In the poker game of site selection, no one’s talking

by Lynne W. Jeter

Published: September 17,2001

Volvo’s not looking. Neither is Toyota. DaimlerChrysler’s vague. And Hyundai’s iffy.

But rumors have run rampant. In a recent issue of Southern Business & Development magazine, an article said, “… rumors are swirling that Toyota is not the only automaker looking at the South for a new facility. Reportedly, Volvo and Hyundai are on the prowl as well.”

Speculation about neighbors for Nissan in Mississippi has escalated since U.S. Sen. Trent Lott (R-Miss) said last month that at least three automakers were interested in the state as sites for expansion.

But a spokesperson for Erlanger, Ky.-based Toyota Motor Manufacturing North America, said they’re not looking. On June 11, America’s fourth-largest automaker broke ground on a $220-million engine manufacturing plant in Huntsville, Ala., the company’s first V8 manufacturing facility outside Japan.

“We’re currently producing 1.25 million vehicles a year and we’ll reach our goal of 1.45 million cars and trucks a year through expansions and continued improvement in the production process at our existing plants,” the Toyota spokesperson said.

Roger Ormisher, vice president of public relations for Volvo Cars of North America, said the company’s interest in “looking for a new factory would be highly unlikely at this stage.”

“We’re already expanding our plant in Sweden, and because we’re part of the overall Ford group, we have access to Ford production sites worldwide,” he said. “There have been no rumors within the company, either.”

Chris Hosford, spokesperson for Hyundai Motor America, importer and distributor of Hyundai vehicles, said all manufacturing takes place in Korea — at this time.

“The chairman has said that he is considering the option of building a plant in the U.S., but this is simply in a preliminary stage,” he said. “It’s possible there’s something going on that I’m unaware of, but at the present time, that’s all I know. I do know that Mr. Ahn, president and CEO of KIA Motors, has said that Hyundai is looking in the southeastern U.S., but I have not seen that confirmed from Korea.”

It has been widely rumored — and partially confirmed — that the Daimler division of Chrysler is looking at a 1,500- to 1,800-acre site along I-20 in Newton County to manufacture military vehicles, pending the company’s success in securing contracts with foreign governments.

Trevor Hale, a spokesperson for DaimlerChrysler, said he couldn’t discuss current projects.

“I wouldn’t even confirm that we’re looking,” he said.

Economic developers are, understandably, tight-lipped.

Sherry Vance, spokesperson for the Mississippi Development Authority (MDA) said it’s not the state agency’s policy to disclose information about companies looking at Mississippi.

“However, since the announcement of the Nissan project, Mississippi has gained worldwide attention as a competitor for the automotive industry and other industries, and with the passage of the Advantage Mississippi Initiative, we hope to have continued interest from companies looking to expand or locate in our state,” she said.

Buzz Canup, project director for the Nissan Implementation Team of the Mississippi Major Economic Impact Authority, a division of MDA, said, “It’s not particularly because companies want to hold a project in secrecy. I’ve worked with companies that have been concerned about the impact of new projects on the stock market, shareholder values, labor relations, competitor knowledge and other issues.”

“There are an awful lot of reasons why companies would not want to let others know what they’re doing,” he said. “I worked on a project in another state for Michelin, and they began production before anyone even knew they were there. But that’s playing it really close to the vest.”

The Michelin project was known in Mississippi as “Project Cougar.” Carlos Ghosn, who joined Michelin in 1978, served as chairman and CEO of Michelin North America until he joined Renault in 1996 as executive vice president and was promoted to CEO of Nissan Motor Co. in June 1999. When Nissan began looking at a site in the South, it is said among economic development circles that he told Mississippi to “dust off Project Cougar.”

Last month, Lott told attendants at the annual meeting of the East Mississippi Business Development Corporation in Meridian that “the part of Mississippi that has been underutilized and hasn’t sufficiently broken through and started to attract industry and create jobs is this section east of Jackson, along I-20 to Meridian.”

In the last decade, Interstate 20, originating in Florence, S.C., has become a Mecca for auto manufacturers. In 1994, BMW Manufacturing Corp. opened its first full U.S. manufacturing facility in Spartanburg, S.C., located about 100 miles north of I-20. In Atlanta, a Ford plant, established circa 1970, is located near I-20. So is the Honda plant being built in Lincoln, Ala.

A Mercedes plant, located on I-20 in Tuscaloosa, Ala., opened in 1996 and began an expansion project last year, to be completed in 2003. The Toyota engine plant being built in Huntsville, Ala. is located less than 100 miles north of I-20.

“There’s some rationale for saying that I-20 is rapidly developing into an automotive corridor, somewhat like I-75 did 15 years ago,” Canup said. “It makes a lot of sense that there would be a lot of development along that corridor because I-20 is the easiest east-west route through the Southeast U.S. If you look at most of the new automotive assembly plants that have been built in the last 15 years, Kentucky south is basically where they’ve been built.”

When the Nissan plant swings into production, one-third of all U.S.-made cars and lightweight trucks will be built within a four-state region (Alabama, Kentucky, Mississippi and Tennessee).

In site selection, the trick is finding a location that meets population density requirements, Canup said.

“The driving factor for communities relative to an automotive plant is really based on the population density and the size of the workforce more so than the characteristics of an individual community,” he said.

“Generally, if you’re going to look at an automotive company that’s going to hire about 2,000 people, you wouldn’t want to have more than a 1% increase in the workforce as a direct result of that hiring. In that sense, you’d essentially want to find an area with a workforce of about 200,000 people. That’s not population, that’s workforce, which generally is about 50% of the population. Then, you’d be looking for an area with a population density of about 400,000 people within commuting distance for a 2,000-person plant. That 400,000 density needs to be within a commuting distance for an automotive plant of about an hour and a half, or 90 miles.”

When Canup worked as a consultant on the Mercedes site selection search, he said the only reason Tuscaloosa survived was because of the population density of Birmingham, located 55 miles away.

“That, in essence, qualified Tuscaloosa from a workforce availability perspective,” Canup said.

The city of Meridian, centrally located on I-20 between Vance, Ala., and Madison County, where the Nissan plant is being built, only has 39,000 residents. Metro Jackson, located about 90 miles east of Meridian, has 440,801 residents.

The 90-mile stretch from Jackson to Meridian along I-20 includes Rankin County with 115,327 residents, Scott County with 28,423 residents, Newton County with 21,838 residents and Lauderdale County with 78,161 residents. Across the state line into Alabama, Sumter County, with
Livingston as its county seat, has only 14,798 residents, all based on U.S. Census Bureau 2000 statistics.

“All the ingredients are here for you now,” Lott told EMBDC members. “You can take the lead in Mississippi, you can be the next site where we have major development if you make up your mind.

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