By the BF Staff
From the January/February 2017 Issue
Tesla, Mazda, Toyota, General Motors, Ford, Fiat Chrysler, Honda, Hyundai, Kia, BMW, Mercedes-Benz, Mitsubishi, Nissan, Volkswagen and Subaru all have U.S. manufacturing facilities. Many of these manufacturers also have engine and transmission plants and are conducting research and development, design and testing. Now comes the next stage of the game. The automotive industry is in the process of facilitating partnerships of the future—for the future.
Many automakers, including General Motors, Nissan, BMW and Ford are in the process of developing self-driving cars. And these are not the only advances being made. But, in order to merge the best in cars with the best in technology, forces must be joined.
For their future endeavors, General Motors acquired Cruise Automation—a developer known for creating an aftermarket product that allows for the conversion of certain types of cars into autonomous vehicles for highway driving. GM also has recently created a team dedicated to self-driving car technology, including electrical design, controls and software and safety integration; has added Wi-Fi to many Buick, Chevrolet, Cadillac and GMC models using an AT&T 4G radio module; and is preparing to roll out a level 2 semi-autonomous (two primary control functions are automated) feature known as Super Cruise. Further, GM eventually plans to launch a network of self-driving cars within Lyft’s service that can shuttle passengers without a driver, and is developing a car-sharing service to attract customers who do not have vehicles.
Another dynamic duo is Nissan North America and NASA. The two have a contract to develop and test zero-emission autonomous cars at NASA’s Ames Research Center.
“All of our potential topics of research collaboration with Nissan are areas in which Ames has strongly contributed to major NASA programs,” said director of Ames, S. Pete Worden. “Ames developed Mars rover planning software, robots onboard the International Space Station and Next Generation air traffic management systems to name a few. We look forward to applying knowledge developed during this partnership toward future space and aeronautics endeavors.”
And while Nissan is busy with the space giant, Audi has joined with chipmaker, Nvidia Corp., to bring a self-driving car to market in 2020. The partnership is an expansion of the companies’ work to introduce an Audi A8 semiautonomous system later in 2017, called the traffic jam pilot. It uses Nvidia hardware and software to allow a driver to hand off control of the vehicle at speeds of up to 35 miles an hour (in certain conditions).
And in other vehicle technology news, Volvo and Microsoft have struck a deal to put Skype conference call functionality inside select Volvo cars. This Skype for Business will be integrated into the large center dashboard display on new Volvo 90 Series cars, allowing drivers to view upcoming meetings and join calls but without video capability. Volvo stated that its partnership with Microsoft also includes exploring future integrations with Cortana, Microsoft’s intelligent personal assistant and said the intent is to add “seamless voice recognition and contextual insights to support peoples’ daily lives by actively predicting their needs.”
The BMW Group, Intel and MobilEye, the largest supplier of cameras for self-driving cars, also have joined forces and expect to test autonomous cars on roads sometime in the latter part 2017. They also are producing scalable architecture for autonomous driving that can be used by other carmakers or developers whether they need individual key integrated modules or a complete end-to-end driving solution.
The list goes on and on with Uber working with Volvo and Waymo, Google’s self-driving car company, dealing with Honda. And if the current race to the autonomous road is any indication, there will be many more partnerships to come—with the game ever changing and technology always advancing.
MISSISSIPPI AIMS FOR AUTOMOTIVE SECTOR THAT IS SECOND TO NONE
Mississippi quickly is becoming an automotive manufacturing mecca, consistently paving the way with impressive milestones. One milestone was Continental Tire the Americas, LLC’s decision to locate in Hinds County, investing $1.45 billion and creating 2,500 jobs. The announcement by the world’s fourth-largest tire manufacturer nabbed Mississippi the Business Facilities’ Gold Award for 2016 Economic Development Deal of the Year. The announcement significantly reasserted Mississippi’s leadership position in the Southern Automotive Corridor.
The year included many other industry milestones. Yokohama Tire, Feuer Powertrain and hago Automotive celebrated grand openings in North Mississippi. Continental Tire broke ground at the future plant site. Nissan debuted the newly redesigned Nissan Titan XD pickup truck and produced its 3-millionth vehicle while Toyota celebrated five years of production. The Feuer facility in Tunica County became the company’s first U.S. manufacturing operation and headquarters. The Yokohama Tire plant in West Point was the company’s first plant in the U.S. to be built from the ground up.
Year in and year out, Mississippi’s contributions to the automotive industry include Toyota and Nissan automobiles and PACCAR trucks. The state produces more than half a million vehicles per year with a workforce trained by the state’s highly ranked community college system. More than 200 automotive-related manufacturers call Mississippi home and employ more than 20,000 skilled workers.
Nissan North America was the catalyst to recruit automotive manufacturing companies to Mississippi after becoming the state’s first original equipment manufacturer in 2003. A 2016 report from the National Strategic
Planning and Analysis Research Center details the economic impact of the auto giant. The analysis concludes the plant has brought more than 25,000 direct and indirect jobs and directly employed more than 6,400 Mississippians. This exemplifies the success automakers experience working with and in Mississippi.
To strengthen the automotive sector, the state takes an innovative approach to building a next-generation workforce with robust research universities and a top-ranked community college system. Mississippi State University’s Center for Advance Vehicular Systems focuses on improving engineering, manufacturing and design technologies, while the School of Polymers and High Performance Materials and the Mississippi Polymer Institute at University of Southern Mississippi continue to be national leaders in the study of composites, advanced materials, polymers and plastics. In addition, Mississippi’s community colleges work directly with companies, providing pre-employment training and customized training programs. These efforts ensure workers are ready to contribute to a high quality product on Day 1.
To strengthen these partnerships between industry and educational institutions, the Mississippi Legislature enacted the Mississippi Works Fund during the 2016 Legislative session. The fund allows the state’s community college system to enhance existing customizable training programs to more effectively meet the needs of companies. The fund allocates $50 million over 10 years for workforce training. Seventy-five percent of the funds are allocated toward new job creation, while 25 percent are allocated for existing workforce training and workforce certification.
The Mississippi Legislature also passed the Corporate Franchise Tax phase out. The legislation encourages corporate competitiveness and expansion by eliminating the state’s corporate franchise tax over a 10-year period starting in 2018. The law reduces the current $2.50 tax for each $1,000 of capital by $.25 a year, with the phase out completing in 2027. The phase out also includes an exemption on the first $100,000 of capital.
The Corporate Franchise Tax phase out and Mississippi Works Fund join an extensive portfolio of existing state business incentives, creating a pro-business climate second to none. As a top 10 state for low cost of doing business, low union membership rate, speed of permitting and competitive utility rates, Mississippi is a prime location for automotive-related companies looking to drive investment.
To learn more, visit www.mississippi.org, or call 1-800-360-3323.
ALABAMA AUTO PRODUCTION HITS RECORD HIGH IN 2016
Alabama’s auto production climbed to a new record high in 2016, as workers at the state’s three auto assembly plants kept up a brisk pace of building SUVs, pickups and sedans for markets around the world.
Honda, Hyundai and Mercedes-Benz factories in Alabama combined to produce at least 1,048,597 vehicles, according to year-end figures from the companies. The tally is approximate because some numbers are preliminary. The total represents a 1.4 percent increase over 2015, when the automakers topped the 1 million mark for the first time and set the previous annual record.
“Alabama’s auto industry continues to be a powerful force for the companies that have planted deep roots here, as well as for the skilled, dedicated workers of our state,” said Greg Canfield, secretary of the Alabama Department of Commerce. “There’s also a robust pipeline of new automotive jobs, investments and products, so we expect production to remain strong in the years to come.”
Honda Manufacturing of Alabama set new marks for output for 2016, with an estimated total production of 369,576 vehicles and engines, a record high for the Talladega County facility. Customer demand has been strong for the redesigned 2017 Ridgeline pickup, which made its debut on Honda’s Alabama assembly lines last year and is now one of three finalists for the North American Truck of the Year. Honda officials also cited the popularity of the rest of its Alabama lineup, including the Pilot SUV, Odyssey minivan and Acura MDX sport utility. 2016 marked the 15th anniversary of the company’s production startup in the state, and workers produced the 4 millionth Alabama-built Honda.
Hyundai turned out 379,021 cars and SUVs at its Montgomery plant in 2016, down slightly from the previous year’s total of 384,519 vehicles. The automaker’s Alabama workers also took on a new model in 2016: After a $52 million investment, the Santa Fe SUV began rolling on Hyundai’s Alabama assembly lines in June, joining the Sonata sedan and Elantra compact. The move marked a return to the plant for the Santa Fe, which had been shifted to a plant in Georgia in 2010.
Mercedes-Benz U.S. International’s Tuscaloosa County operation reached its stated annual capacity of 300,000 vehicles. As is customary, the German automaker will announce an exact production tally for its Alabama operation later this year, so it did not provide a preliminary year-end figure. 2016 also brought major changes to the Mercedes plant, as work continued on a $1.3 billion, 300-job expansion. The project is setting the stage for the next generation of luxury SUVs that will be produced in Alabama.
Meanwhile, another record was achieved at Toyota’s Huntsville engine factory: Toyota Motor Manufacturing of Alabama produced 702,014 engines, an all-time high and an 11 percent increase over 2015. The facility—the only Toyota operation in the world to produce four-cylinder, V6 and V8 engines under one roof—also marked the 15th anniversary of its groundbreaking in Alabama last year. Toyota is scheduled to produce its 5 millionth Alabama-made engine in early 2017.
Two decades after its launch, the auto industry continued to expand in Alabama in 2016. New jobs and millions in capital spending were announced in communities across Alabama last year, in activities ranging from parts production to precision machining and engineering.
“It was yet another very successful and record-breaking year for Alabama’s automotive industry, which continued to grow and add thousands of jobs in 2016,” said Steve Sewell, executive vice president of the Economic Development Partnership of Alabama. “In addition to the great impact the industry has on our economy, the state’s automotive companies continue to bring positive recognition to Alabama, our workforce and climate for business.”
TENNESSEE’S GROWING AUTO TRANSFORMATION
More than 30 years ago, Tennessee’s economy was transformed by the arrival of Japanese automaker Nissan in Smyrna. Now, $30 billion in investment later and five years after the onset of the Great Recession, an exponentially larger and more intensely competitive Tennessee auto industry has begun to grow again under new conditions. This environment presents Tennessee with both opportunities and challenges as it considers how to secure more and better jobs and prosperity in what the state has recognized as a definitive “advanced industry.” As defined by the Brookings Institution’s Metropolitan Policy Program, advanced industries (AIs) like the auto sector are the high-value innovation- and STEM-worker intensive industries that drive regional and national prosperity in the United States.
The Southeast has become a driving force in automotive manufacturing, and Tennessee’s success in this cluster is no accident. The growing supplier list of companies that serve General Motors, Nissan and Volkswagen in Tennessee, and other OEMs throughout the southeast is significant. The automotive sector employs 111,000 workers through 900 establishments. Their ability to reach 76 percent of the major U.S. markets is but one factor in their growth and success here.
Key factors in Tennessee’s success in attracting and expanding the automotive base include: location; workforce; logistical access; abundant, reliable energy; overall low cost of doing business (tax structure); and first-class industrial “certified” sites. The focus and commitment that is apparent from the Governor, The Tennessee Valley Authority, the Regional Industrial Development Associations, local Chambers of Commerce and local officials are why Tennessee has been so successful in locating industry throughout the state. Success breeds success and Tennessee has come to learn what this sector expects and needs in order to flourish.
A major factor that will impact West Tennessee is the development of the Memphis Regional Mega Site. The Memphis Regional Megasite (MRM) in Haywood County and Fayette County, Tennessee, located on Interstate 40, is the premier advanced manufacturing site in the southeastern U.S. The development of the 4,100-acre site is fully backed by the administration of Tennessee Governor Bill Haslam with a total infrastructure investment by the state of $106 million to date. Top Fortune 500 companies have visited the site and recognized its potential.
West Tennessee continues to see opportunities for new and expanding automotive suppliers throughout the region as well. NSK Steering Systems, Toyota-Bodine Aluminum, Arvin Sango and Pacific Manufacturing are just a few of the suppliers that have found success and profitability here. They continue to produce high quality components and grow their workforce and its skill-sets.
State leaders have put a great deal of emphasis on educating and preparing its workforce. Low taxes and utilities are obviously critical factors, but without an educated and trained labor pool, which companies can use, it wouldn’t be as successful. State-of-the-art training programs, skill certification, Tennessee’s Colleges of Applied Technology, its Universities and the Community College systems provide so many resources to produce quality Tennessee workers. Workforce truly sets Tennessee apart from so many others. This enables them to be production leaders with a 16.6 percent increase in production in Tennessee auto plants from 2012 to 2013. Foreign direct investment from Japan, Germany, Canada and the United Kingdom accounts for over $17.5 billion dollars.
Another coordinated effort by the State was the implementation of the Tennessee Select Sites program. This third party certification allows communities to minimize as much risk as possible regarding the development of their industrial properties. Communities that have earned this certification are well positioned for future success in attracting and expanding industrial clients. There are 15 Tennessee Select Certified Sites in western Tennessee. Companies that are looking to expedite their search process can rely on this program to provide them with all the information they need to know about a particular site.
In West Tennessee they have implemented a “Dynamic Building” concept that in conjunction with the Select Site program, adds the availability to provide a streamlined process for new construction. The Dynamic Building Plan concept is a design driven, visually presented planning process. The concept revolves around three main incentives: lower capital investment, expedited launch for construction and higher visibility in marketing efforts.
All pre-permitting requirements for the site, along with approved engineered drawings and cost estimates for finished construction, gives companies a very flexible building option. A customized building can be built to company needs and specifications in about the same timeframe as choosing, retrofitting and renovating an existing facility.
Success in Tennessee has not been by accident. Through leaders with vision and commitment and communities that are willing to invest in themselves, the automotive industry has found a home here. This sector has transformed the state and region and will continue to bring economic opportunity and prosperity for many years to come.
ADDING MOMENTUM: RIGHT-TO-WORK STATUS ADDS HORSEPOWER IN KY
As Kentucky’s annual automotive-related numbers arrive early in the New Year, they once again show the state increasing strength and momentum in the automotive sector, a key industry for Kentucky and the nation.
In 2016, motor vehicle related companies announced more than $923 million in new investments in the Bluegrass state. Company executives and Kentucky officials expect those new location and expansion projects will create 3,200 new full-time jobs.
Despite a population less than half of auto-heavy Ohio and Michigan, Kentucky’s annual vehicle production continues to rank among the highest nationally. In addition, Kentucky remains one of the nation’s top international exporters of both vehicles and automotive parts.
Talk about punching above its weight.
So, what makes Kentucky a perennial leader in the automotive industry?
The answer comes in three words: preparation, vision and location.
By way of preparation, Kentucky recently leapt forward as a right-to-work state. The new law holds the promise of accelerating Kentucky’s economic growth, boosting employment and supporting the creation of better jobs and higher wages for residents.
The right-to-work legislation gives employees of unionized workplaces the choice of joining and supporting the union. Previously, union membership and/or payment of dues could be a mandatory condition of employment.
The right-to-work legislation was essential to Kentucky Gov. Matt Bevin’s new vision for the state, which he discussed while speaking at a recent event organized by the Kentucky Association of Manufacturers.
“If I were to ask if you wanted to engineer and manufacture something to the highest degree of excellence in continental Europe, what country would you like to start in?”
“Germany,” he said. “It’s the only answer I’ve ever heard. It’s the first thing that comes to mind.
“And yet, if I were to ask you the same question of where in the United States you would go if you wanted something engineered and manufactured to the highest degree of excellence, there would in this room be five, 10, 15 different answers that would instinctively come to people’s minds.”
That’s the vision to establish Kentucky as an engineering and manufacturing hub of excellence in North America.
“There is no immediately instinctive, No. 1 answer that comes to everybody’s minds. Why is that? Because nobody owns it,” he said. “Well guess what? We’re going to own it.”
Already rich with resources, Kentucky offers a prime location within 600 miles of two-thirds of the U.S. population and income. More than 500 automotive-related facilities—which currently employ about 95,000 people full-time—already take advantage of Kentucky’s location as well as its robust logistics and distribution industry.
Kentucky’s location, as a gateway between the American South and Midwest and with easy access to the Northeast and Atlantic Seaboard, makes it an ideal place for establishing and growing an automotive-related engineering and manufacturing business.
Kentucky also offers advantages of logistics and infrastructure. It offers companies 20 interstates and major highways, rail networks, barge traffic on the Ohio and Mississippi rivers, six commercial airports and dozens of regional airports. The state’s transportation network can move products easily and efficiently by air, rail, road and water to all points globally.
Kentucky ranks third nationally in air-cargo shipment volume, thanks to the UPS Worldport air hub and
Centennial ground hub in Louisville, DHL Americas hub in Northern Kentucky and several large FedEx ground hubs throughout the state. This strong presence by the world’s most prestigious logistics companies means products manufactured in Kentucky can get anywhere in the world virtually overnight.
The commonwealth received A grades for both manufacturing industry health and logistics industry health in the Conexus 2016 Manufacturing and Logistics Report Card for the U.S.
Those factors helped Kentucky auto suppliers and OEMs export more than $4.75 billion in vehicles and parts through November, the most recent figures available. That puts 2016 ahead of the prior year’s exports, when Kentucky ranked fifth nationally.
In preparing its workforce, Kentucky is focused providing unparalleled training opportunities leading to a credentialed, dependable pipeline of employees for Kentucky’s businesses. Doing so helps make Kentucky a top choice for automotive business locations and expansions. Numerous efforts that partner government, industry and education have prepared Kentucky and continue propelling it forward.
A major initiative by the Bevin administration, the Work Ready Skills Initiative, is creating partnerships between educational institutions, private-sector employers, community organizations and others to set up workforce training programs that specifically meet the needs of the employers and communities involved. More than 100 groups have submitted their proposals to a competitive process that will award $100 million to fund various selected workforce-training programs throughout 2017.
Targeting manufacturing in particular, the KY FAME program—Kentucky Federation for Advanced Manufacturing—currently has more than 400 students enrolled in its apprenticeship style education-and-training program. KY FAME partners manufacturing firms with local Kentucky Community and Technical College System across nine chapters throughout the state.
Through KY FAME, students receive an associate degree in applied sciences and certification as an Advanced
Manufacturing Technician. With the practical skills gained during their paid work experience, most students begin full-time employment with their sponsoring company. Students also can continue toward an engineering or business degree.
As well, Gov. Bevin and his staff and a number of other state entities recently introduced Kentucky Trained. Kentucky Built. The initiative brings added prominence to the state’s variety of apprenticeship-style programs.
To prepare communities for industrial growth many of Kentucky’s communities jumped at the chance to participate in the state’s Build-Ready program. Build-Ready certification helps companies and site selectors choose sites ready for immediate construction, slicing months off the time between written commitment and grand opening.
Build-Ready also gives local communities a better chance of landing highly competitive projects. With permits filed, utilities extended to each site, pads prepared and building renderings complete, Build-Ready certified sites offer companies expedited turnaround in locating, building and opening for production.
Also, the Kentucky Cabinet for Economic Development works with local development agencies to maintain a comprehensive and detailed list of sites and buildings throughout the state available for manufacturing, service and technology businesses.
With so many advantages in hand and the numbers on its side, state and company leaders look forward to making 2017 another top-performing year for the automotive industry in Kentucky. Learn more at www.ThinkKentucky.com.
THE FORMULA FOR GREATER THINGS
Set in the picturesque Texas Hill Country and strategically located in the heart of the Innovation Corridor, the Greater San Marcos region is ideal for automotive companies looking to have proximity to key markets, including San Antonio’s Toyota Plant and the General Motors IT Innovation Center in Austin.
Ranked for three consecutive years as the nation’s fastest growing city by the U.S. Census Bureau (2013-2015), San Marcos, which is one of the most affordable cities in Texas, is conveniently situated 30 minutes between Austin and San Antonio on the NAFTA Interstate Highway 35.
The city has a long history in advanced manufacturing with firms like Thermon, CFAN, UTC Aerospace and Philips, headquartered or with major operations present. In fact, Hays County is the fastest growing county for job growth in Texas right now.
Globally recognized brand-name companies have selected the San Marcos region for their new facilities. Since fall 2016, Amazon opened an 855,000-square-foot fulfillment center and Best Buy opened their first and only e-commerce sales operation center in Texas.
Prior to Amazon and Best Buy, among other recent announcements, Tier 1 Automotive Supplier Corvac Composites, one of the largest global automotive thermoform suppliers in the world, opened a new manufacturing facility in San Marcos.
Corvac’s core product line consists of wheel arch liners, under engine covers, belly pans and underbody aero covers for automotive applications. Corvac is a product leader in providing products to make vehicles lighter and more fuel-efficient to companies such as Toyota, of which they are a Tier 1 supplier to in San Antonio.
“We have had customers in the region for several years and were looking for a manufacturing facility in a location where freight costs would be greatly reduced as compared to shipping from our plants in the Midwest. After investigating several possibilities, we found a property in San Marcos that best fit our needs,” said John Huber, Corvac’s Vice-President of Manufacturing. “Our favorable impressions of the local workforce, educational systems and quality of life have us excited to begin operations in San Marcos in 2014.”
Ample power was key to the success of that deal and the region continues to boast its electric capabilities through San Marcos Electric Utility, Pedernales Electric Cooperative and Bluebonnet Electric Cooperative.
In addition to direct access south to Mexico and north to Minneapolis, the San Marcos region is only a 20-minute drive to Interstate Highway 10, connecting port cities Los Angeles to Jacksonville. State Highways 290 and 130 both run through the region to the east and west, providing additional routes between Austin and San Antonio.
The area includes The San Marcos Regional Airport, a former World War II Army Base, as well as close proximity to two international airports, Austin-Bergstrom and San Antonio. Union Pacific and BNSF rail access is also available within one mile of major highway thoroughfares.
Employers can tap the diverse and talented workforce of 2.1 million within a 60-mile radius of San Marcos, per the Texas Workforce Commission.
The presence of major research universities, technical training institutions and STEM-emphasized primary education in the region poises it to sustain a 21st century workforce pipeline.
San Marcos is home to the state’s fourth largest university, Texas State University, an Emerging Research University and Hispanic Serving Institute with nearly 39,000 students. Many of the University’s 200 degree programs include specific research on manufacturing, materials and metal fabrication. The school is actually the site of one of a few teaching metal foundries available in the U.S.
The University’s STAR Park, a 58-acre advanced materials research park, fosters and houses innovative companies performing cutting-edge research.
STAR Park resident MicroPower Global has developed a groundbreaking form of thermoelectric technology that can convert heat directly into electricity far more efficiently than current alternatives. This technology has many potential benefits for the transportation industry such as energy efficiency, increased reliability and reduced emissions.
At Austin Community College (ACC), which has a presence in the region, the technical training programs are designed to meet the needs of a modern automotive service facility. Emphasis is placed on real world approaches to diagnostic skill building and a thorough understanding of system theory and operations. Independent, self-directed learning is promoted through hands-on experience with mockups and modern vehicles and use of computer programs and audiovisuals. Students completing degree and/or certificate programs will leave ACC with the workplace skills and professionalism necessary to succeed in the automotive workforce.
Gary Job Corps, the nation’s largest Job Corps center, offers over 18 career technical training opportunities, including construction and manufacturing. The center also offers career technical training with the Transportation Communications Union (TCU).
In addition to the presence of a business-friendly climate found in the region, Greater San Marcos is a great place to call home. The area is set with a beautiful natural backdrop, featuring spring-fed, crystal clear rivers and lakes. From world-class shopping at the largest outlet mall complex in the U.S. and live music, to outdoor activities like tubing and Glass Bottom Boat Tours, the area is ideal to plant roots and thrive personally as well as professionally.