By the BF Staff
From the January/February 2016 Issue
U.S. car sales in 2015 notched a blistering record pace, exceeding the previous high achieved 15 years ago as the low price of gasoline, a recovering economy and low interest rates turbocharged new car sales. In all, automakers sold 17.5 million cars and light trucks in the U.S. last year, a 5.7 percent increase (the average price of each vehicle also increased). Americans overall spent about $570 billion on new vehicles.
With gas selling for less than $2 a gallon nationwide, automakers project a continuation of the robust demand for higher-margin pickup trucks and sport-utility vehicles. These larger vehicles account for more than half of U.S. sales, pushing the average transaction price to $34,428, according to automotive data provider Kelley Blue Book.
However, analysts say higher interest rates and a glut of cars coming off leases (which will crowd used-car lots with late-model vehicles available at discounts) could act as a damper on new-car sales. The industry’s seasonal adjusted annual selling pace fell to 17.3 million in December from 18.2 million the month before, suggesting a slowdown at year-end. Sales should rise this year before falling next year, says industry consultants AlixPartners LLP. Average incentive spending across all automakers rose to $3,063 per vehicle in 2015 from $2,809 a decade earlier, according to Kelley Blue Book and data provider TrueCar Inc.
KENTUCKY: A CENTURY OF LEADERSHIP
Kentucky expanded its automotive industry leadership in 2015 with billions of dollars in investments planned by automakers and parts suppliers, fresh products launched and thousands of new jobs announced.
The Bluegrass State’s automotive industry stretches back to 1913 when the state’s first Model T rolled out of a Ford assembly plant in Louisville, KY.
That early success echoes today, as Ford operates two plants in Louisville. Ford announced in December 2015 its Kentucky Truck Plant will begin production of all-new, aluminum-bodied Ford Super Duty trucks later this year.
Last fall, Kentucky witnessed the rollout of the first American-built Lexus, the ES 350, from Toyota’s flagship U.S. plant in Georgetown, KY. And General Motors announced a half-billion in investments for its Bowling Green Assembly plant in Bowling Green, KY, which produces the Chevrolet Corvette Stingray Coupe and Convertible and the Corvette Z06 Coupe and Convertible, America’s most blistering and cutting-edge family of sports cars.
With accomplishments like those, industry watchers worldwide recognize Kentucky for its deep automotive resources, skilled workers and top-level achievements.
In 2015, automotive manufacturers and suppliers made 80 announcements, promising to bring more than $2.8 billion of investment and nearly 5,400 new, full-time jobs to Kentucky. Automakers in the Commonwealth built 1.2 million of the 16 million vehicles produced in North America between January and November 2015. Among U.S. states, Kentucky ranks in the top three by vehicle production and first nationally by vehicle-production-per-capita. Even more telling, the nature of the 80 projects announced puts Kentucky ahead of the curve in the ever-evolving automotive industry.
From a move to lighter-weight vehicles to upgraded state-of-the-art equipment to the production startup of one of the world’s most popular luxury vehicles, Kentucky continued to make a major impact on the auto industry throughout 2015. That includes research and development for the industry’s future. As a part of the National Network for Manufacturing Innovation, several state institutions are engaged in research to produce strong, lightweight materials, improve battery performance and reduce emissions.
The three automakers with assembly plants in Kentucky—Ford, General Motors and Toyota—all made major announcements this past year, each influencing the industry in its own way.
In May, GM announced a $439 million investment at the Bowling Green plant for technology upgrades and state-of-the-art environmental and efficiency enhancements and a new paint shop. In December 2015, GM announced it would invest an additional $44 million in the plant beginning in early 2016 and would add 36 jobs to increase capacity for its high-performance Z06 models.
In October, Toyota Motor Manufacturing Kentucky unveiled at its Georgetown plant the first-ever Lexus manufactured in the U.S., the ES 350. Production of the world’s top-selling Lexus sedan comes with an investment of $360 million and an anticipated 750 new jobs.
Finally, in December, Ford announced investment of $1.3 billion in its Kentucky Truck Plant in Louisville, bringing with it 2,000 full-time jobs. The massive project prepares the facility to produce the 2017 class of F-Series Super Duty. The new-generation truck moves to a high-strength aluminum-alloy body in response to the industry adopting weight-saving technology to increase capability, performance and fuel economy.
It’s not all about the final product, though. Kentucky’s automotive suppliers notched a historic year as well. Bowling Green Metalforming announced a $261 million expansion, promising 450 jobs, Robert Bosch Automotive Steering plans to invest nearly $85 million in its Northern Kentucky operations, creating a projected 212 jobs, and Dr. Schneider Automotive Systems plans a $13 million investment in Russell Springs, KY, promising145 jobs to produce plastic components. Those represent just a few of the dozens of major announcements by Kentucky’s auto suppliers.
The industry’s shift to lighter-weight materials, including aluminum, tied into multiple product changes, renovations, new-equipment purchases and other announcements from Kentucky’s auto suppliers. In total, Kentucky’s aluminum-related facilities announced more than $379 million in investment and the creation of more than 640 jobs in 2015, proving the state will continue its role as a major player in the auto industry’s changing landscape.
Plastics also grew their presence in the auto industry, which translated into jobs and investments in Kentucky’s manufacturing base last year. Plastic suppliers announced nearly $41 million in investments in 2015, creating more than 350 new full-time positions. Among them, Sabert Corporation in Shepherdsville, KY plans an $8 million investment creating 35 jobs, and ISCO Industries in Louisville is making a $4.3 million investment expected to create 55 new positions.
Manufacturers report an increasing need for skilled workers in a variety of roles. In response, higher education institutions across the state are getting more involved with those very manufacturers to provide a strong, next-generation workforce. Through the Kentucky Federation for Advanced Manufacturing Education (KY FAME), an industry-led apprentice-style program, students gain experience with a potential permanent employer while continuing their education at no cost to the student.
KY FAME started with one chapter in central Kentucky in January 2015 and expanded to eight regions throughout the Commonwealth with well over 100 companies taking part.
Kentucky recognized its rich automotive history—and promising future—with the Kentucky Auto Industry Association’s inaugural AutoVision Conference, held in Louisville in September. The event brought together some of the industry’s brightest minds who shared thoughts on how the state’s automotive sector gained so much ground and where it’s headed. From aluminum lightweighting to self-driving cars and long-lasting batteries for hybrid and electric-only vehicles, speakers provided an inside look at the industry. In their view, Kentucky will see numerous opportunities for automotive-related economic growth in the years to come.
Given Kentucky’s century-long ties to the automotive industry, the past year’s momentous growth in the sector and training of future generations of workers already underway, the state looks to continue its progress, in all likelihood for an entire century to come.
(The Kentucky section of this Industry Focus was written by Brandon Mattingly).
MADE IN MISSISSIPPI MEANS QUALITY
When Nissan opened an automotive assembly plant in Canton, MS in 2003, the company propelled the state’s newly formed automotive industry into the global spotlight. Prior to Nissan’s opening, no automobile had been produced in Mississippi. Today, the state is a leader in the Southern Automotive Corridor, and growth within its thriving automotive industry shows no signs of slowing down.
Over the last year, Mississippi welcomed new automotive companies, and existing manufacturers celebrated several significant milestones—a testament to the state’s productive workforce, which strives to ensure companies’ long-term growth and success in Mississippi.
More than a decade after Nissan Canton began production, the world’s eyes were once again on the plant in 2014 when it began production of Nissan’s crossover SUV, the Murano. The addition of the Murano to the plant’s production line-up marked the first time the vehicle had been produced in the U.S., and it positioned the facility as the global source for Murano production. In Nov. 2015, Nissan Canton once again made global headlines when company officials launched the much-anticipated, newly redesigned 2016 Nissan Titan XD pickup truck. The Titan has been in production since 2004 and is assembled exclusively at the Canton facility. Also in 2015, the plant celebrated production of its 3 millionth vehicle, another exciting milestone for the plant, its workforce and the entire state of Mississippi.
In 2011, Toyota Motor Manufacturing Mississippi opened its doors, further strengthening the state’s impressive automotive portfolio. Today, TMMMS’s 2,000 employees are engaged in the production of one of the world’s best-selling vehicles of all time, the Corolla. In Feb. 2015, the plant celebrated the production of its 500,000th vehicle—a milestone TMMMS met faster than any other Toyota facility in the U.S. and proof of the hard work TMMMS’s workforce has exhibited to meet consumer demand since the plant opened.
Yokohama Tire Corporation is one of the newest automotive companies finding its competitive edge in Mississippi. Yokohama announced in 2013 it would locate a commercial truck tire plant in West Point, MS, the company’s first in the country to be built from the ground up. In Oct. 2015, Yokohama Tire Manufacturing Mississippi, LLC officially opened for business, as the company celebrated the grand opening of Phase I of the plant—a $300 million corporate investment that represents the creation of 500 jobs. Potential future expansions are expected to increase Yokohama’s investment and employment levels up to four times in scale in accordance with future growth.
In Dec. 2015, Mississippi welcomed Germany-based hago Automotive Corp., producer of laser-welded sheet metal and stamped automotive parts, as the company announced it was locating operations at the Yellow Creek Port in Iuka, MS, in Tishomingo County. The project represents a corporate investment of $10 million and is creating 80 jobs.
From Iuka, hago will perform automated stamping with up to 400 tons of processing power, transfer stamping with up to 630 tons of processing power, several laser-welding applications, parts washing and cleaning, parts processing and the production of assemblies. Currently, hago supplies parts to BMW’s manufacturing plant in Spartanburg, S.C.
Mississippi knows companies rely on a strong competitive advantage to achieve success in today’s dynamic economy, and global leaders across a wide range of industry sectors are finding that advantage in the state. All across Mississippi, economic development professionals at the state, regional and local levels work together to provide a business environment that supports innovation, growth and longevity. This teamwork involves using the state’s available resources to meet the unique needs of today’s businesses, including offering customized workforce training through Mississippi’s nationally ranked community college network to ensure Mississippi’s workers not only meet—but exceed—companies’ expectations.
Mississippi’s competitive energy rates and operating costs combine with the state’s seamless, one-stop permitting process to further strengthen the supportive business climate companies expect from a Mississippi location. The state’s award-winning infrastructure and proven logistics capabilities also play a role in the success of companies in the state. Another vital component contributing to that success is Mississippi’s well-integrated, robust transportation network, which guarantees companies can effectively and efficiently move their products to market. Mississippi is centrally located in the fastest growing region of the U.S. and offers ease-of-access to global distribution hub, Memphis, Tenn. The state’s interstate and highway network was ranked eighth best in the country in 2014, and its six interstate highways and 14 federal highways provide companies with single-day roadway access to more than 55 percent of U.S. businesses and major population centers. Additionally, Mississippi’s 15 ports, including two bustling deep water ports on the Gulf of Mexico, also offer quick, convenient access to national and international markets.
Nissan. Toyota. Yokohama. hago Automotive Corp. Toyoda Boshoku. Feuer. BorgWarner. GRAMMER. The list goes on. We invite you to come discover the distinct business advantages offered by a Mississippi location, just as these companies and so many others already have. To join the growing list of automotive leaders that call Mississippi home, visit www.choosemississippi.org, or call (800) 360-3323.
INFRASTRUCTURE, ACCESSIBILITY IN CLARKSVILLE-MONTGOMERY
Strategic location and valuable assets are the foundation of Clarksville-Montgomery County, Tennessee’s appeal as a premier destination for industrial relocation and expansion. Already an established economic powerhouse within the Middle Tennessee region of the United States, concentrated efforts to deliver world class infrastructure and business support have made a name for the area as an international hub of development activity—right in the heart of Auto Alley. Clarksville-Montgomery County’s total package, from a skilled and available workforce to affordable metropolitan living, places this historic locale at the top of site selectors’ lists time and again.
When a company or client is ready to move forward in relocation, Clarksville-Montgomery County has options including acreage for a build to suit, an existing building to retrofit or a speculative building. Today, there are more than 1,100 acres available in the Corporate Business Park North adjacent to the recently announced Google data center facility. Existing buildings range from 2,000 square feet to 575,000 square feet and are available in both commercial and industrial settings.
The Clarksville-Montgomery County Corporate Business Park is zoned M-2 Industrial and is under full ownership of the Industrial Development Board. The master plan for the park is to transition geographically from heavy manufacturing to light manufacturing to office and distribution space on the South end. The southern end has amenities including sidewalks, and attractive street lighting. Enhanced first responder capacity includes a new $3-million EMS and Fire Station. The emergency service area is located across from the Hankook Tire Plant, and includes a combined 10,000 square feet to help service the Corporate Business Park.
Industrial Development Board’s featured building, 1136 Dunlop Lane, is ideal for distribution or light manufacturing and boasts over 150,000 square feet within Corporate Business Park South. The property is expandable by another 90,000 square feet and includes three separate office areas totaling 3,000 square feet on over 18 acres of land. Situated just two miles off I-24 and otherwise serviceable by water, rail and air, 1136 Dunlop Lane is not just a building but also a transportation solution.
All businesses throughout the park benefit from significant savings in both time and expense from site selection to start up with industrial grade gas, water, power and sewer infrastructure already in place. Utilities are attractively priced and highly reliable with Environmental Phase I reports complete. Due diligence is currently being completed on the new North park expansion as well.
‘Service after the sale’ is one of the greatest strengths among the economic development team and prospects are encouraged to explore the many reasons so many national and international companies have chosen to settle in Clarksville-Montgomery County. While the economic development team in Clarksville-Montgomery County works aggressively to recruit new industry, existing businesses are the backbone of the community.
A testament to the favorable environment and support provided, more than 40 manufacturing facilities call Clarksville-Montgomery County home. One of the oldest members of the community is American Snuff LLC, established in 1907—Google and Hankook Tires are the newest.
Google recently announced plans to repurpose an existing industrial site in the Corporate Business Park North to serve as home for the tech giant’s 15th data center. Likewise, in 2013, Hankook selected a prime location in the Clarksville-Montgomery County Business Park South as home for its first North American manufacturing site.
The city and county work closely with the State of Tennessee Department of Economic and Community Development, Tennessee Valley Authority and other regional partners to effectively market the industrial vitality of the region and local incentives are available based on capital investment and job creation, while a skilled and available workforce simplify staffing and recruitment.
Home to Ft. Campbell, one of the nation’s largest military installations, Clarksville-Montgomery County proudly welcomes retiring soldiers to bring their technical skillsets into the local workforce. The local skilled and available workforce is also supported by ready access to higher education and multiple career training facilities in a Right to Work environment. Relocating employees and residents enjoy a high quality of life with metropolitan amenities, abundant schools and low taxes devoid of personal state income tax. For more information, contact Mike Evans at [email protected] or call (931) 647-2331.