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.