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 Southern Auto Corridor News

February 9, 2009

Lawsuits Mount in Kentucky for Integrity Manufacturing and its Proposed Electric Car Project

More than a few tongues wagged in the summer 2008 quarter when California-based ZAP (zero air pollution) and Integrity Automotive announced a new $84 million, 4,000-employee electric car plant in Simpson County, Ky. Integrity Automotive was launched by Randall S. Waldman, who also owns Integrity Manufacturing, a steel fabricator company in Bullitt County, Ky.

Even Kentucky Gov. Steve Beshear and the Kentucky Cabinet for Economic Development went giddy over the deal, announcing on August 25, 2008 an incentive package worth $48 million to entice Integrity Automotive to locate its new North American auto manufacturing facility in Kentucky. Not only that, Beshear signed an executive order permitting the use of low-speed electric vehicles (we assume because of the proposed electric car plant) on Kentucky highways with a posted speed limit of 45 mph or less. In fact, Integrity and ZAP officials acknowledged at the time that the Governor's executive order was critical to their decision to choose Kentucky over neighboring Indiana as the plant's home state.

A groundbreaking for the electric car plant took place in Simpson County, Ky., on August 28, 2008. Several hundred people attended the event. Now it looks as if the big deal is a big dog as National City Bank sued Integrity Manufacturing and other companies associated with Randall S. Waldman in the winter quarter for failure to pay off a loan of over $1 million the bank granted the company in 2007. National City, which was acquired by Pittsburgh-based PNC Financial Services Group, holds a mortgage on the property where Integrity Manufacturing has its steel fabrication plant. According to the suit, the bank wants the Bullitt County Circuit Court to order the property sold to pay off the debt. 

Back in November, Waldman broke the news that GE Capital pulled the plug on the financing of the electric car project. Officials with GE said that was news to them in that a formal proposal to finance the deal was never done. Waldman then announced that he would seek federal financial aid to save the project. Now, with lawsuits flying, that is probably not a possibility.

Honda Hits the 20 Million Milestone

In early February, Honda officials reported that the Japanese automaker assembled its 20 millionth vehicle in North America. Honda opened the first foreign-owned automotive plant in North America in Marysville, Ohio in 1982. The company has several divisions operating plants in the South, including a large automotive assembly plant in Lincoln, Ala. and a jet assembly facility in Greensboro, N.C.

Lear-Kyungshin to open Seat-belt Plant in West Georgia

In the winter quarter, Lear-Kyungshin, a manufacturer of seat belts, announced it is investing $3.5 million to open a facility in West Point, Ga. The plant, located in the West Point Technology Park, will house about 50 workers and produce parts for the new Kia assembly plant that is almost complete in West Point.  

Bridgestone Ceases Light Vehicle Tire Production at Nashville Area Plant

Bridgestone announced in the winter quarter that it will stop producing light-truck and passenger car tires at its plant in LaVergne, Tenn. The company will continue to make heavy-truck tires at the plant. However, the drop in production will eliminate about 850 positions at the facility. About 700 workers will continue to work at the plant and Bridgestone officials speculated that it might be possible to bring back workers in the fall of 2009, or whenever the economy improves.

VW Forms Manufacturing Company for Tennessee

In January, the formation of the new manufacturing company that will operate at the German automaker's plant now under construction near Chattanooga, Tenn. was revealed. Volkswagen Group of America Chattanooga Operations LLC will operate the $1 billion facility. Frank Fischer, CEO of the company said at the announcement in Chattanooga that "2009 will be a big year for Volkswagen in Chattanooga and I am pleased with the continued progress we have made at the plant. With the formation of the manufacturing company, the architectural renderings and construction set to begin on the paint shop, we are well on track to meet all our scheduled milestones." Other news regarding VW's new plant includes:

* The training center at the plant is scheduled to be completed in the fall quarter of this year.
* Over 100 full-time VW employees now work in Chattanooga and the company has moved into new office space downtown.
* Equipment procurement for the paint shop has been issued.
* Meetings with potential suppliers have already begun, with more than 20 scheduled for February.
* The new plant will produce a new mid-size sedan for the U.S. market that reportedly will get up to 55 miles a gallon.

Production in Chattanooga is expected to begin in early 2011. VW is investing $1 billion in the project and expects to employ 2,000 direct jobs in the Chattanooga, Tenn. region.

Peterbilt Closing Tennessee Plant

Truck maker Peterbilt, a division of Washington State-based PACCAR, announced in February it is closing its Nashville area factory indefinitely. The closure comes after the truck manufacturer and the United Auto Workers Local 1832 could not come to a labor agreement in the summer of 2008. No trucks have been assembled at the factory since last summer. Peterbilt officials cited low demand for heavy-duty trucks for the closure, not the failure to settle on a labor agreement with the UAW. The company expects to reopen the plant when demand improves for large trucks.

Wells Fargo Closing Texas Auto Finance Center

Banking giant Wells Fargo announced in the winter quarter it is laying off 67 employees at its automotive finance center in Dallas. The company is closing the facility and moving the work to other Wells Fargo auto financing centers in the U.S.

Tube Manufacturer Announces S.C. Plant

Triumph Tube, an aluminum tube manufacturer, announced in the winter quarter it will open a new plant in Orangeburg, S.C. The $3.5 million deal is expected to create 40 new jobs. The company sells its tube products to the automotive, military, sporting goods and medical industries.

Freightliner Slashes 2,137 Jobs in N.C.

North Carolina's transportation equipment manufacturing sector was slammed in late January when truck-maker Freightliner announced it was cutting 2,137 jobs at its three plants in the Tar Heel State. The facilities, located in Mount Holly, Gastonia and Cleveland, house about 3,000 workers, meaning more than two-thirds of the company's employment in North Carolina is being trimmed. Freightliner has an up and down history in North Carolina, employing thousands when times are good in the trucking industry and drastically cutting back when the industry slows.

Hyundai Bucks Auto Sales Trend

Bucking a trend that saw dismal vehicle sales for just about every automaker in the U.S., Korean automaker Hyundai posted a sales increase of 14 percent in January '09 compared to its sales in January of 2008. Even more, sales of the Alabama-made Sonata sedan jumped 85.5 percent and sales of the Santa Fe SUV model rose 35 percent compared to a year ago. Hyundai officials cited the new Hyundai Assurance Program for the increase in sales in what was one of the worst automotive sales months in modern U.S. history. Hyundai's new Assurance Program allows buyers to return purchased vehicles if they lose their jobs.

Honda Opens Alabama Engineering Facility

"Why in the world would you open an engineering center in the worst market for automobiles maybe any of us can ever remember" said Jim Wehrman, vice-president of Honda Engineering North America? "It's because that long-term dream is more important and more powerful than short-term business conditions." In the winter quarter, Honda opened and dedicated a new $6 million building on Honda's Lincoln, Ala. campus that will house a branch of Honda Engineering North America. The 14,000-square-foot facility will increase the Japanese automaker's support capability for improvements to equipment needs at its Alabama plant. 

Toyota Will Make Payments to Mississippi

In the fall quarter, what was rumored to occur became reality as Toyota announced a delay in the opening of its plant that is nearly complete in Blue Springs, Miss., located near Tupelo. In January, Mississippi Gov. Haley Barbour said that the state will get back some of the money it put into the Toyota project, despite the project's delay. Toyota officials said that it will pay its portion of the debt service on the plant beginning with a $10 million annual payment in 2010. Also, Toyota will pay $5 million annually to North Mississippi school districts in 2010.

Toyota Tops GM in 2008 Sales

Since 1931 General Motors has been the worldwide leader in vehicle sales. That long string ended in calendar year 2008 as Toyota became the world's leader with 8.97 million vehicles sold. GM placed second with 8.35 million vehicles sold. GM continues to outsell all other automakers in the U.S. Both GM and Toyota struggled in 2008 as sales worldwide fell by 3.5 million vehicles.

Automotive Supplier Selects Harlingen, Tex.

Spring Dynamics, an Almont, Mich.-based manufacturer of custom precision springs for the automotive industry, announced in January that is has selected Harlingen for a 31,000-square-foot facility. The company plans to supply current customers in Matamoros, Mexico, as well as develop new business with other maquiladoras in Matamoros and Reynosa from the new facility. A maquiladora is a factory that imports materials and equipment on a duty-free and tariff-free basis for assembly and then exports the assembled product, usually back to the originating country. About 35 jobs will be created in the deal.


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