be at least $200 million.

* Winter 2002/2003: Rumored to close, GM pumps $150 million into its Doraville, Ga. plant to build minivans.

* Winter 2002/2003: Toyota chooses San Antonio, Tex. area for $800 million pickup truck plant.

* Winter 2002/2003: DaimlerChrysler announces it will build a $750 million van plant in Pooler, Ga.

* Spring 2003: Toyota announces it will build a $124 million engine block plant in Jackson, Tenn.

* Spring 2003: Toyota officials announce the company is investing $25 million in the expansion of its newly opened engine plant in Huntsville, Ala.

* Summer 2003: Nissan announces it is moving production of the Pathfinder model from Japan to its plant in Smyrna, Tenn., investing $250 million more in the 20-year-old facility and adding 1,500 jobs.

* Fall 2003: DaimlerChrysler backs out of van plant in Pooler, Ga.

* Fall 2003: General Motors officially dedicates the $500 million expansion of its plant in Shreveport, La. that is producing Chevrolet Colorado and GMC Canyon pickup trucks.

Total Investment by automakers in the South over the last two years: $5.874 billion (that's with a "b") not counting GM's $1.2 billion capital expenditure in Shreveport and Oklahoma City, which were deals announced prior to Fall 2001 and DaimlerChrysler's Georgia backout.

Auto Assembly Plant Activity in the Midwest from Fall 2001 to Fall 2003

* Summer 2002: Ford and Mazda announce a $644 million, 1,400 job expansion of their Flat Rock, Mich. facility to produce Mazda6 sport sedans.

* Summer 2002: GM invests $500 million to expand its Lordstown, Ohio plant.

* Fall 2002: GM announces $300 million expansion of its Orion, Mich. plant to build the Pontiac Grand Am

* Fall 2002: DaimlerChrysler adding 1,000 jobs and spending $35 million at Detroit pickup truck facility.

* Winter 2002/2003: Toyota announces it is adding 400 workers at its Gibson County, Ind. facility that makes Sequoia and Tundra trucks. The facility recently went through an $800 million expansion.

* Winter 2002/2003: Ford announces another $644 million expansion of its Flat Rock, Mich. facility to build Mustangs.

* Fall 2003: Ford announces it is spending $325 million to expand plants in Livonia, Mich. and Sharonville, Ohio. No additional jobs are expected to be created in the expansion.

Total Investment by automakers in the Midwest over the last two years: $3.248 billion.

Auto Assembly Plant Activity in the South Isn't the Half of It

It's clear that the South is the rage right now when it comes to auto assembly in the U.S. That activity is likely to increase in coming years. Simply put, domestic automakers hold too much production capacity. That has meant the announcement of plant closures from domestic automakers. Domestic plants populate the Midwestern Automotive Corridor in great numbers. They do not in the South. And to date none of the domestic automakers have closed plants located in the South. On the contrary, they have expanded them.

On the other hand, foreign automakers have added great capacity in the U.S. in the last few years. Furthermore, all new foreign assembly plants built in the U.S. in the last two decades have been built in the Southern Auto Corridor. It's very unlikely the Midwestern Auto Corridor will see another foreign auto plant in the near future or ever. But the South will land many more foreign auto assembly plants in years to come.

Yep, it's clear that new and expanded assembly plants are driving the Southern Auto Corridor and winning the assembly plant war with the Midwestern Auto Corridor. But riding shotgun, if not taking its turn at the wheel from time to time, are parts suppliers from all over the world. And those suppliers are spread from West Texas, throughout the spine of the Southern Auto Corridor all the way up to Northern Virginia.

A Record Number of Deals Coming From a Single Industry in the South

Southern Business & Development magazine (www.sb-d.com), the developer and owner of this Web site, has recorded every significant capital investment and job deal announced in the South since it published its first issue in 1992. In the 12 years it has recorded those deals, in no year has 85 significant deals come from a single industry. We define significant somewhat loosely, but it hovers around 100 jobs and about $30 million in investment.

But in calendar year 2003, that's exactly how many significant deals came from the automotive industry in the Southern Auto Corridor. Furthermore, since 1992 no quarter in the South had generated 27 significant deals from a single industry. In the winter 2002/2003 quarter, the automotive industry announced 27 significant deals in the Southern Auto Corridor.

This amazing expansion of a single manufacturing industry is not exclusive to the areas around the "spine" of the Southern Auto Corridor, which is without question Interstates' 65 and 75. With Toyota's decision to build its newest North American plant in San Antonio, the Southern Auto Corridor widened by more than a 1,000 miles. And if DaimlerChrysler would have made good on its decision to build a van plant in Savannah, the corridor would have widened even more. That eastern widening will occur soon when an automaker will announce an assembly plant somewhere on the I-95 corridor between Savannah and Rocky Mount, N.C. by 2006.

Conclusion and Comment

The Southern Auto Corridor is, without debate or argument from any expert, economist or politico, the rage when it comes to automotive manufacturing in the U.S. and the world. The industry's future is extremely bright in the region. Most states and communities in the South are prepared for future automotive related investment and job creation. And the ones that aren't are quickly preparing themselves for automotive related industries.

We invite your automotive related company to establish a foothold in the Southern Auto Corridor. Simply click on the button found in the top right hand portion of the main page of www.SouthernAutoCorridor.com and we will help you garner the maximum amount of everything from incentives to labor to housing options in your site search. If you make that move (click) now, you won't believe how professional, courteous and objective we can be in regards to your search. Heck, we're the South. We invented Southern hospitality and in times like these your business likely could benefit from a little hospitality.

mike@sb-d.com