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Official: Automotive support manufacturers looking at Starkville

February 14th, 2012 No comments

Oktibbeha County Economic Development Authority President Jon Maynard said at a meeting of that organization Monday that two manufacturers with ties to the automotive industry have started kicking the tires on possible sites in the Starkville area.

According to a story on the Starkville Daily News‘ website, Maynard declined to name the companies, citing confidentiality agreements. Starkville is almost exactly halfway between Canton and Blue Springs, and would make a good geographical match for a company that wanted to do business with Nissan and Toyota. Four-lane highways connect the three cities, so this will certainly be something to keep an eye on.

Maynard also updated the progress on a few other projects that have been simmering for a while in Starkville, including the mixed-use CottonMill Marketplace. The SDN has it covered here.

Beef plant trial will lay bare the inner workings of complete institutional failure

November 20th, 2011 No comments

Trial set to begin on Dec. 5

Another layer of the beef plant collapse will be peeled back starting Dec. 5 in Hinds County Circuit Court.

The state of Mississippi, its now-defunct Land, Water and Timber Board and the Mississippi Development Authority are suing Facility Construction Management Inc. in effort to recoup some or all of the $54 million the state lost when the cull cattle plant in Oakland closed shortly after it opened in 2004.

Construction of the beef plant started in summer 2002, with Mississippi Beef Processors and its president Richard Hall in charge of the project. Community Bank loaned MBP $21 million, plus a $6.5 million line of credit for operating costs, to build the facility. The state guaranteed the loan through the Mississippi Development Authority.

In December 2002, Hall told the state, before the bank had issued the first loan advance, that the available funds would not cover the cost of construction. Unwilling to bear the risk of the increased cost, Community Bank suspended construction funding, and the state and the bank hired Georgia-based Facility Construction Management Inc. (FCMI) to evaluate the project’s design and its financing structure.

FCMI said then that the construction and budgeting process was deeply flawed and offered to oversee the project build-out for a total compensation package of $2.59 million. The state and the bank accepted that proposal, and contracts were signed in early 2003. This agreement increased the loan amount the state had guaranteed from $21 million to $35 million, according to the complaint.

“It was obvious that Facility Group had wanted to get involved in this project,” said Dorsey Carson, attorney for the plaintiffs. “Facility Group was chosen because they came in and put on a dog-and-pony show and showed how much experience they had in this area. But instead of doing what a design professional should do, they just took over every portion of the project, including renegotiating the contracts. They were the state’s insurance policy. Everybody wanted to make sure this thing succeeded.”

In a project management agreement submitted in July, 2003, the complaint says, FCMI’s total fees rose nearly $4 million, to $6.57 million. The complaint says that figure was the “guaranteed maximum price” FCMI would charge to build and deliver a fully operational beef plant, and that the company would cover any cost over-runs. The guaranteed maximum price to build the plant in its entirety under that agreement was $43 million.

The complaint alleges that FCMI failed to cover the eventual cost overages, did not pay $1.7 million to subcontractors, and pushed the project toward completion even though it knew it was flawed — the complaint accuses the company of hiding an internal memo that pegged the plant as a “money pit” — in order to enrich the company at the expense of Mississippi taxpayers. The complaint also accuses FCMI’s executives of using fraudulent billing practices to receive compensation for work that was never done, money the complaint says was partly used to defray improper contributions to the campaigns of Mississippi politicians.

“Internally they had their own questions about the viability of the plant,” Carson said. “I consider that memo to be a smoking gun. That memo went to the No. 2 guy in the company. It may not have killed the project, but it certainly would have made everybody take a hard, hard second look at it.”

The state is seeking a declaration that FCMI, its subsidiaries, and executives Robert Moultrie, Nixon Cawood and Charles Morehead were in breach of their contract with the state; an order that they pay any outstanding debts to contractors and subcontractors; and punitive damages resulting of the failure of the project. Cawood and Moultrie eventually pleaded guilty to making an illegal contribution to then-Gov. Ronnie Musgrove, and Morehead pleaded guilty to withholding information in a federal investigation of the plant. All have been released from federal prison. Hall pleaded guilty to mail fraud and money laundering. His original sentence of 96 months was reduced to 64 months because of his cooperation with investigators. Hall is scheduled for release in May 2012, according to the federal Bureau of Prisons website.

Attorney General Jim Hood’s spokesperson Jan Schaefer said Hood’s request for federal grand jury records from the investigation of Moultrie, Cawood, Morehead and Hall had not yet been turned over to Hood’s office. Hood requested the records in October, with plans to use them for trial preparation.

The complaint says total loss to the state is in excess of $54 million, not including loss of revenue from the beef plant’s operation.

“They turned it over (when it opened) and they walked away from it,” Carson said, referring to the plant’s short operating time before closure.

“Facility Group, to cover themselves, puts out press releases blaming Richard Hall for everything. Richard Hall became the scapegoat for all this. He did commit fraud, but he committed small-time fraud. These guys are big-time crooks.

“(The agreement) essentially was one where they were acting as the owner and they were acting as the construction manager and the designer, and they had the checkbook. You couldn’t have a situation where the fox was guarding the henhouse any better than the way they set it up.”

Carson said he expects FCMI and its attorneys at Ridgeland-based Butler Snow to use a similar defense once the trial gets underway. Judge Winston Kidd will preside when jury selection starts Dec. 5.

“They’re going to blame it on Richard Hall, they’re going to blame it on the Legislature,” Carson said. Carson added that FCMI’s witness list could potentially include a who’s who of state political and economic development officials, if the presiding judge allows it.

“I’m sure they’re going to try to turn it into a political circus. This thing didn’t fail because there was no product. It failed because of design and construction errors. Everything else has complicated it, but at its core, this is a design and construction negligence case.”

Attorneys for FCMI declined comment.

Categories: Manufacturing, News Tags:

Want a job at Toyota? Get in line

November 4th, 2011 No comments

The Mississippi Department of Employment Security announced Friday afternoon that 41,000 people (!) have applied for the roughly 2,000 jobs that will be available at the Toyota plant in Blue Springs. The agency started taking applications in August 2010.

The facility will roll the first Corolla off the assembly line Nov. 17 in a ceremony.

Folks from every county in Mississippi and 44 states across the U.S. sent in their applications. All the production jobs have been filled, but the company is still accepting applications for maintenance jobs.

While 38,000 people will be disappointed to learn they won’t be working for Toyota, you’re not totally out of luck if you live in North Mississippi. The MDES is still accepting applications for Schultz Extruded Products, a pipe manufacturing plant in Tunica; and for KiOR, the biofuel facility in Columbus. The agency will soon start accepting applications for the Winchester firearms facility in Oxford. Combined, those projects represent a touch more than the job count for Toyota.

Here’s the full release from the MDES:

The Mississippi Department of Employment Security has collected more than 41,000 applications for Toyota’s plant near Tupelo.

Toyota attracted applications from all 82 Mississippi counties, 44 other states and Puerto Rico.

The plant is expected to employ about 2,000.

Working through the MDES website, Toyota continues accepting applications for maintenance jobs at the Blue Springs plant. Toyota is no longer accepting applications for production jobs at the plant.

“We’ve collected applications from every corner of the state and I’m sure we’ll continue to draw more,” MDES Deputy Executive Director Stan McMorris said.

“This has been a highly successful partnership with Toyota,” MDES Executive Director Les Range said. “People were able to apply for these jobs from any computer with Internet access — whether that was at home, school or in our WIN Job Centers.”

In August 2010, MDES began collecting online applications for Toyota. The agency has maintained an online jobs database for years, but the partnership with Toyota is among the agency’s early ventures into allowing customers to complete job applications online.

“Making it easier to apply for more jobs, we’re expanding our online job-application offerings,” Range said. “As with our other services, accepting online applications for companies is a service we offer at no charge to businesses and job seekers.

“Job seekers can also apply for these jobs by calling 888-844-3577,” Range added.

MDES now is accepting online applications from Schulz Xtruded Products LP and Kior Inc. The agency soon will begin accepting online applications for Winchester Rimfire and others.

Categories: Manufacturing, News Tags:

Kewanee still available should Hyundai want it?

October 2nd, 2011 No comments

If Mississippi is to attract another automaker, it will have to assemble a new megasite.

Mississippi Development Authority interim executive director Leland Speed said in a commercial real estate roundtable Sept. 21 that the state currently does not have a megasite assembled that would meet the size and infrastructure requirements of an automotive manufacturer.

Speed’s assertion came in response to a question about the possibility South Korean automaker Hyundai was looking at Mississippi as a possible destination for a facility to produce its best-selling Sonata sedan.

Hyundai builds the Sonata in Montgomery, Ala., and industry speculation for the past several months has been that the facility cannot meet the sales demand for the car.

Speed himself let slip in an interview earlier in September with a Jackson television station that the state had been in contact Hyundai about the company locating here.

He has declined to address it further. Speed said Sept. 21 that at least three automakers are “rumored” to be exploring Mississippi.

“I can’t comment,” he said when asked if Mississippi had been in contact with any of them.

The East Mississippi Business Development Corp. advertises on its website the Kewanee megasite as being available, with utilities like water and sewer and broadband already installed.

EMBDC executive director Wade Jones said his organization is still marketing Kewanee to original equipment manufacturers (OEMs). The site, Jones said, meets the size and infrastructure requirements for an automotive manufacturer or a facility that could build engines or transmissions for an automaker. Jones said the two Class I railroads that service the site and the adjoining interstate highway system make the site ideal for either of those. He said the EMBDC has spent $450,000 on engineering the site, to provide utilities and site work to ensure it’s not susceptible to flooding.

Kia, another Korean automaker, eyeballed Kewanee in 2005, and according to Speed, had decided to locate on the site, but the plant eventually went to Montgomery. The company backed out after it determined the labor force in Meridian and the surrounding area was insufficient, Speed said. Specifically, Speed said automotive companies prefer their workforce account for less than 1 percent of the area’s “labor shed.”

“This is so they can be sure of workforce quality. The week of Katrina they showed and we met with them in Montgomery,” he said. “(Kia told us) we need  to move farther west. So we moved twice, once on east side of Forest and one on west side of Forest. We didn’t own that land. We assumed we’d be able to assemble it by paying insane prices and, if need be, use eminent domain. They finally wanted it moved to Pelahatchie. We just couldn’t let them get that close (to Nissan). We were working Toyota at the same time. We figured we weren’t going to get but one or the other. So we went with Toyota. It worked out.”

Jones said two recent studies the EMBDC commissioned show more than 29,000 people who are either currently unemployed or under-employed are available within a 65-mile radius of Kewanee. That combined with the four community colleges in the area, he said, should put to rest any workforce concerns a prospect would have.

“We know we can supply the workforce,” Jones said.

Hyundai senior management told the automotive blog Auto Pacific last summer that it would consider building another U.S. facility when Hyundai and Kia sold more than 900,000 units per year in the U.S.

In 2010, the companies combined to sell just shy of 847,500 units stateside. The Montgomery facility, according to the company, has the ability to produce 400,000 units annually, and is at capacity. Hyundai is already importing its midsize Elantra from Korea to meet its demand, and Kia has added a third shift at its West Point, Ga., facility, which makes crossover sport utility vehicles for Kia and Hyundai.

Auto Pacific hypothesized that since Hyundai and its subsidiary Kia already had plants in Alabama and Georgia, it had likely reached the limit of public assistance in each of those states, which could bolster Mississippi’s case.

What could possibly work against Mississippi are the two automakers – Nissan and Toyota – that already call the state home.

Generally, Speed said, automakers prefer not to be within 90 miles of one another. In the case of Nissan and the Kia facility the state missed out on, both companies had reservations about Kia’s wage scale, which was $10 less per hour than Nissan’s.

“What you’re doing is just begging for a union to come into that site,” Speed said. “That’s a formula for trouble.”

What also puts Mississippi at a disadvantage, Speed said, is the state’s inability to quickly assemble a megasite should the need to do so arise.

Hyundai in Mississippi — real deal, or eminent domain rallying cry?

September 16th, 2011 4 comments

Jackson television station WLBT’s Bert Case may have stumbled upon a major scoop Thursday during the course of an on-camera interview with MDA interim executive director Leland Speed.

Case was asking about the eminent domain initiative that will appear on the November ballot when, apparently, Speed mentioned the possibility of South Korean automaker Hyundai building a plant in Mississippi that would produce its Sonata sedan.

I first got wind of this about 3 p.m. Friday, and I’ve been calling everybody I think might know something since.

Two folks who spoke on the condition of anonymity, and who would know if negotiations were getting serious, said the same thing: They don’t know anything, and my mention of it is the first they’ve heard of anything relating to Mississippi getting a third automotive manufacturing plant.

Speed declined further comment to Case after the slip, and there’s zero chance Gov. Haley Barbour’s office will do anything different.

If you’re a conspiracy theorist, you could reason that Speed intentionally floated the idea that Hyundai is looking at Mississippi as an example of the damage he says the restriction of the use of eminent domain for private enterprise would cause the state’s economic development efforts. I’m not saying that is or isn’t the case. I’m just saying that the few times I’ve talked with Speed about taking away the state’s power of eminent domain for economic development, he’s been vigorous in his assertion that it would take the state out of the running for mega projects like a Hyundai facility. This would be the perfect way to prove that point.

This will be worth keeping eyes and ears on.

Categories: Eminent domain, Manufacturing, News Tags:

MDA, GreenTech finalizing incentive package

August 14th, 2011 No comments

A Q&A with GreenTech president Terry McAuliffe that appeared in early August on the Washington Post‘s website has a lot of the same information the Mississippi Business Journal has reported since the first part of this year.

In it, McAuliffe says the production of the company’s MyCar neighborhood electric vehicle will start in Horn Lake late this year, with the first production run scheduled for sale in Denmark. The Tunica facility, where GTA hopes to build its midsize sedan and sport electric hybrid cars, is under construction. The company will also produce parts in the U.S. for a Chinese automaker.  McAuliffe’s claims back up what GreenTech CEO Charles Wang said in an emailed statement to the MBJ earlier this summer. Neither man put a timetable on production starting in Tunica. Site work there started a few months ago.

What’s new, though, is McAulife’s mention of an incentive package the company and the state are putting together. Since the groundbreaking ceremony for the Tunica facility nearly two years ago, the Mississippi Development Authority has waited for the company to raise private capital – at least some of it through the EB-5 Investment Visa, which grants permanent residency to foreign investors who pump at least $1 million into an economic development project, or at least $500,000 into one in an economically depressed area.

That is no longer the case. MDA spokesperson Melissa Medley said last week that the economic development agency and GreenTech are applying the final touches to an incentive package, and hoped to have it finalized and a memorandum of understanding signed in the next few weeks. Medley did not release details of the arrangement.

“They’ve met all the requirements we’ve set for them so far,” she said, without elaborating.

Categories: GreenTech, Manufacturing, News Tags:

MDA, GreenTech finalizing incentive package

August 9th, 2011 No comments

A Q&A with GreenTech president Terry McAuliffe that appeared over the weekend on the Washington Post‘s website has a lot of the same information that Magnolia Marketplace has reported since January.

The production of the company’s MyCar neighborhood electric vehicle will start in Horn Lake late this year, and the Tunica facility, where GTA hopes to build its midsize sedan and sport electric hybrid cars, is under construction. We’ve known that for a while now.

What stood out, though, is McAullife’s mention of an incentive package the company and the state are putting together. It’s notable because since the groundbreaking ceremony in Tunica nearly two years ago, the Mississippi Development Authority has sat back and waited for GreenTech to raise private capital.

That is no longer the case. MDA spokesperson Melissa Medley said Tuesday afternoon that the economic development agency and GreenTech are indeed applying the final touches to an incentive package, and hoped to have it finalized and a memorandum of understanding signed in the next few weeks. She did not release details, but it’s common sense to think that the numbers won’t be very big. Maybe they will. We’ll just have to wait and see.

To read the full Q&A with McAuliffe, click here.

Wang: GreenTech on track for production this year

July 20th, 2011 No comments

In a couple months, it will have been two years since GreenTech Automotive CEO Charles Wang showed up in Tunica and announced his plans to manufacture electric hybrid sedans and sports cars there.

Since then, GreenTech has acquired a company that built the MyCar, a neighborhood electric vehicle, and said it would build that in Horn Lake in the old Dover Elevator building, hopefully by the end of the third quarter.

We recounted all of that in a story in this week’s Mississippi Business Journal. What didn’t make the story is any comment from GreenTech, due to us not having received a response from a company spokesperson before we sent the paper to the press.

Tuesday afternoon, we got a reponse to a list of questions we submitted. Among the questions were if the MyCar production was still scheduled to start this year, if construction had started on the Tunica facility, what sort of timetable GTA had for starting production in Tunica, and for an update on the raising of private capital via the EB-5 Visa investment program. Through the EB-5 program, foreigners can acquire permanent residency status by investing a minimum of $1 million into an economic development project in the U.S., or $500,000 in a project in an economically depresseed area.

Tunica would qualify as an economically depressed area, so we’ve been operating under the assumption that EB-5 money related to its GreenTech facility would have to meet the $500,000 minimum. We’ve been unable to confirm that, though, because GreenTech has been short on details in the rare public comments it makes.

The same was true of its latest offering.

“We are making progresses in accordance with our business plan and we will have our SOP (start of production) this year,” read an emailed statement attributed to Wang. “We have already begun construction in Tunica.”

So it sounds like the MyCar will start rolling off the lines in Horn Lake sometime this year; whether it’s by the end of the third quarter is still unclear. And Tunica? Construction has apparently started on the facility, but when production will start is a secret only GreenTech knows, and it’s not telling.

Elevance heads to Natchez, brings 165 new jobs

June 7th, 2011 No comments

Gov. Haley Barbour has just announced in Natchez that Illinois-based Elevance Renewable Sciences has purchased the old Delta BioFuels facility. The company will revamp and expand the 800,00 square-foot building so it can make its specialty chemicals for use in personal care products, detergents, plastics, lubricants and a few other things.

Magnolia Marketplace first reported Friday night that there would be a “major” economic development announcement in Natchez today. For Natchez, 165 new jobs over a five-year, multi-phased rollout would qualify as major. The Natchez and Adams County area has spent the past decade watching its major industries leave town, with probably the most crushing blow coming in 2001 when the International Paper mill shut down.

Here’s the full release from Barbour’s office:

NATCHEZ – Gov. Haley Barbour and executives from Elevance Renewable Sciences Inc., creator of high-performance renewable specialty chemicals for use in personal care products, detergents, plastics and lubricants, announced today the company has acquired the Delta BioFuels facility in Adams County. The company intends to convert the facility to a biorefinery and derivatives operation in a multi-phase project that will involve an investment of more than $225 million and will create 165 full-time jobs over the next five years, in addition to 300 construction jobs.
 
“Elevance’s decision to locate here in Mississippi results in a significant investment in the area and its economy, as well as in the local workforce,” Gov. Barbour said. “Job creation and retention is vital to a healthy economy, and I thank the company for creating these new jobs for southwest Mississippi’s residents. I am delighted to welcome Elevance to Natchez and Adams County.”
 
Elevance plans to expand the existing 800,000-square-foot refinery, which is located in Natchez, in multiple phases over the next five years. The result will be a world-scale biorefinery and derivatives operation.
 
“We are pleased to be coming to southwest Mississippi to build our first North American manufacturing facility. We plan on deploying Elevance’s innovative technology here to bring competitive manufacturing and high-value jobs back to the United States,” said K’Lynne Johnson, chief executive officer of Elevance. “These operations will complement our joint venture with Wilmar International in Asia and expand our global footprint. By building biorefineries in multiple geographies, we are responding to our customers’ demands for innovative environmentally friendly products in a cost-effective and scalable way.”
 
The Mississippi Development Authority worked with company and local officials to help facilitate the project. Through the Mississippi Industry Incentive Financing Revolving Fund, MDA provided assistance for upgrades at the Natchez/Adams County Port, as well as a $25 million loan to the company. Additionally, the county provided assistance for upgrades to the port to support this project.
 
“Today marks a milestone for Natchez and Adams County, and I couldn’t be more pleased that Elevance has chosen to locate its newest operations here,” said MDA Executive Director Leland Speed. “This announcement reinforces the fact that Mississippi has a business climate in place to meet the needs of any company. I thank Elevance for its investment in Natchez, Adams County and the entire state of Mississippi, as well as for its confidence in and commitment to Mississippi’s workers.”
 
Headquartered in Bolingbrook, Ill., Elevance Renewable Sciences Inc. creates valued specialty chemicals from natural oils. Using a Nobel Prize-winning technology called olefin metathesis, the company creates high performance ingredients for use in personal care products, detergents, fuels, lubricants and other specialty chemicals markets. To learn more about Elevance, please visit the company’s website at
www.elevance.com.

Toyota reveals production schedule; Blue Springs still on track for fall opening

April 25th, 2011 No comments

Lost in the Easter weekend shuffle was a pretty interesting nugget from Toyota about its production schedule in Japan and North America in the wake of the earthquake and tsunami.

Very early Friday morning — specifically, 1 a.m. Mississippi time — the company made known its plans to deal with the production issues it has experienced the past two months or so.

Here’s the gist, according to a Toyota press release: New vehicle production will begin to get back to pre-disaster levels as early as July in Japan, and in August in North America. By November and December, production should be back to normal here and overseas.

Obviously, you need to apply the best-laid-plans theory to that. There are a million different things that could happen between now and then that could throw the whole situation into another round of chaos.

From the beginning, stateside Toyota officials have maintained that Blue Springs, scheduled to begin making Corollas this fall, would not be affected by what’s happened in Japan. About 20 percent of the parts Blue Springs workers will use to make the Corolla come from Japan.

The latest production schedule does not change that, according to a Blue Springs spokesperson.

The current situation is having no impact on Toyota Mississippi’s construction progress or the planned start of production this fall,” Emily Holland wrote in an email Monday morning. “We are on schedule and looking forward to rolling a car off the line in a few months.”

Again, apply the best-laid-plans theory. In the three years Magnolia Marketplace has covered Toyota, it’s been our experience that the company keeps a stiff upper lip in situations like this, right up to the announcement to the contrary (the original delay of the plant’s opening springs to mind as a good example). We’re not saying that will happen here. In fact, everything points toward it not happening.

Just something we’ll be keeping an eye on over the summer.