Americans to make German engines at Japanese automaker's Tennessee plant

Americans to make German engines at Japanese automaker's Tennessee plant

January 15th, 2012 by Ellis Smith in Business Around the Region

Nissan employees work on the main line of the four-cylinder engine line at the Nissan plant in Decherd, Tenn., on Thursday. The plant produces engines for the Japanese automaker, and is now making four-cylinder engines for Mercedes.

Photo by Jake Daniels /Times Free Press.

DECHERD, Tenn. -- It's easy to get lost in Nissan's Tennessee powertrain plant.

The Japanese automaker began building engines here in 1997 with just a few hundred thousand square feet of covered space in this small Franklin County town.

It's now the home of the largest forging press in Tennessee, and is set to become the first site in North America to produce Mercedes-Benz engines, starting in 2014.

The enormous building now contains more than 1.2 million square feet of machines that heat, grind, cut, cast and forge metal, pounding steel and aluminum into 580,000 auto engines per year.

Conveyer belts stretch to the indoor horizon in the endless warren of humming electronics that will produce more than 100 million horsepower for consumer cars and trucks by Christmas.

Autonomous computer-controlled robots scoot around on the shop floor, keeping the plant's 800 human workers supplied with engine parts.

A spritely tune warns pedestrians to watch out for the chirping buggies, which only bring workers the parts they need for each specific engine.

"Japan used to ship us parts, now we ship them parts," said Gary Edwards, who has served as director of engineering since the plant opened its doors.

Edwards builds everything he can in-house. Workers begin the process by heating a steel cylinder to 2,200 degrees before beating the molten metal with a 2-million-pound hammer until it begins to resemble a crankshaft.

Rinse and repeat.

Next door, engineers force molten aluminum into an engine-shaped cavity, then compress and cool it until it looks like a V-6 engine.

Edwards is also prepping a space to build electric motors for the all-electric Nissan Leaf, which should produce its first engines in 2013.

Workers set production goals as high as 700 four-cylinder engines each day, along with another couple of hundred each of the larger six- and eight-cylinder motors, Edwards said.

Making engines

Those numbers are set to rise dramatically if Nissan goes through with its plan to add capacity to build engines for German automaker Daimler AG.

As part of the deal, Nissan will produce Mercedes-Benz four-cylinder gasoline engines starting in 2014, with the capacity to build 250,000 units per year.

Construction could begin as early as April, and the new production line could create "more than 100 new jobs," said Richard Stewart, mayor of Franklin County.

"We're also hoping to see more tier one and tier two suppliers, and that more people will relocate here," he said.

Tennessee officials are negotiating with Nissan to determine what kind of incentives to give the automaker. Officials say that the project likely will qualify for a FastTrack grant for job training and infrastructure, in addition to tax credits.

However, nothing has been decided, according to Laura Elkins, director of communications for the Tennessee Department of Economic and Community Development.

Tennessee Gov. Bill Haslam said on Friday that his administration already had spoken with Nissan on incentives in an attempt to grow the number of residents employed by automotive manufacturers beyond the current 103,395.

Tennessee currently claims 894 auto plants and suppliers, and Haslam wants to expand the role of state grants in bringing in additional businesses, he said Friday.

Welcome to Decherd

Whether its working for Germans, French or Japanese companies, the jobs created by Decherd's engine plant have been a boon for the town, area residents say.

The town even named a street "Nissan Powertrain Drive" after the plant, which required the purchase of four new signs.

Mike Foster, city administrator, said Nissan has "put Decherd on the map."

"Everything Nissan brings is positive," Foster said.

The company tries to hire workers who are good citizens, he said, which helps maintain the area's small-town character.

"If you have an individual who has DUIs, they won't put up with it," he said. "If you look at employees they hire, it's good-quality homegrown people with good values. You're not going to have the fly-by-night thugs."

Some nearby towns, however, are still waiting for a boost.

"There has been a huge impact on the county, but as far as an increase in our population or our tax base, there's not been any noticeable impact," said Becky Sherman, city recorder in Cowan, Tenn. "Our population actually decreased by about 35."

Winchester, Tenn., on the other hand, has felt a distinct ripple effect from Nissan's investment, said City Councilman Bruce Spencer.

The number of building permits has risen, and unemployment has remained in line with the national average, he said.

"Presently, it's just a huge impact and a plus for us in Franklin County and this whole region," Spencer said. "Even our housing market is picking up."

Automaker axis

For now, Nissan will ship the engines to Daimler's vehicle plant in Tuscaloosa, Ala., where workers will drop them into the company's Mercedes-Benz C-Class.

The agreement is part of the the Renault-Nissan Alliance, which launched in April 2010. The Renault-Nissan Alliance took a 3.1 percent stake in Daimler, while Daimler bought a combined 3.1 percent interest in Renault and Nissan.

In return for supplying the Germans with Japanese engines, Daimler will supply Nissan and Infiniti with four- and six-cylinder gasoline and diesel engines, as well as automatic transmissions.

"This is the newest milestone in our pragmatic collaboration and our most significant project outside of Europe so far," said Renault-Nissan CEO Carlos Ghosn. "Localized capacity reduces exposure to foreign exchange rates while rapidly enabling a good business development in North America -- a win-win for the Alliance and Daimler."

Earlier phases of the cross-continent alliance saw Infiniti planning a premium compact vehicle based on the Mercedes compact car, and as well as battery and electric motor sharing.

Dr. Dieter Zetsche, chairman of the Daimler board of management and head of Mercedes-Benz Cars, said the goal was to produce engines closer to where cars are sold, and take advantage of "attractive economic terms."

"Thus, we are systematically broadening our manufacturing footprint in this important growth market," Zetsche said.