State working on Nissan phase two details

by Lynne W. Jeter

Published: June 17,2002

Landing another Nissan North America assembly plant, which some consider the second phase of the Nissan plant being built in Madison County, is not a sure bet. And if an announcement is not forthcoming by June 21, the additional 1,300 to 1,600 direct jobs and hundreds more supplier jobs may go elsewhere. Mississippi is still smarting from the loss of the Hyundai plant to Alabama, and losing the Nissan expansion would be a major setback.

“It’s not a done deal,” said a political observer. “The state needs to get its act together and not botch this project.”

Nissan is also reportedly accepting bids from the State of Tennessee, where the company’s Smyrna plant already produces about 500,000 vehicles per year and is one of the largest automotive production plants under one roof in the U.S. According to sources close to the project, the leading contender for the new standalone assembly plant is in Decherd, Tenn., where the company already has a power train assembly facility, which takes up 100 acres of a 1,000-acre site. It is located approximately 70 miles from the Smyrna plant. The Madison County location is reportedly the company’s second choice, and Nissan is also considering a site near Mexico City and a site in Canada, where a former General Motors plant is located.

“Anything you’re hearing is purely speculative at this point,” said Vicki Smith, a spokesperson for Nissan. “As a general rule, we do not talk about future production plans until there is something definite to announce.”

On June 11, the Mississippi Development Authority submitted its final proposal package to Nissan of approximately $62 million. Details of the proposition were not disclosed, but a source close to Gov. Ronnie Musgrove said that Nissan was expecting a $75-million to $80-million package, which would include workforce training funds, site preparation work and other expenses. Ostensibly, there are two sticking points: the water supply and workforce training dollars.

The water issue is still unresolved for the original project, a 2.6-million-square-foot, $930-million automotive plant being built in Madison County, primarily because of purity and cost issues. If a well is drilled or if water is piped in from the Ross Barnett Reservoir, a treatment plant would be required to purify the water, which would be used in the painting process. If water is tapped from the City of Jackson, a 24-inch line may be necessary to transport it approximately 15 miles to the Nissan plant. The cost: roughly $16 million to $20 million.

That amount is reportedly costlier than the budgeted amount, which MDA officials did not disclose when contacted last week for this story. Sources close to the project estimate the water cost in the phase one proposal was budgeted at roughly $4.5 million. Jackson city officials were unavailable by press time for comment on the plan. To resolve the water issue, MDA may have to request additional bonding from the Legislature above the $295 million in bonds that state legislators originally approved.

“MDA is probably trying to go with a $50-million package with $12 million covering water that should have been covered in phase one, which may not be acceptable to Nissan,” said an anonymous source in the Capitol.

Nissan is reportedly asking for workforce training dollars of approximately $20,000 per employee, the same amount the state guaranteed for the initial 4,000 hires. (The first phase called for an $80-million workforce training package.)

“There’s some difference between what’s being offered and what’s being asked,” said the source. The state’s offer has been said to be about $11,000 per worker. Tennessee is reportedly offering Nissan $20,000 per worker and a superior workforce training program.

Musgrove has been criticized for allowing politics to interfere with Mississippi’s ability to land the Hyundai project, and speculation abounds that the state may lose the second Nissan project for the same reason.

On May 28, a Mississippi delegation traveled to Nissan’s Smyrna plant to listen to the international automaker’s requests for the project. Neither Musgrove nor MDA chief Bob Rohrlack attended the meeting, according to sources.

On June 4, the state made a proposal to Nissan. The next day, Nissan made a counter proposal. On June 6, MDA allegedly told Nissan that additional incentives could not be added to the proposal because it lacked legislative approval. Meetings on June 7 and June 8 were cancelled, but by whom is unclear.

When asked about the pending proposal, MDA spokesperson Sherry Vance said confidential information concerning economic development projects could not be disclosed. The governor’s office did not return repeated phone calls by press time.

With the completion of the Nissan Revival Plan (NRP) a year ahead of schedule, Nissan CEO Carlos Ghosn is on the fast track. In a May 9 speech, “Fiscal Year ‘01 Business Review,” Ghosn said, “At the end of FY01, our net automotive debt … is the lowest it has been in the past 24 years.”

Contact MBJ contributing writer Lynne W. Jeter at (800) 993-3392 or lwjeter@yahoo.com</a.


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