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 Southern Auto Corridor News

September 5, 2008

Integrity Automotive, ZAP to Build Electric Vehicles in Kentucky, Hire 4,000

Kentucky Gov. Steve Beshear announced in the late summer that Integrity Automotive, LLC has chosen Simpson County, Ky. as the location to build a new $84 million, one-million-square-foot facility that will be used to manufacture low-speed electric vehicles. A tax incentive package worth $48 million was approved by the state of Kentucky for Integrity. The incentives are partly based on the company's commitment to create 4,000 jobs in the first four years of the project's completion. The project represents a partnership between Integrity and the California-based Zero Air Pollution (ZAP) electric car maker to expand its manufacturing operations currently based in China. One month prior to Integrity's decision to build the plant in Kentucky, Gov. Beshear signed an executive order permitting the use of low-speed electric vehicles on Kentucky highways with a posted speed limit of 45 mph or less. Integrity and ZAP officials acknowledged the action by Gov. Beshear was critical to their decision to choose Kentucky instead of Indiana for the project.

Mack Trucks Moving HQ to North Carolina

In mid-August, Mack Trucks, one of North America's largest producers of heavy duty trucks, announced it will relocate its headquarters and some support functions to Greensboro, N.C., creating 493 jobs and investing $17.7 million. Greensboro is also the home of Volvo Trucks of North America. Both truck makers are part of the Sweden-based Volvo Group, the world's second-largest producer of heavy trucks. Mack is relocating its headquarters from Allentown, Pa.

Volkswagen's Site Search Revisited

In mid-summer, German automaker Volkswagen announced that it is building a $1 billion automotive assembly plant in Chattanooga, Tenn. It is the first new U.S. auto assembly plant announced in an age of $3 to $4 a gallon gasoline. The timing of the plant's announcement is critical to the future of the Southern Automotive Corridor, which in recent years has clustered in great numbers in Alabama, Georgia, Kentucky, Mississippi and Tennessee.

VW's decision marks the first new assembly plant announced in Tennessee since Saturn chose Spring Hill in 1985. Since that year, Alabama has landed three major auto assembly plants (Mercedes-Benz, Honda and Hyundai), Mississippi two (Nissan and Toyota), Kentucky (Toyota), South Carolina (BMW), and Texas (Toyota), one each.

We have written many times that Tennessee's automotive industry is one of the most mature in the Southern Automotive Corridor. VW will bring new life into the Volunteer State's automotive sector, not to mention thousands of new jobs and an economic transformation of the greater Chattanooga region. The economic effect of this new plant will reach almost all areas of Tennessee, as well as parts of the Carolinas, Alabama, Georgia and elsewhere in the South. It will be enormous and may have the most profound economic impact on the region since the Japanese automakers' Toyota, Honda and Nissan found this region to their liking several times over the last 25 years.

Now, the Southern Auto Corridor is home to three German automakers. They are located in a crescent that starts in Greer, S.C. (BMW), arcs through Chattanooga (VW) and down to Tuscaloosa, Ala. (Mercedes-Benz). The Germans are no-nonsense players in the automotive industry. They know how to build outstanding vehicles, most of which are of the luxury variety. VW, on the other hand, will most likely not build a luxury model in Chattanooga. Because it is the first U.S. assembly plant announced in the highest gas prices in the U.S. in history, it will be different than any other plant currently operating in the South.

The economic effect of VW's new plant will not be limited to the heart of the Southern Auto Corridor, which now is getting pretty crowded. Located near the spine of the Southern Automotive Corridor, which is Interstate 65, are 13 of the region's 22 major assembly facilities. In other words, 13 plants are located in five Southern states and eight plants are located in the other 12 states.

Sure, clustering is a popular economic development theory, one that really isn't a theory; it is a reality. There will be more automakers that will choose the South in coming years, several more than experts in the industry expect. We project three to five more in the next five years. But with VW selecting Chattanooga and Toyota choosing Tupelo, Miss. last year, there is less room "in the Inn" than ever before. VW's location decision may indeed enable the Carolinas, Virginia, Louisiana, Arkansas, Texas and other states outside the center to compete more favorably for the next plant that comes down the pike.

We would like to congratulate officials in Tennessee for landing the VW project, or Project Polar Bear. When we first began our work reporting on the project, what stands out the most to me is talking to local officials in Tennessee outside of Chattanooga and what their opinions were on the deal. To us, it is always important to interview, but not necessarily publish, views from those outside of the fray of the project itself. The consensus in Tennessee was this: It will be difficult for Tennessee to land VW simply because in the recent past they have not wanted these automotive projects as much as Alabama has. Well, in our view, Tennessee (and local Chattanooga officials) did want VW more than Alabama did and more than anything, that's why they got it.

Michael C. Randle

Toyota Investing $500 Million in West Virginia Engine Plant

Toyota is upgrading its Putnam County, W.V. engine plant with new technology. The Japanese automaker is investing $500 million to modernize its production lines, which manufacture and assemble four-and-six-cylinder engines and automatic transmissions. Recently the Harbour Report ranked the Toyota engine plant in Buffalo, W.V. as the most productive four-cylinder in North America and fourth most productive six-cylinder engine plant.

Domestic Automakers Want Increase in Government Loan Program

In the summer quarter, officials with American automakers' General Motors, Ford Motor and Chrysler asked the Congress and the Bush administration to increase the $25 billion government loan program authorized last year to help them design and manufacture more fuel efficient vehicles. Much of the money will be spent to retool existing U.S. plants for next generation vehicle assembly. The three automakers have asked the federal government to authorize almost $4 billion by the beginning of the fall quarter so that the money can be used to retool plants. The $25 billion loan was approved in December of 2007 as part of an energy bill passed by Congress. Both Presidential nominees, Sen. John McCain and Sen. Barack Obama, have endorsed the loans to the three U.S. automakers.

China-based Tiger Truck Opens Facility in Oklahoma

Tiger Truck LLC celebrated the grand opening of its new assembly plant and headquarters in Poteau, Okla. Tiger assembles vehicles designed by ChangAn Automobile Group, China's third-largest vehicle manufacturer. The Poteau plant will have the capacity to assemble 7,500 vehicles per year. Tiger's truck models are know for their small stature but tremendous power. The vehicles are mostly used as off-road vehicles by governments, the military, golf courses, farms, nurseries and parks. The company is investing $25 million in the deal, which is expected to create 300 new jobs.

Goodyear Investing $200 Million in Danville Facility

Goodyear Tire & Rubber Company's Danville, Va. facility, the world's largest aircraft tire and medium radial track tire manufacturing plant, will undergo a $200 million makeover in the next few years. The modernization project will improve technology and production capacity at the 2,200-employee Danville facility.

Korean Supplier Expanding in Opelika, Ala.

In August, Korea-based Hanwha Alabama announced plans to add 42,000 square feet to its 78,000-square-foot plant in Opelika, Ala. Hanwha manufactures a number of products, including plastic floor materials, automotive components and packing materials. The $15 million expansion will result in about 45 new jobs.

Mercedes-Benz USA Breaks Ground on New Vehicle Prep Center in Brunswick, Ga.

In late August, Georgia Gov. Sonny Perdue congratulated Mercedes-Benz USA for breaking ground on a new Vehicle Preparation Center in Brunswick at the Georgia Ports Authority's Colonel's Island facility. The new 70,000-square-foot facility will replace Mercedes' facility in Jacksonville, Fla. The center will process vehicles headed for Mercedes-Benz dealers throughout the Southern Region. The deal will result in 120 new jobs.

Toyo Tire Announces Third Expansion in Georgia

Toyo Tire Tire NA announced in late August its third major expansion in four years in Bartow County, Ga. The Japanese tire manufacturer will create an estimated 400 new jobs and invest $270 million in the expansion of its Bartow County facilities. The project will enable the company to produce 5.2 million units a year and bring employment at the plant to 850.

Tool Ventures International Opens First Facility Outside of Michigan
In an effort to be nearer to the customers it supplies Tool Ventures International, has opened a 12,000 square-foot plant located in Chase Industrial Park in Huntsville, Ala. The over 30 year old tool and die company has been headquartered in Michigan but has chosen Huntsville for its new operation because of its proximity to many of its customers who are located in the Southern Auto Corridor. The new plant when fully operational is expected to employ over 50 workers.

155 Jobs Cut in Arkansas as Auto Sales Slump

Superior Industries, a Van Nuys California-based company, told its workers that they will cut 65 current jobs and not fill another 90 open positions in their Fayetteville and Rogers Ark. plants. The locations have employed a total of approximately 1,600 employees who turn out wheels for Ford Mustang, Escort and Toyota Matrix and several GM cars. The layoff plan comes as a result of the decrease in auto sales.

Tier II Supplier Locating in Randolph County, Ala.

Silla America, a Korean parts supplier, announced in the summer quarter it will locate in Wedowee, Ala. The Tier II supplier will fabricate metal auto pallets in support of the new Kia plant in nearby West Point, Ga. The plant will house 20 workers to start.

Kia Supplier Powertech to Locate in West Point, Ga.

Kia supplier Powertech plans to locate on the Kia assembly plant site in West Point, Ga., creating 355 jobs and investing $150 million. The new deal brings the total number of jobs planned by Kia and its suppliers "to more than 6,200 and the total investment to more than $1.7 billion" said Georgia Gov. Sonny Perdue in late August. The plant, which will produce automatic transmissions for the Korean automaker, is the company's first in the U.S.

GM's Old Doraville, Ga. Plant Site to go Green

This month, GM closed its assembly plant in Doraville, Ga., located in Atlanta. The 165-acre property is now the largest available piece of developable real estate inside the outer beltway of Atlanta. The city of Doraville has approved a measure requiring that new private buildings of 20,000 square feet or more that will be developed on the site must be built to certification under LEED, a national rating system for environmental construction. LEED, or Leadership in Energy and Environmental Design, is costlier during the construction process, yet those costs are recouped over years as a result of lower energy costs.

Fluortubing USA Expanding in Campbellsville, Ky. Moving Production from Holland

Fluortubing USA, a manufacturer of plastic tubing for the automotive industry and other industry sectors, is moving part of its manufacturing operations to Campbellsville/Taylor County, Ky. The $1.1 million investment includes the purchase of an existing 48,000-square-foot facility that will initially house 25 employees.

INFAC Building Parts Distribution Center

INFAC Corp., a producer and supplier of mechanical cables and electronics components for the automotive industry, will locate its distribution and sales center in Taylor County, Ky. The South Korean-owned company expects to manufacture brake cables at the new facility and will employ 75 workers.

Eaton Opening Plant Expanding in Youngsville, N.C.

Ohio-based Eaton Corp., a producer of components used in the automotive and power supply industries, is expanding its Research Triangle presence with a new manufacturing facility that will house 100 workers. Eaton employs about 4,000 workers in North Carolina and 850 in the Raleigh area.

Cummins Turbo Announces Expansion in Charleston County, S.C.

Cummins Turbo Technologies reported in the summer quarter that it is expanding its facility in Charleston County. The $11 million investment is expected to bring 100 new jobs to the area. The company produces turbochargers for diesel engines.

Tower Automotive Lays Off 55 in Tennessee

In the summer quarter, parts supplier Tower Automotive laid off 55 workers at its Smyrna, Tenn., plant. The plant supplies parts to Nissan North America's assembly plant in Smyrna. Tower is based in Michigan and operates 40 plants that house 11,000 workers worldwide.

Kentucky-based Company Opening Plant in Roanoke, Va.

Kentucky-based parts supplier Westport Corp., announced in the summer it will invest about $3 million top open an assembly plant in the city of Roanoke. The company will occupy the 203,000-square-foot former Smurfit-Stone building to assemble axles for the Volvo Heavy Truck plant in Dublin, Va. The deal will result in 60 new jobs.

Italian Auto Parts Company Expanding in W.V.

Allevard Sogefi is investing $7 million to add production of engine filter systems to its manufacturing plant in Prichard, W.V. The company will continue to produce stabilizer bars for vehicle suspensions. The new engine filter systems product line is expected to start operation by the end of 2009. About 65 jobs are expected to be created in the deal.


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