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Where will Kia locate its new U.S. assembly plant?

The Kia guessing game continues.

Even though industry watchers predicted the Korean automaker would select Kewanee as the site of its first U.S. plant — not long ago, Kia officials had said it was their top pick — reports began circulating two months ago that decision makers had changed their minds after expressing concern about the availability of the labor pool in East Mississippi and West Alabama.

The automotive plant is expected to employ 2,500.

“Two studies document the workforce availability,” pointed out Wade Jones, president of the East Mississippi Business Development Corporation. “There’s 1.6 million within 100 miles of Nissan, and 1.4 million within 100 miles of the Kewanee site.”

Several weeks ago, Gov. Haley Barbour said Kia’s “sole concern has been about the numbers. When they flew over here, they said, ‘where are the rooftops … the villages … and the people who are going to work here?” South Koreans are not accustomed to long commutes.

Mike Randle, publisher of Southern Business & Development, said the labor pool availability isn’t the issue.

“People follow the jobs, jobs don’t follow the people,” he said. “If you’ve got a plant in Meridian starting off workers at $14 per hour with a chance to make $22 within two years, believe me, there’ll be people all over moving to Meridian. They’ll get the labor.”

The sticking point of the Kewanee deal is money, said Randle.

“Kia asked Mississippi for about $250 million in incentives,” he said. “Mississippi officials agreed to $200 million. Kia would’ve had to spend $50 million of its own money to develop the Meridian site, and they decided they didn’t want to do that.”

Southern speculation

So is the Kewanee site off the Korean automaker’s short list? Kia officials declined to comment. However, reports have circulated that they are considering sites in Decatur, Ala., Hopkinsville, Ky., Chattanooga, Tenn., Aiken, S.C., and West Point, Ga.

“Kia’s painted into a corner and they’re running out of options,” noted Randle. “According to our records, Kia loves Chattanooga. However, Nissan is moving its headquarters to Nashville and I don’t see Chattanooga being politically right. Georgia just lost the GM plant and is about to lose the Ford plant. The political environment in Georgia is very good for a foreign automaker, but how will Kia view the UAW an hour up the road? Atlanta’s all UAW.”

Hyundai owns Kia Motors America, which sold 257,084 cars in the U.S. for the first 11 months of 2005. Last April, the company unveiled plans to build a $70-million U.S. headquarters in Irvine, Calif.

Mississippi speculation

Economic developers in Columbus, Tunica and Tupelo were also reportedly trying to land the Kia project.

“If Kia goes with the Columbus site, it would cost less than $200 million to develop, and if Mississippi is willing to pony up $200 million, then there’s the money for the deal,” Randle pointed out. “Plus, there are some federal incentives through the GO Zone that Kia could tap into to go along with that. All this makes the Columbus site as a last-minute pitch somewhat intriguing.”

Joe Higgins, CEO of The LINK, confirmed that Columbus is developing a second megasite, The Crossroads, located west of the Golden Triangle Regional Airport, not far from where the SeverCorr plant is being built. Officials hope to have the 1,800-acre site TVA-certified soon.

“This is probably the cheapest site to develop in Mississippi,” said Higgins. “In a time when the state’s broke and dealing with Katrina, it’s a bargain.”

It’s no secret that business leaders in Pontotoc, Union and Lee counties — the PUL Alliance — trying to overcome the loss of furniture jobs in the region, are lobbying state lawmakers hard for $14.5 million in state funds to match $4.5 million in local funds to acquire roughly 1,700 acres in Union and Pontotoc counties and prepare the Wellspring site in hopes of attracting an automaker to the area. The House has already approved project funding through House Bill 206. At press time, the bill was awaiting action in the Senate Finance Committee.

“If Columbus gets an automotive plant, there will never be one in Tupelo. And that’s a fact,” said Randle.

If an automaker doesn’t choose the Wellspring site, the land would be developed into an industrial park, PUL officials have said.

Rumors have circulated that Kia wanted to consider a Pelahatchie site, but it was considered too close to the Nissan site in Madison County. “Nissan would just say, ‘Well, we can forget any future expansions’,” said Randle.

Tunica is also in play. The Tunica Economic Development Foundation is marketing a 2,221-acre site at Mississippi 304 and U.S 61, which was certified in August as auto-plant ready with necessary utilities and interstate access. The new Interstate 69 would be complete at the end of 2006 and run near the site. Gas, electricity and water are available, the proximity to Memphis provides an ample labor pool, and the land is under option for acquisition until 2007.

“Now that everyone has gotten auto plant fever … and trying to do everything to position themselves to land one, we have re-opened the old regionalism contest in Mississippi, with the Northeast and the Coast and the central part of the state vying for supremacy in that regard,” said Marty Wiseman, director of the John C. Stennis Institute of Government at Mississippi State University. “Most people had grown to talk about regionalism in Mississippi in the past tense, but the beef plant, for example, was an effort to find a fit for a major piece of legislation to create jobs in North Mississippi. Wellspring is probably a more doable version of that.

“The Kia plant’s flirtation with Meridian, competition for four-lane highways and railroads and so forth have started to heat things up a little bit and now people are keeping an eye on the governor’s office, wondering who’s the MDA going to favor? And so it’s all becoming interesting once again, for sure.”

Under pressure

Kia officials are under fire to make a decision by the end of March, and to begin construction by June.

“They’re a year behind right now,” explained Randle. “Their sales have increased dramatically and they have to make cars. But every day they’re not making cars in the U.S., they’re missing out on sales.”

Jones, who has been working on the Kewanee site for the last two years, said he isn’t convinced that Kia executives have marked it off the list.

“We haven’t changed our strategy from day one,” he said.

If Kia chooses another site, it would not affect Teikuro, a Japanese automotive supplier that recently purchased a site in Lauderdale County. It would also not change the 100,000-square-foot expansion of the old Delco Remy building in Meridian that is underway for Tower Automotive’s second Mississippi site. Two other automotive suppliers are moving into the area, which is served by Interstates 20 and 59 and the future Interstate 85.

Six communities colleges are located in the two-state region, and between the two Class 1 railroads that service the area, plans to improve service to the west were recently announced. Meridian is also located in the GO Zone, which receives special federal assistance.

“We have a site Kia has considered that has all of the characteristics companies are looking for,” said Jones.

Contact MBJ contributing writer Lynne W. Jeter at Lynne.Jeter@gmail.com.


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