Cover
Big Wheels Keep
On Turnin'
Detroit Seeks
Retro Upgrade
Who's Got It, Toyota?
Putting the North in North America
Request Information
NORTH AMERICAN AUTO INDUSTRY REVIEW
No Finish Line
| T |
he relative health or lassitude of the automotive economy in North America remains one of the continent's most inextricable economic indicators. In the past year, big financing deals for consumers – backed by unprecedented financial incentives – have been matched by big industrial project deals ... and their own brand of unmatched freebies. As the new year begins, two potential blockbusters from Toyota and DaimlerChrysler – and perhaps the fortunes of two regional economies – hang in the balance.
Of course, the impact of such projects from original equipment manufacturers (OEMs) goes way beyond their gargantuan footprints. The net work of suppliers, R&D centers and training programs usually goes an even longer way toward shoring up a state, regional or even, in the case of Mexico, national economy, from the tiniest plastic interior components to the most sophisticated fuel cell experiment.
Just a sample of automotive mega-projects in the offing reveals what's working and what isn't for the companies and their courtiers, and how their decisions reverberate through community and corporation alike.
But even as the balloons were falling from the ceiling in Savannah, DaimlerChrysler spokesmen said, "Not so fast." For the Stuttgart, Germany-based automaker, due diligence is a way of life.
"Further planning regarding the NAFTA Van plant will from now on solely focus on the site near Savannah in Georgia, USA," wrote Marc Binder, spokesman for the company's commercial vehicle division in Stuttgart, when queried by Site Selection. "A final decision, whether, when and in which steps the project will be implemented, is not yet taken."
In addition, while the announcement by state and community officials indicated a construction start date of July 2003, DaimlerChrysler spokesmen said no firm timeline has been established. The methodical approach may test some people's patience, but earns more respect than exasperation.
"They're very professional and they're very thorough, so their due diligence doesn't really leave anything out, and that takes time, " says a patient Rick Winger, president and CEO of the Savannah Economic Development Authority, noting that the announcement was not a contrived rush, but a natural event in the process. "The company has been gracious enough to say, 'Savannah has been selected if we come,' but they of necessity have had to do that with a caveat."
Despite the hint of uncertainty, a blend of celebration and preparation has engulfed this historic city at Georgia's southeastern extremity. While the initial pool of contenders included locations like Windsor, Ontario, and Jacksonville, Florida, the final battle came down to Pooler, near the port of Savannah, and Summerville, near the port of Charleston, S.C. Representatives of the South Carolina Dept. of Commerce were notified of the decision in a letter from Rolf Bartke, senior vice president of the DaimlerChrysler Van Division. The Palmetto State had offered $346 million in incentives, but South Carolina officials said that was no match for Georgia's package. Total incentives from state and local communities in Georgia only came to $325 million, but the key element was that the 1,560 acres (631 hectares) at the juncture of I-95 and I-16 was already owned by the state ... no ifs, ands or options.
"They had been here visiting not quite three years ago," says Winger. "He was a single scout. The project was quickly put on the back burner.
The site search returned to the front burner for DaimlerChrysler in March 2002, focusing once again on what Winger calls a beautiful site on the Savannah River named Mulberry Grove. But the company balked, throwing the curve at the officials.
"We were about to be eliminated, and we remembered a site, and asked if we could show that to them, even though we didn't have it under control at all," says Winger. "They did give us a chance to do that. So we assembled five pieces into one big property."
The maneuver was accomplished by optioning the parcels, then transferring those options to the Georgia Ports Authority, which exercised them "because they have the financial capacity to do that," says Winger. "We needed it to be under an authority." Funding for the land purchase came from the state legislature, a very short time after the Georgia Dept. of Industry, Tourism and Trade (GDITT) had identified "mega-sites" as a crop to be cultivated.
DaimlerChrysler's Commercial Vehicle division is the largest manufacturer of commercial vehicles in the world, headed by Dr. Eckhard Cordes. The Freightliner truck division suffered big losses in 2001, but is aiming to reduce its dependency on large fleets. In materials distributed by the division in September, the largest swaths cut in its projected path to profitability are by the NAFTA market entry of the van business and the division's growing overall emphasis in the Asian market, which it predicts will account for fully half of worldwide sales by 2011. The German company's 2001 commercial van sales in the U.S. grabbed a 15-percent share of the market, trailing Ford and GM.
R. K. Sehgal, the commissioner of the Georgia Department of Industry, Tourism and Trade, did not return phone calls seeking comment. But the quality of the department's leadership in pursuing the project was evident in the identities and testimony of the team members the department assembled.
Lindsay Thomas, senior vice president, governmental relations, for AGL Resources, was an active team member not only from the natural gas perspective, but from having served the Savannah area as a U.S. Congressman, not to mention serving as president of the Georgia Chamber of Commerce.
"The way you work these things is you work them as a team," says Thomas. "At this stage, nobody is in there saying we have a new technology for gas or electricity. The first thing is to see and to meet all the people, to understand all the people. Then when you get into the construction and design of the plant, it's just a matter of putting your cards on the table."
It was no accident that one secret to the state's winning hand this time around was the fundamental involvement of Southern Co., the utility giant that basically founded the idea of economic development in the state decades ago. Robin Spratlin, general manager of economic development for Georgia Power, a division of Southern Co., says that her company was involved in Bluebell on the first go-round in 2000, when site location firm Lockwood Greene solicited their involvement. So they were ready when the project came around again.
"John Malone was our senior project manager for the project, and our engineering group provided a lot of critical services to them in terms of things they could do in preparing the site documents," says Spratlin, whose firm's sister company Savannah Electric will be the supplier to the plant. "This was one of those projects where the state really had to take the lead at the commissioner's level. They did, and they did a good job."
As the smoke clears from the state vs. state battle, the spoils may go to both combatants in the end.
"Absolutely," says Winger. "The county manager of Jasper County across the river, which is one of South Carolina's poorest counties as measured by jobs and wages, would have been happy either way. They'll benefit from this, no question about it, and so will counties west of here. This is going to ripple out for 50 miles and more, maybe a lot more."
"I think the great benefit will be that even smaller communities will now be looked at for supplier options," says Spratlin. "There could be some spillover to South Carolina. Georgia has benefited immensely with suppliers locating here because of BMW [in South Carolina] and Mercedes-Benz, Honda and Hyundai in Alabama. And I think people tend to forget that we've had Ford and GM for an awfully long time in Georgia. So we're a natural for those suppliers."
She notes that Georgia is just starting to welcome visits from companies looking to supply the Hyundai project in Alabama, so there will be a similar time lag in this announcement's wake. And as more OEM assembly plants continue to dot the region, a point of critical mass may mean critical profits for a multitude of companies.
"The more of these plants that come to the Southeast," observes Winger, "I'm not sure some suppliers couldn't handle multiple plants from one location."
One month after the DaimlerChrysler announcement, Atlanta-based United Parcel Service announced it had agreed to purchase 1,800 of the Sprinter vans for immediate addition to its U.S. fleet by March 2003. The delivery company had already used 750 of the vehicles with proven success in its European operations. No doubt both companies would be glad to have a ready source of van supply in the same country – not to mention the same state – as UPS headquarters.
DaimlerChrysler Vans spokesman Randy Jones says the van division currently re-assembles the Sprinters (after their initial manufacture in Germany) on the grounds of the company's Freightliner facility in Gaffney, S.C., which was expanded by about 75,000 sq. ft. (6,970 sq. m.) to accommodate the additional work. He declined to discuss how many vans are currently re-assembled at the facility. In a press release, Dr. Bartke has said, "DaimlerChrysler expects the Sprinter to become a major player in North America. The U. S. market plays a key role within the globalization activities of the DaimlerChrysler commercial van business."
Lindsay Thomas says the Savannah area now faces a mixture of challenges that might take some of the edge off the exhilaration, but he knows that the area is ready, and confesses to having had a great feeling about the project from the outset.
"In politics, you have to be able to read people ... not out-figure them, but pick up nuances as to whether their thoughts are positive are negative. When I went down there for that few days, I came away feeling very positive."
Now the area's residents and officials wait for those good vibes – like a special dose of secret Savannah mojo – to work their way into the arithmetic and strategy of their newfound friends in Stuttgart.
Of course, the impact of such projects from original equipment manufacturers (OEMs) goes way beyond their gargantuan footprints. The net work of suppliers, R&D centers and training programs usually goes an even longer way toward shoring up a state, regional or even, in the case of Mexico, national economy, from the tiniest plastic interior components to the most sophisticated fuel cell experiment.
Just a sample of automotive mega-projects in the offing reveals what's working and what isn't for the companies and their courtiers, and how their decisions reverberate through community and corporation alike.
Savannah Daydreamin'
One of those two pending projects is unfolding in a Southern state that had missed the boat until now. On October 18, mere hours after having successfully completed contentious labor negotiations with the Canadian Auto Workers, DaimlerChrysler seemed to bring to a close the equally contentious battle to land its US$750-million, 2.5-million -sq.-ft. (232,250-sq.-m.) cargo van plant, selecting Pooler, Georgia, as the site, according to the office of now ex-Georgia Governor Roy Barnes. Coming the same day as an announcement that Atlanta-based Delta Airlines was cutting 8,000 jobs from its payroll, the project was lauded for the 3,000 jobs it would bring to the Lowcountry part of the state.But even as the balloons were falling from the ceiling in Savannah, DaimlerChrysler spokesmen said, "Not so fast." For the Stuttgart, Germany-based automaker, due diligence is a way of life.
|
"Further planning regarding the NAFTA Van plant will from now on solely focus on the site near Savannah in Georgia, USA," wrote Marc Binder, spokesman for the company's commercial vehicle division in Stuttgart, when queried by Site Selection. "A final decision, whether, when and in which steps the project will be implemented, is not yet taken."
In addition, while the announcement by state and community officials indicated a construction start date of July 2003, DaimlerChrysler spokesmen said no firm timeline has been established. The methodical approach may test some people's patience, but earns more respect than exasperation.
"They're very professional and they're very thorough, so their due diligence doesn't really leave anything out, and that takes time, " says a patient Rick Winger, president and CEO of the Savannah Economic Development Authority, noting that the announcement was not a contrived rush, but a natural event in the process. "The company has been gracious enough to say, 'Savannah has been selected if we come,' but they of necessity have had to do that with a caveat."
Despite the hint of uncertainty, a blend of celebration and preparation has engulfed this historic city at Georgia's southeastern extremity. While the initial pool of contenders included locations like Windsor, Ontario, and Jacksonville, Florida, the final battle came down to Pooler, near the port of Savannah, and Summerville, near the port of Charleston, S.C. Representatives of the South Carolina Dept. of Commerce were notified of the decision in a letter from Rolf Bartke, senior vice president of the DaimlerChrysler Van Division. The Palmetto State had offered $346 million in incentives, but South Carolina officials said that was no match for Georgia's package. Total incentives from state and local communities in Georgia only came to $325 million, but the key element was that the 1,560 acres (631 hectares) at the juncture of I-95 and I-16 was already owned by the state ... no ifs, ands or options.
"They had been here visiting not quite three years ago," says Winger. "He was a single scout. The project was quickly put on the back burner.
The site search returned to the front burner for DaimlerChrysler in March 2002, focusing once again on what Winger calls a beautiful site on the Savannah River named Mulberry Grove. But the company balked, throwing the curve at the officials.
"We were about to be eliminated, and we remembered a site, and asked if we could show that to them, even though we didn't have it under control at all," says Winger. "They did give us a chance to do that. So we assembled five pieces into one big property."
The maneuver was accomplished by optioning the parcels, then transferring those options to the Georgia Ports Authority, which exercised them "because they have the financial capacity to do that," says Winger. "We needed it to be under an authority." Funding for the land purchase came from the state legislature, a very short time after the Georgia Dept. of Industry, Tourism and Trade (GDITT) had identified "mega-sites" as a crop to be cultivated.
DaimlerChrysler's Commercial Vehicle division is the largest manufacturer of commercial vehicles in the world, headed by Dr. Eckhard Cordes. The Freightliner truck division suffered big losses in 2001, but is aiming to reduce its dependency on large fleets. In materials distributed by the division in September, the largest swaths cut in its projected path to profitability are by the NAFTA market entry of the van business and the division's growing overall emphasis in the Asian market, which it predicts will account for fully half of worldwide sales by 2011. The German company's 2001 commercial van sales in the U.S. grabbed a 15-percent share of the market, trailing Ford and GM.
R. K. Sehgal, the commissioner of the Georgia Department of Industry, Tourism and Trade, did not return phone calls seeking comment. But the quality of the department's leadership in pursuing the project was evident in the identities and testimony of the team members the department assembled.
Lindsay Thomas, senior vice president, governmental relations, for AGL Resources, was an active team member not only from the natural gas perspective, but from having served the Savannah area as a U.S. Congressman, not to mention serving as president of the Georgia Chamber of Commerce.
"The way you work these things is you work them as a team," says Thomas. "At this stage, nobody is in there saying we have a new technology for gas or electricity. The first thing is to see and to meet all the people, to understand all the people. Then when you get into the construction and design of the plant, it's just a matter of putting your cards on the table."
It was no accident that one secret to the state's winning hand this time around was the fundamental involvement of Southern Co., the utility giant that basically founded the idea of economic development in the state decades ago. Robin Spratlin, general manager of economic development for Georgia Power, a division of Southern Co., says that her company was involved in Bluebell on the first go-round in 2000, when site location firm Lockwood Greene solicited their involvement. So they were ready when the project came around again.
"John Malone was our senior project manager for the project, and our engineering group provided a lot of critical services to them in terms of things they could do in preparing the site documents," says Spratlin, whose firm's sister company Savannah Electric will be the supplier to the plant. "This was one of those projects where the state really had to take the lead at the commissioner's level. They did, and they did a good job."
As the smoke clears from the state vs. state battle, the spoils may go to both combatants in the end.
"Absolutely," says Winger. "The county manager of Jasper County across the river, which is one of South Carolina's poorest counties as measured by jobs and wages, would have been happy either way. They'll benefit from this, no question about it, and so will counties west of here. This is going to ripple out for 50 miles and more, maybe a lot more."
"I think the great benefit will be that even smaller communities will now be looked at for supplier options," says Spratlin. "There could be some spillover to South Carolina. Georgia has benefited immensely with suppliers locating here because of BMW [in South Carolina] and Mercedes-Benz, Honda and Hyundai in Alabama. And I think people tend to forget that we've had Ford and GM for an awfully long time in Georgia. So we're a natural for those suppliers."
She notes that Georgia is just starting to welcome visits from companies looking to supply the Hyundai project in Alabama, so there will be a similar time lag in this announcement's wake. And as more OEM assembly plants continue to dot the region, a point of critical mass may mean critical profits for a multitude of companies.
"The more of these plants that come to the Southeast," observes Winger, "I'm not sure some suppliers couldn't handle multiple plants from one location."
One month after the DaimlerChrysler announcement, Atlanta-based United Parcel Service announced it had agreed to purchase 1,800 of the Sprinter vans for immediate addition to its U.S. fleet by March 2003. The delivery company had already used 750 of the vehicles with proven success in its European operations. No doubt both companies would be glad to have a ready source of van supply in the same country – not to mention the same state – as UPS headquarters.
DaimlerChrysler Vans spokesman Randy Jones says the van division currently re-assembles the Sprinters (after their initial manufacture in Germany) on the grounds of the company's Freightliner facility in Gaffney, S.C., which was expanded by about 75,000 sq. ft. (6,970 sq. m.) to accommodate the additional work. He declined to discuss how many vans are currently re-assembled at the facility. In a press release, Dr. Bartke has said, "DaimlerChrysler expects the Sprinter to become a major player in North America. The U. S. market plays a key role within the globalization activities of the DaimlerChrysler commercial van business."
Lindsay Thomas says the Savannah area now faces a mixture of challenges that might take some of the edge off the exhilaration, but he knows that the area is ready, and confesses to having had a great feeling about the project from the outset.
"In politics, you have to be able to read people ... not out-figure them, but pick up nuances as to whether their thoughts are positive are negative. When I went down there for that few days, I came away feeling very positive."
Now the area's residents and officials wait for those good vibes – like a special dose of secret Savannah mojo – to work their way into the arithmetic and strategy of their newfound friends in Stuttgart.