Click for FREE INFO on Automotive Sites in the South
Email This Page
Tuesday, June 27, 2017    Login

 Southern Auto Corridor News

October 31, 2008


Automotive Activity in the South Remains Strong

Activity in the Southern Automotive Corridor was surprisingly strong in September and October as several new suppliers announced new and expanded projects. Almost all of the deals announced in the South over the last 45-60 days were made by foreign-owned companies and only a handful were related to the three new assembly plants currently being built in Mississippi, Georgia and Tennessee.

While auto sales may be soft in the South as they are everywhere, you wouldn't know it by what is taking place in the region. New suppliers are breaking ground on new facilities and it should be noted that there hasn't been a time in Southern Automotive Corridor history when three automotive assembly plants were under construction at the same time, which is the case today. Kia and Toyota continue to complete their plants in Georgia and Mississippi and Volkswagen's construction of its plant near Chattanooga has begun.

There are other clues that automotive related companies are readying for an industry recovery in 2009 and 2010. Of the top 10 deals announced in the South during the summer 2008 quarter -- one of the worst quarters ever experienced by the auto industry -- three were automotive industry projects (Integrity Automotive/Zap – 4,000 new jobs in Kentucky; Volkswagen – 2,000 new jobs in Tennessee; and Glovis – 600 new jobs in Georgia). In fact, those three projects alone will account for over 6,500 new jobs in the region. And with this October 31 report, we have found almost 20 new or expanded automotive-related deals in the region over the last month or so. That, by the way, is only about 10 percent below the norm for a 45-day period in the Southern Automotive Corridor.

One other trend supporting the fact that business in the Southern Auto Corridor remains steady in this tough environment centers on domestic production. In the last four months, domestic automakers continued to announce plant closures and layoffs in North America. However, no domestic plant closures have been announced in the South so far this year. There have been layoffs, however, at domestic assembly plants that are operating in the South. But, again, no closures, while in mid-October GM announced that it would lay off over 4,000 plant workers at facilities in Delaware, Michigan and Wisconsin. Previous plant closure announcements included GM and Ford in the Atlanta area and GM's plants in Oklahoma City and Norfolk. But those announcements were made two or more years ago. So far, the Detroit 3's plants in Louisiana, Texas, Missouri and Kentucky seem to be safe for now, while others in the Midwest and Northeast have been put on the chopping block.

Michael C. Randle

Ford May Boost Investments at Louisville, Ky. Plants

On October 30, the Kentucky Economic Development Finance Authority approved amendments to its incentive agreement with Ford Motor Co., opening up a chance for the Michigan-based automaker to invest up to $600 million at its two assembly plants in Louisville. The KEDFA board amended the incentive package awarded in 2007 to Ford to invest $200 million at the Louisville Truck Plant. The language in the package provides up to $180 million in incentives over 10 years if the automaker invests up to $600 million at the two Louisville assembly facilities. However, Ford has no plans at this time to invest more than the $200 million it announced in 2007 on its facilities in Louisville.

LSP Automotive Announces Expansion in South Carolina

LSP Automotive Systems LLC announced on October 30 that it will expand its facility in Union County, S.C. The $45 million investment is expected to create 61 new jobs. LSP is a Tier 1 supplier of Class A metal and assemblies for the North American automotive industry and currently is a supplier to BMW and its large plant in Greer, S.C. LSP is a subsidiary of the German auto parts supplier Laepple AG.

Toyota Tier I Supplier Breaks Drought in Mississippi

In the early summer quarter, Toyota announced a model change at its plant going up in Blue Springs, Miss., near Tupelo. The new assembly plant was scheduled to build Highlander SUVs, but the Japanese automaker decided in May that the small Prius model would be assembled in Tupelo. Since the change in models, there haven't been any suppliers announced for the plant until now. In late October, Toyota Tsushu announced it will locate two operations in Blue Springs. The first is a joint venture steel processing facility on the Toyota site. The second project is a plant that will be located across U.S. Highway 78 that will provide tire and wheel assembly. No employment figures were made available as of this writing. Toyota Tsusho is the sixth Toyota supplier to announce a facility in North Mississippi and the first since Toyota decided to build the Prius model as opposed to the Highlander.

September Mass Layoffs Top 2,000

According to the U.S. Department of Labor, mass layoffs in September 2008 topped 2,000 for the first month since September 2001 and the two months following 9/11. A mass layoff, as defined by the Labor Department, "are from establishments (existing manufacturers and service providers) that have at least 50 initial claims for unemployment insurance filed against them during a 5 (five) week period." According to the Department of Labor, mass layoffs jumped to 2,269 in September, almost doubling the number of mass layoffs in the country in September of 2006. It should also be noted that when this current economic crisis began in earnest back in May, there were 1,626 mass layoff events. September's 2,269 events followed 1,512 in July and 1,772 in August.

Most Mass Layoffs Have Come From Just Six States

In August a battered "U.S. economy became a crisis." And here we are in late October and we’re told by much of the media that the U.S. economy continues in crisis mode. The abovementioned mass layoff total in September is the second-highest recorded by the Department of Labor in the last 10 years. Yet, as we have written for almost two decades now, the U.S. economy as a whole does not represent the state of regional economies and especially sub-regional economies such as "The Carolinas," "The Mid-South," or the "Gulf Coast States" that represent parts of the South.
Since July there have been 5,553 mass layoffs in the country, according to the Department of Labor. While state and regional numbers reported by the same agency are estimated for September, as of this writing, what is shown on the U.S. Dept. of Labor's Web site is that more than half of the 5,000-plus mass layoffs announced since July have occurred in just six U.S. states: Florida in the South; Michigan and Ohio in the Midwest; New York and Pennsylvania in the Northeast and California in the West. In fact, California's mass layoffs represent one-quarter of all mass layoffs announced in the U.S. from July to September.
The South's share of all mass layoffs in the U.S. over the last 90 days (preliminary numbers) is just over 25 percent. Clearly, that number means the region is faring much better than the Northeast, Midwest and West. Why? Well, the South is home to over 40 percent of the U.S. population and an equal amount of the gross domestic product is generated in the South. So, with 40 percent of the people and 40 percent of production and just 25 percent of the mass layoffs, the Southern region is undoubtedly faring better in the economic crisis than the other regions. States in the South that have had a rough go of it since July based on mass layoffs include Kentucky, Louisiana, Georgia and the aforementioned Florida.
States in the South which have had little if any rise in mass layoffs during the last 90 days include North Carolina, Arkansas, Maryland, Oklahoma, Tennessee and West Virginia. If you recall during the last major recession (2001-2003), North Carolina really took it on the chin, as did Texas. So far in this recession, North Carolina and Texas have weathered the tough times so much better than in the last recession.

German Automakers Cry Foul Over U.S. Bailout Bill

In October, President Bush finally signed into law a bill that provides low interest loans of up to $25 billion for domestic auto makers. The loans will partly be used by GM, Ford and Chrysler to refit some of their U.S. plants to produce new, environmentally-friendly vehicles. Also, it remains to be seen how much of the recent $700 million federal bailout will be used to purchase troubled loans associated with the domestic automotive industry, including inventory loans to struggling U.S. car dealerships. While little has been heard from Asian automakers, such as Toyota, Hyundai and Honda about the $25 billion loan to domestic automotive assemblers, German automakers are denouncing the deal. Also, the government in Berlin isn't happy about the deal either, describing the loans to U.S. automakers as "subsidies" and "a distortion of competition."

BMW Laying Off Temporary Workers in S.C.

In mid-October, officials with German automaker BMW announced that the company will lay off as many as 700 temporary workers at its plant in Greer, S.C. Most of the temporary employees work on the production line. The layoffs will occur after the plant shuts down for the Christmas holidays. BMW is currently undergoing a $750 million expansion of its facilities in South Carolina, where about 5,400 full-time workers are housed. There was no word from the company if the temporary employees would be rehired after the expansion is completed.

Parts Maker Settles in North Carolina

In October, Indiana-based Magna-Tech picked an existing building in Lincoln County, N.C. for a new automotive castings production facility. The company, which will heat, treat and seal automotive castings, is investing $2.5 million in the deal and will hire about 25 workers.

First Major Auto Assembly Equipment for Kia Arrives in Georgia

The first major machinery destined for Kia Motors' West Point manufacturing plant arrived in the U.S. in October when the ship M/V Leopold Stuffs docked at the Port of Savannah carrying more than 3,500 tons of automobile manufacturing equipment. Kia is transporting the equipment to its $1.2 billion plant in 128 separate loads, which is under construction in West Point. 

Nissan Cutting Production in the South

Nissan Motor Co. announced in mid-October that it is cutting production of its Altima models at assembly plants in Mississippi and Tennessee due to sluggish demand. Steve Parrett, a spokesperson with Nissan said employees at the plants took three successive Fridays off during the month of October.

No Automaker is Immune to Slumping Sales

In the month of August 2008, 964,873 cars and light trucks were sold in the U.S. The figure represented the worst vehicle sales month in the U.S. since 1993, according to New Jersey-based Autodata Corp. Sales were down for every auto maker, with Nissan (-36.8%), Ford (-34.5%), Chrysler (-32.8%) and Toyota (-32.3%) topping the list of sales declines compared to August of 2007. Even Honda, which has been somewhat immune from the sales slump, saw its sales drop by 24%. GM, on the other hand, captured an impressive 29% of the U.S. vehicle sales market in August with sales down 15.6%.

Pirelli Tire Expanding Georgia Plant

Pirelli Tire North America announced in early October that will add a new production line to its Rome, Ga. facility, investing $15 million. The expansion will provide a 25 percent boost in manufacturing output and is scheduled to become operational during the first quarter of 2009. In 2002, Pirelli relocated its U.S. headquarters and manufacturing facility to Rome, where it produces high-end tires for the automotive industry.

Palmetto Synthetics Announces S.C. Expansion

In September, Palmetto Synthetics, a manufacturer of specialty polyester fibers used in the automotive industry and others, announced a $3 million expansion of its plant in Kingstree, S.C. The expansion will include a 30,000-square-foot addition, a new product line and 25 new jobs.

Lear Expanding in South Carolina

Lear Corp., a leading supplier of automotive seating and electronic components, announced in September that it is investing $10.8 million in its Spartanburg, S.C. plant. Lear supplies seats to BMW's plant, which is also located in Spartanburg County. The deal will generate 140 new jobs at the company's plant in Duncan, S.C., which currently houses 237 workers.

SEM Locating its Headquarters in York County, S.C.

SEM Products announced in September that it will locate its headquarters and manufacturing facility in York County, S.C. The $11 million deal is expected to bring 85 jobs to the county, which is located in the Charlotte metro area. SEM manufactures a broad array of specialty aerosols, adhesives and coatings for the automotive, marine and aerospace industries.

Japanese Supplier Picks Kentucky

Fuel Total Systems, a Japanese-owned automotive parts supplier, announced in the fall it is building a 140,000-square-foot facility on 20 acres in Marion County, Ky. The new plant will house about 100 workers and will produce automotive fuel tank systems and related components. The company was approved for tax benefits and other incentives under the Kentucky Rural Economic Development Act.

NPR Celebrates Kentucky Grand Opening

In October, NPR Manufacturing Kentucky celebrated the grand opening of its new $48.7 million steel piston ring plant in Bardstown, Ky. The company is a subsidiary of Saitama, Japan-based Nippon Piston Ring Co, Ltd. The 200,000-square-foot facility will house 150 workers that will produce over 18 million piston rings annually.

American Howa Kentucky Announces Expansion

American Howa, which celebrated its grand opening in Bowling Green, Ky. in March of 2008, announced in October it will undergo a $12 million expansion, creating 24 new jobs. AHK's expansion will add 56,000 square feet to its existing 81,000-square-foot facility and will house three new manufacturing lines. The company produces headliners, dash insulators and other automotive interior parts.

German Automotive Supplier Opening Plant in Virginia

Germany-based ept automotive has chosen Chesterfield County, Va., located in the Richmond metro, for a 46,000-square-foot facility to produce electrical connectors for the auto industry. ept (Electronic Precision Technology) is a subsidiary of ept GmbH & KG of Peiting, Germany. The $5 million deal is expected to create about 50 new jobs.

Navistar Announces Second Engine Plant in Huntsville

Navistar, which has been manufacturing V6 and V8 diesel engines in Huntsville since 2002, celebrated the opening of a second engine plant in Huntsville on September 27. The new plant is producing large diesel engines for heavy-duty commercial vehicles.

Gate Factory in Arkansas Announces Layoffs

The Gates Corp., a manufacturer of belts used in the automotive industry, announced in October it is laying off 50 workers at its plant in Siloam Springs, Ark., as it installs equipment from a plant that's closing in South Carolina. The company, which operates the 630-employee facility, will rehire the workers once the equipment is operational.

Triangle Suspension Opening New Plant in North Carolina

In late September, a division of Pennsylvania-based Triangle Suspension Systems announced it is opening a new plant in Mount Olive, N.C. The company will invest about $6 million and create 102 jobs over the next three years. Triangle manufactures truck springs for the medium and heavy-duty truck aftermarket. Triangle is a division of The Marmon Group, a Berkshire Hathaway company. 

BFGoodrich Expanding Alabama Operations

In the early fall quarter, BFGoodrich announced it is investing $13 million in its Tuscaloosa, Ala. tire plant to increase production of steel belt material to be used at five other BFGoodrich-Michelin plants in the Southeast. The expansion will result in a dozen new jobs.

Visteon Creating New Jobs in Alabama

Michigan-based automotive parts manufacturer Visteon has announced a $14 million expansion of its plant in Tuscaloosa, Ala. The expansion will add 67 new jobs. In June Visteon announced it will close its Durant, Miss. plant, which houses 150 workers. Some of the equipment in that facility will be delivered to the company's Tuscaloosa facility during the expansion.

Honda's Alabama Plant to Produce Cars for First Time

In October, Japanese automaker Honda announced that it will move production of its popular V-6 Accord model to its plant in Lincoln, Ala. The $60 million deal represents the first time Honda will make passenger cars at the Alabama facility. Honda will move V-6 Accord assembly from a plant in Ohio to the Alabama factory. Earlier this year, Honda announced it was shifting assembly of its Ridgeline pickup from a plant in Canada to Alabama.

Panasonic Closing Georgia Car Stereo Plant

In the early fall quarter, officials with Panasonic Automotive Systems, a subsidiary of Japanese electronics giant Matshusita, announced that the company's 500-employee car stereo plant in Peachtree City, Ga., will close some time last next year. The company will consolidate its car stereo manufacturing production to an existing plant in Reynosa, Mexico. Panasonic Automotive supplies dashboard electronic equipment to domestic and foreign auto makers. The Atlanta-area plant began production in 1987.

Exide Creating 60 New Engineering Jobs in Georgia

Alpharetta-based car and truck battery manufacturer Exide, announced in October it is filling 60 new engineering positions as it reorganizes its research and development division. The company will create a new division that will oversee development of technologies used in next generation car and truck batteries.

Automobile Shredding Operation Expands in Arkansas

The A.Tenenbaum Co. of North Little Rock, announced in the early fall quarter that it is expanding its automobile shredding operation and has acquired three metal recycling centers in Arkansas. The company has placed in operation a new, larger automobile shredder in North Little Rock and has acquired land in Rogers, Ark., for another shredding facility.



 Southern Business & Development

Southern Business & Development Southern Auto Corridor Small Town South Randle Report