Most of Mississippi’s automotive manufacturing news recently has been good, headlined by Toyota’s announcement that its ultra-popular Prius will originate from the plant in Blue Springs that was originally set to build the Highlander crossover SUV.
That announcement could mean an almost-permanent presence of the automaker in Northeast Mississippi, with the hybrid Prius’ fuel economy at time when gasoline prices are forcing car-buyers to shelve their trucks and SUVs and drive more fuel-efficient vehicles.
But not all of the auto news has been greeted with exultation.
Starting in March, suppliers to Nissan’s Canton plant have been laying off workers in response to the carmaker’s decision to reduce production of the Titan truck and Armada and Infiniti QX56 SUVs. Declining sales of those models and surging sales of Nissan’s Altima, which is also made in Canton, led to the move. Production of the Altima will increase.
Exact data on the number of supplier jobs lost in unavailable, but reports surfacing in early July had Tower Automotive in Madison, which makes frames and front clips for Nissan, laying off 48 people after the July 4 break.
A spokesman for Tower Automotive said it is that company’s policy not to comment on such matters. Nissan referred all questions to suppliers.
Since Nissan first revealed plans in the early 2000s to locate in Mississippi, it has been subject to a Memorandum of Understanding (MOU) with the state. The MOU stipulates that Nissan must employ a minimum of 3,000 employees to continue to enjoy tax incentives the state legislature approved to lure the automaker to Canton. That number can be drawn from employees at the plant itself or indirect employees, those who work for suppliers.
Gov. Haley Barbour said July 10 that he doesn’t expect the recent cut in supplier jobs to violate the MOU.
“Four-dollar gas is terrible for Mississippians,” Barbour said. “That also has an economic effect on the auto industry.”
Out of the cycle
While Nissan is currently adjusting to the economic climate created by the cost of fuel, this is one of a series of cycles the automotive industry has gone through over the decades, Barbour said.
“And there’s no question in my mind that we will come out of this cycle,” he said.
Barbour positioned Nissan’s difficulty as a platform to call for more domestic production of energy, which he said would decrease the U.S.’s dependence on oil from the Middle East and yield a larger supply to cope with the increasing demand. He echoed President Bush’s recent proclamations that areas of the Alaska National Wildlife Refuge (ANWR) be opened to oil drilling. Bush went a step further last week when he lifted the executive order prohibiting drilling for oil in the outer continental shelf (OCS), an area closer to the shore than where oil companies currently have drilling rigs like ones in the Gulf of Mexico. For OCS drilling to become reality, however, it would have to gain approval by Congress, whose Democratic leaders, citing environmental concerns, have balked at additional drilling in the OCS and drilling of any kind at ANWR.
“What we need in this country is more domestic production of energy,” Barbour said. “Our government’s policies through the generations have restricted supply.”
Barbour put a lot of the blame on former President Bill Clinton, who in 1995 vetoed a bill that would have allowed for drilling in ANWR. At the time, Clinton said the bill was useless since it would take a decade for any oil produced by the drilling to hit the market.
“Well, here we are 10 years later and look at the situation we’re in,” Barbour said.
Also affected by the pain at the pump are state and local governments, some of which have instituted four-day work weeks to lessen the cost of workers’ commutes. Birmingham went to a four-day schedule earlier in the summer, and Barbour has acknowledged state workers’ schedules will be scrutinized and would not eliminate the possibility of going to a similar schedule.
Contact MBJ staff writer Clay Chandler at clay.chandler@ msbusiness.com .