Home > Articles By Issue > Site Selector's Strategies > Article Feb. 2002 An Advertising Section of Business Facilities Exploring the Hot Spots for Automotive Manufacturing By Beth Brody Sparked by unparalleled no-interest loans and mega-financing incentives, the U.S. automotive industry boasted record sales in 2001. U.S. sales for 2001 hit 17.18 million units, according to The Associated Press (AP), making 2001 the second-best year in the history of the auto industry. Sales were highest in 2000 with 17.4 million units sold, cited The AP. "It's unprecedented to see auto demand rising as unemployment is rising," Rod Lache, analyst at Deutsche Banc Alex, told CBS.MarketWatch.com. Prime Locales in Northwest Ohio Northwest Ohio has long been popular for its position on Lake Erie, and the area's Port of Toledo has become one of the Great Lakes most diversified international cargo facilities. Along with the ports of Sandusky and Huron, the Port of Toledo links Northwest Ohio to global markets through the St. Lawrence Seaway. Almost half the U.S. and Canadian industrial markets are within a day's drive of Northwest Ohio. In addition, several rail carriers, including CSX and Norfolk Southern, complement Northwest Ohio's intermodal transportation system. Five new companies are locating to Defiance County in Northwest Ohio as suppliers to the GM Powertrain-Defiance plant, which last year invested $127 million to install a new line to build aluminum blocks for automobiles. The five companies represent a total investment of approximately $75 million in the county, and will create some 79 new full-time jobs. The new companies include OneSource Diversified which is investing $3.23 million to construct a building to lease out to Alfe Heat Treating-Defiance Inc., CBS Boring & Machine Co., and Advantage Powder Coating. Alfe Heat Treating-Defiance Inc. will do the aluminum heat treating of automotive castings for the new GM Powertrain plant; CBS Boring & Machine Co. will do cube and leak testing of aluminum engine blocks and heads; and Advantage Powder Coating will inject chemical resins into the aluminum blocks to prevent leakage. Finally, DQE Energy Services will provide energy conditioning services for the new engine line. An Ohio Enterprise Zone agreement will save the companies a combined $2.2 million dollars in property tax payments over the first ten years of the project while still holding the local school harmless from revenue loss. The State of Ohio assisted with $100,000 in roadway improvement grants and a job creation tax credit for the largest of the four companies - CBS Boring & Machine. In other news, DaimlerChrysler began production of the new Jeep Liberty sport utility vehicle at its new, $1.2 billion Toledo North Assembly Plant in April 2001. The DaimlerChrysler and the GM Powertrain plants have attracted a long list of auto suppliers to Northwest Ohio including Johnson Controls, with plants in three counties; Lear Corp., with plants in four counties; Dana Corporation headquartered in Toledo with plants in three other counties; Delphi with a large presence in Erie County; Visteon, with nearly 2,000 employees in Erie County; Ford with an autoparts plant in Lucas County; and Chrysler, with an autoparts plant in Perrysburg township. General Motors Corp. introduced its zero and low-interest financing offers in the days following the September 11 terror attacks as a way to re-ignite sales. Ford Motor Co., the Chrysler Group of DaimlerChrysler AG, and Toyota Motor Corp soon offered their own incentives. The AP reported that for the first time in 2001, trucks outsold passenger cars. The AP also noted that the Honda Accord was the best-selling car in the United States, followed by the Toyota Camry, and the Ford Taurus. Sales figures aside, the U.S. auto industry remains the largest automotive industry in the world, according to a 2001 study released by the Association of International Automobile Manufacturers (AIAM). New investments by international automakers is a top factor in enabling the United States to achieve the top spot. The AIAM study found that "advantages in location, resource availability as well as the overall efficiency of the American economy were the principal reasons for these international investment decisions." AIAM president and CEO, Tim MacCarthy, said in a company announcement: "This study documents what many have long known to be true: that international automakers have played, and continue to play, a key role in revitalizing the U.S. auto industry." International automakers have had a significant presence in the United States since 1982, when Honda opened its first assembly plant in Marysville, OH. Toyota and Nissan next opened their doors in the United States, followed by Subaru-Isuzu, Mazda, Mitsubishi, BMW, and Mercedes-Benz. Big, Big Business With more than 250 facilities in 35 states, automobile manufacturing is the largest manufacturing industry in the United States, reports the Alliance of Automobile Manufacturers. What's more, auto manufacturer suppliers and related industries generated by the use of aluminum, copper, iron, lead, plastic, rubber, textiles, and steel employ more than four million Americans, while spin-offs from these auto industry and related jobs produce an additional 9.3 million jobs. In fact, the Alliance of Automobile Manufacturers reports that automakers are the biggest customers of America's small businesses. (For example, auto manufacturers buy more steel than any other industry.) Suppliers and related industries mean big business for many cities and towns across the United States. Here is an up close look at some of our nation's most popular sites. The Driving Power Behind Illinois Illinois has a long history of being called home by many major automotive industry companies. In fact, Intermet Wagner Foundry, which manufactures ductile iron castings and employs 750 workers, has been in Decatur since 1917. Another Illinois "old timer" is Sparta's Spartan Light Metals, whose large factory employs 600 workers who produce aluminum and magnesium die casting parts. Spartan first opened their doors in 1961. Other automotive suppliers include Decatur's Zexel USA, which produces automotive air conditioning systems and employs 550, and Continental General Tire. Based in Mount Vernon, the Continental General Tire plant employs 2,000, and has been in the area since 1974. One of the state's largest automotive companies is Mitsubishi. The Mitsubishi Bloomington-Normal plant employs approximately 4,000 and manufactures the Eclipse, Sebring, Galant, and Avenger, to name a few. The driving force of light and energy behind these auto companies is Illinois Power, an energy delivery company based in Decatur which serves more than 650,000 natural gas and electricity customers in a 15,000 square-mile territory across Illinois. Illinois Power is a subsidiary of Dynegy Inc., a leading provider of energy and communications solutions to customers in North America, the United Kingdom, and Europe. Automotive companies considering a move to the Midwest should visit with Illinois Power for assistance. The company's Economic Development section maintains current information on industrial sites and buildings throughout its 15,000 square mile territory, helping companies find business sites that make the most financial sense. Sold on Saginaw Moving east from Illinois, three out of the top fifteen employers in Saginaw County, Michigan are in the automotive industry. In fact, the number one spot goes to Delphi Automotive Systems, with 9,000 employees, and number three is General Motors Powertrain with nearly 3,000 employees. Ranked at number eight is Eaton Corporation, employing 615, while Means Energy, which does auto stampings, comes in at number 14, with 400 employees. And, these companies are so sold on Saginaw, that many have invested heavily in the area over the past few years. For example, in 2000, Eaton Corporation invested $17 million and created 100 new jobs, Delphi Energy & Chassis System invested $280,000, while Delphi Saginaw Steering System invested a whopping $42,000,000. What's more, Minsor Powertrain Systems, LLC, a new minority-owned supplier to General Motors, invested nearly $3 million in new equipment lines and processes at its new facility. The company provides dry vacuum impregnation of aluminum heads and blocks for various GM facilities throughout the region and the state. Saginaw Future Inc. - a private, non-profit alliance of local businesses, the Saginaw County Chamber of Commerce, Saginaw County and the City of Saginaw - provided Minsor with site location services and also assisted the company with a tax abatement application. In other investment news, Fast-Tek Inc. opened its doors in July 2000, and Saginaw Future Inc. helped the company with site selection and in finding skilled workers. Fast-Tek contains, inspects, and certifies automotive components to guarantee automotive manufacturers that their parts are free from defects and safe for further use. The Buckeye State: A Powerful Place Ohio is one of the top two producers of motor vehicles in the United States. More than 650 auto-related manufacturing plants support the four vehicle manufacturers in the Buckeye State. The state ranks second in the nation both in the production of motor vehicles and in the number of tier one auto suppliers located throughout the state. A strong transportation infrastructure has allowed suppliers to strategically locate in close proximity to Ohio auto manufacturers. The crucial I-75 corridor allows for frequent deliveries to multiple customers from a single supplier location. Buckeye Power, Inc., the transmission and generation arm of the 27 electric cooperatives in Ohio which serve 77 out of 88 counties, sheds light and power on Ohio's auto industry by servicing American Honda's Marysville motorcycle and Accord facilities, its engine plant in Anna, and American Honda's transmissions facility in Russells Point. Buckeye Power also serves a number of warehouse and distribution facilities utilized by American Honda operating near the manufacturing plants. In addition, dozens of original equipment automotive manufacturers (OEMs) such as Ford, Chrysler, and General Motors are located along Ohio's 1,330-mile interstate systems, supplying the state's automotive assembly plants with everything from emission control systems to drive trains. Ohio's unique logistics position provides a major advantage to commercial businesses both in and out of the state. A specific example of the importance that manufacturers place on logistics is the sprawling complex of American Honda's automotive plant at Marysville. Located on a spur of I-70 northwest of Columbus, the Marysville plant uses Ohio's network of interstate highways to facilitate its just-in-time delivery system. Buckeye Power has been on the scene for over 20 years-Honda's 400,000 square foot motorcycle facility first opened in 1979, auto production began at its 1 million square foot plant in 1982, and the Anna engine plant opened its doors in 1985. In addition, Buckeye Power serves the large majority of automotive suppliers, seat manufacturers, suppliers to the Anna engine plant, and many just-in-time manufacturing facilities. The Auto Industry is Zooming in Zanesville, OH Just 45 minutes east of Columbus, OH, directly on east-west I-70, sits the booming area of Muskingum County, and its largest city, Zanesville. Just 25 miles east on I-70 is I-77 which takes a manufacturers products north to Cleveland or south to the Carolinas. There are also more than 40 motor freight carriers serving the county. A major Class 1 railroad carrier also provides excellent service throughout the county. In addition, one of the county's industrial parks is located at the Zanesville Municipal Airport, a growing Class 1 regional facility with two, 5,000-foot runways to accommodate executive jet and freight aircraft. Less than an hour west, sits Port Columbus International Airport, and the huge Rickenbacker air freight facility. Major auto-related companies include Lear Corporation, AK Steel, Han-Yei, Inc., and The Fabri-Form Company. The Lear Corporation manufactures interior automotive switches and other related parts at its large Zanesville plant. The 525-employee facility provides components to other Lear facilities and to Ford, General Motors, and Chrysler. AK Steel produces stainless steel and electrical steels used to manufacture automotive exhaust system components for Toyota cars made in North America. The AK Steel Zanesville facility employs about 300. In 2000, Han-Yei, Inc.-a tier two automotive distribution center that provides rubber coating used in window and door seals for mainly Nissan vehicles-began operating in Muskingum County from a 4,900 square-foot facility. Founded in 1943 in Guernsey County, The Fabri-Form Company opened a state-of-the-art corporate center and R&D facility in New Concord, Muskingum County in 1999. The company processes plastic fabricating and vacuum thermoforming. Virginia's Roanoke Valley's Auto Cluster is Growing Heading southeast, Virginia's Roanoke Valley is home to a growing cluster of automotive and transportation-related suppliers. The reason for its success in the auto industry can be found in three key factors: the area's central mid-Atlantic location that is only one day's shipping distance from most of the transportation manufacturing in the United States; access to Virginia's Smart Road, the nation's most advanced test bed for Intelligent Transportation Systems technology; and Virginia Tech's Transportation Institute, which conducts research involving the Smart Road. Business costs here are considered well below the national average. In addition, the valley's workforce is technologically skilled, with innovative, new workforce training initiatives supplementing a well-developed network of universities, community colleges, and public schools. The area's newest addition-Altec Industries-celebrated the completion of the first eight utility trucks to roll off its assembly line at its new manufacturing and final assembly facility in December 2001. "The new facility offers a central geographic location on the East Coast with an excellent transportation system and is in an area of the country known for workers with a solid work ethic. It's a perfect fit for our company," notes Jon Styslinger, senior vice president, manufacturing for Altec. Altec is the fifth transportation-related manufacturer to locate in the Roanoke Valley since 1995, creating an industry cluster that makes the area especially attractive to others in the transportation industry. Koyo Steering Systems of USA has completed construction on a 260,000 square-foot facility. Last year, the Japanese-owned company became this country's first domestic mass producer of Electric Power Steering (EPS) systems. After proving that they could fulfill GM's requirement of producing 288 EPS systems in less than eight hours each day, Koyo began shipping its EPS systems to GM's Saturn plant in Spring Hill, TN, for use in its new SUV, the VUE, introduced in late 2001. Roanoke Valley is also home to Virginia Forge Co., Metalsa Roanoke (formerly Tower Automotive), and the Japanese firms of Dynax America, , and Yokohama Tire. To alleviate educational concerns of Japanese parents relocating to the Roanoke Valley as a result of the area's growing base of Japanese-owned companies, the Roanoke Valley Economic Development Partnership along with Botetourt County and the Roanoke Regional Chamber of Commerce have formed the Japanese Saturday School of Roanoke. The school, one of only 72 Japanese schools in the United States, supplements the education Japanese children receive in public schools to help them keep up with their peers in Japan. Tennessee Valley: The Heart of the Southeast In the heart of the Southeast is the seven-state region of the Tennessee Valley, currently the home of eight automotive and heavy truck manufacturers: Saturn, Nissan (in Decherd, TN, Smyrna, TN, and Canton, MS), Navistar, Toyota, DaimlerChrysler, and Honda. More than 50 auto and heavy truck manufacturers are in close proximity to the Tennessee Valley. The 80,000 square-mile Tennessee Valley is comprised of the entire state of Tennessee, and parts of Alabama, Georgia, Kentucky, Mississippi, North Carolina, and Virginia. According to the Tennessee Valley Industrial Development Association (TVIDA)-which coordinates the economic development activities for the eight regional industrial development associations in the Tennessee Valley-the top five reasons why industries are attracted to the Tennessee Valley are: an unbeatable location and complex transportation system; quality workforce; low labor costs; available suppliers (over 3,000 companies); and low-cost and efficient energy. In October 2001, Kiriu USA Corporation, a 100%-owned subsidiary of Kiriu Corporation of Japan, the second-largest automotive brake rotor producer in Japan, will be constructing a 35,000 square-foot facility in Bowling Green, Kentucky. "Bowling Green was selected from over 20 sites in Tennessee, Georgia, and Kentucky not only because of its strategic location for the automotive parts supplier, but also because of the very supportive community for new industry and further business development," Kiriu president, Toshio Nakagawa, said in a company press release. New Mather Metals, a Toledo, OH-based company and wholly-owned subsidiary of NHK Springs, Ltd. of Japan, has purchased a 30-acre tract of land to build a new manufacturing plant in Franklin, Kentucky. The company manufactures stabilizer bars for the North American OEM Automobile Manufacturers. The new, 120,000 square-foot facility will employ 90 people. The TVIDA territory is abundantly supplied with power from the Tennessee Valley Authority (TVA), the nation's largest public producer of electric power. TVA delivers power to 158 municipal systems and electric cooperatives across the region and to 62 large government and industrial facilities. Geography's the Key in East Tennessee In East Tennessee, the Knoxville-Oak Ridge-Smoky Mountains Region has plenty to offer an automotive supplier looking for a new business location. The area's advantages are both tangible and intangible, but perhaps the most obvious advantage is geography. Many areas sell a central location, but the Knoxville-Oak Ridge-Smoky Mountains Region epitomizes it. It is truly a central location for any company doing business east of the Mississippi River. Located at the confluence of three major interstates (40, 75, and 81), the region provides access to 76% of the U.S. population in a day's drive. With proximity being an important consideration for automotive suppliers, this region is tailor made to meet their needs. East Tennessee is just a few hours from several automotive manufacturers including Nissan, Saturn, Honda, Toyota, Mercedes-Benz, and BMW. Proximity is a major factor in the location of dozens of new and existing auto suppliers in the region. Another advantage that has become increasingly recognized in the automotive industry is the area's labor force. Tennessee is now the fourth largest auto producing state in the nation thanks in part to the quality labor force that companies find here. The East Tennessee Region alone has a civilian labor force of over 500,000. These workers are known for their work ethic, loyalty, low turnover rates, and high productivity. The area also has many intangibles that one has to see first hand to appreciate, like the unparalleled quality of life that so many outsiders have found moving here over the years. Many come to the area for jobs and never leave because of the high caliber educational, recreational, and cultural opportunities. Take the First Train to Clarksville Business is flourishing in Clarksville, Tennessee's fastest growing city behind only Memphis and Nashville. Located on I-24 just 40 minutes northwest of Nashville, and approximately 250 miles from the population center of the United States, Clarksville is just one day's drive from 76% of major U.S. cities. What's more, the cost of living is 7% below the U.S. average, and employers benefit from an annual workforce infusion of 800 Austin Peay State University graduates and 4,200 separating military personnel. All of these advantages have made quite an impression on many auto-related firms. Robert Bosch Corporation has been in Clarksville since 1989, and has had four subsequent expansions totaling $49.5 million. Bosch, the third largest auto supplier in the world, supplies hubs, rotors, and corner modules for GM Blazers, Dodge Dakota, Durango, and pickups, Ford Ranger, F-150, and Sportrac. It will also supply for the 2004 Nissan. "The Clarksville workforce is a tremendous differentiating factor for us," notes Dale Richter, plant manager. "Forty percent of our workers are former military employees - very disciplined, with a very strong work ethic. We have a world-class low absentee rate. We have leaders throughout the plant. They take initiative, are disciplined, and are focused on continuous improvement. That just doesn't exist everywhere in the United States." The Clarksville workforce is also a strong selling point for the plant manager of Hendrickson Trailer Suspension Systems, Kirk Steer: "We've had a very positive experience with the labor market. Fort Campbell produces a discipline and work ethic that isn't available everywhere." Other Clarksville mainstays include Bridgestone Metalpha USA, Inc., which was established in 1994 and has had two expansions totaling $80 million; Smithfield Manufacturing, Inc., which has produced precision component parts since 1952; and SPX Corporation Contech/Metal Forge which has been in Clarksville since 1979 and has had four expansions for an investment of $41.6 million. 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