Auto footprint expands

Auto footprint expands

November 2nd, 2009 in News

SOUTHERN AUTO CORRIDOR

VW's new Chattanooga facility will be the 11th auto assembly plant built or announced in the Southeast in the last 2 1/2 decades.

MURFREESBORO, Tenn. - As the nation's economy slowly regains traction, the South's auto manufacturing role continues to expand with new plants such as Volkswagen's Chattanooga project and added work at existing factories, industry officials say.

"The whole automotive industry in Alabama has grown tremendously the last 15 to 16 years. We'd like to think we've had a hand in that," said Jason Hoff of Mercedes-Benz U.S. International in Vance, Ala.

Mr. Hoff, speaking at the Southern Automotive Conference last week, cited plans for the factory to launch assembly of a new M-Class hybrid, for example.

Executives with other auto manufacturers that have large investments in the South also discussed expansions and new products.

Susan Brennan, vice president of manufacturing for Nissan North America, said the Japanese automaker next year will start producing its electric car at the Smyrna, Tenn., plant.

Nissan plans to invest $4 billion to revamp the 26-year-old factory for the production of the zero-emissions cars.

The carmaker will build both the Nissan Leaf and its batteries at the facility, though it is not adding more space for production of the vehicle itself, she said.

"We're not building a separate line," Ms. Brennan said, adding that Nissan will use its existing supply base for the new car.

Mark Brazeal, assistant general manager of Toyota Motor Manufacturing Alabama in Huntsville, said that by 2011 the factory will build four-, six- and eight-cylinder engines.

The company is making a $147 million investment and will create 240 new jobs to support the market for vehicles with four-cylinder engines, he said.

The factory will make four-cylinder power plants for the RAV4 and Camry, Mr. Brazeal said.

Mike Lapham, Honda Manufacturing of Alabama's purchasing division manager, said Ridgeline truck production recently was moved to the Lincoln, Ala., plant from Canada. In addition, Accord V-6 production was shifted to the Alabama facility, he said.

The company has "exercised the flexibility" of the plant, Mr. Lapham said.

Ashley Frye, director of production for Hyundai Motor Manufacturing Alabama, said the South Korean automaker and sister company Kia have expanded sales during the economic slump.

"We're on track to sell 3 million cars this year," he said.

kia startup

Kia last month started production at a new plant in West Point, Ga. Kia workers are producing the Sorento sport utility vehicle at the $1.2 billion, 3 million-square-foot plant.

The facility has capacity to assemble 300,000 vehicles a year.

VW's new plant in Chattanooga, meanwhile, will be the only new auto assembly factory to open in the United States in 2011. A University of Tennessee study has estimated the German carmaker's new $1 billion, 2 million-square-foot plant will create more than 11,000 direct and indirect jobs.

While the auto industry in the South is moving forward, American automakers such as General Motors, Chrysler and Ford are shrinking and closing plants, many of which are in the Midwest.

Bill Hampton, publisher of industry newsletter AutoBeat, urged caution in writing off the Midwest just yet.

Recent changes in the cost structures of the American car companies have closed the gap that has made the South the place for building new plants for the last two decades, he said.

"The shift of production from the Midwest won't reverse," Mr. Hampton said, adding that he doesn't know if it will continue much further.

He said the GM and Chrysler bankruptcies and accompanying less-costly labor expenses may stop a lot of the migration out of the Midwest.

Also, the representatives of the automakers with plants in the South said they had been hit by the sharp drop in car sales.

Mr. Hoff of Mercedes said the company has had to cut the work force at its Vance plant and is planning a second round of trimming.

"We're hit like everyone else," he said, noting production has been down 50 percent at times. "It has presented tremendous demands on our supply chain."