Week of December 30, 2002
from Site Selection's exclusive New Plant database
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Cars Fall on Alabama:
430-Worker Mobis Plant Starts Hyundai Supplier Surgeby JACK LYNE, Site Selection
Executive Editor of Interactive Publishing MONTGOMERY, Ala. The enduring ditty that's etched on Alabama's license plates has it wrong:
It's not that song's stars that are falling right now on Alabama. It's cars.
Current case in point: the 430-employee, 400,000-sq.-ft. (36,000-sq.-m.) supplier plant that Hyundai Mobis (www.mobis.co.kr) has decided to build in Montgomery. The facility will make instrument panels and front and rear chassis assemblies for Hyundai's US$1-billion, 2,000-worker plant, which is rapidly taking shape on a nearby 1,744-acre (698-hectare) site.
And that Mobis facility marks the start of a major surge. The project represents only the first Tier-1 trickle in a sizable supplier ripple rolling out from the big stone that Hyundai's plopped into Alabama's pond. As many as 14 more Tier-1 Hyundai supplier plants are coming to Alabama, state officials estimate - and they're coming soon. Hyundai, which chose the Montgomery site in April of 2002, has set a self-imposed June 2004 deadline for initial production tests at its newly finished Alabama plant, its first U.S. manufacturing operation.
In other ways, though, the Mobis project is nothing new for the state. Rather, it's only the latest manifestation of Alabama's ascending supernova in the auto-making galaxy. Not until 1997 did the state even manufacture a single vehicle. Very rapidly, though, Alabama has become a major force to reckon with in the U.S. Car Wars.
The state now ranks sixth among all states in total auto production, according to newly released Alabama Automotive Manufacturers' Association (AAMA at www.aama.to) research, which represents the first comprehensive look at the Yellowhammer State's auto industry. Moreover, by 2005 the state will rank No. 3, the AAMA is projecting, with the capacity to churn out 760,000 vehicles - only 10,000 less than No. 2 Tennessee's projected tally.
Prattville Last Other
That gave Alabama's capital city the formidable recruiting edge of the Hyundai plant's proximity. Mobis, however, had a broader location palette to consider in the aftermath of Hyundai's location choice.
Once states settle their ferocious fights in landing auto-makers' mega-catches, the recruiting game changes. Once the catch is cached, it's local areas that begin slugging it out, striving to secure part of the second-wave supplier tsunami invariably trailing in the wake of a major auto plant's site selection. Opelika, for example, assembled a large land tract as one of Alabama's contending Hyundai locations. Once Montgomery got the Hyundai nod, though, Opelika officials began splitting the tract into smaller parcels. The logic: Land suppliers.
With that kind of intense competitive bidding, Mobis had numerous offers to consider, company officials concede. At the end, it came down to two locations: an 82.2-acre (33-hectare) site at Montgomery's Airport Industrial Park and an 80-acre (32-hectare) site in Prattville's South Industrial Park. The site in Prattville, some 13 miles (21 kilometers) northwest of Montgomery, was farther away than the site in Montgomery, only a few miles from Hyundai.
Selecting the Montgomery plot, explained Hyundai Mobis President Kyu-Hwan Han, will give the supplier's operation lower-cost, higher-speed delivery of its sections for Santa Fe SUVs and Sonata sedans. With an I-80 exchange and the Montgomery Regional Airport sitting nearby, the acreage also provides strong transportation links.
Supplier Merits State, Local IncentivesMobis officials visited the Montgomery area 10 times during their site search, according to Mayor Bobby Bright. A local and state incentive package helped make Montgomery's frequent visitor a fulltime resident.
Incentives have been a major hammer in jumpstarting Yellowhammer State auto manufacturing. Alabama by AAMA estimates has ponied up some $872 million in landing major plants for DaimlerChrysler, Honda and Hyundai.
Suppliers, of course, don't merit subsidies that rich. Nonetheless, Mobis garnered about $1.1 million in local-area incentives, including discounted land, water and sewer extensions to the site, and site preparation, according to officials with the Montgomery Area Chamber of Commerce (www.montgomerychamber.com).
In addition, Mobis's Montgomery workers will be trained free of charge through the Alabama Industrial Development Training Institute (www.aidt.edu), according to the Alabama Development Office (www.ado.state.al.us) - which is currently setting up an operation focused on recruiting South Korean firms.
Mobis also has other plans on the drawing board to further globalize its manufacturing. Those plans include building a modular production plant near Beijing, which will supply the nearby auto assembly plants that Hyundai Motors and Kia Motors are setting up. (Hyundai Mobis, Hyundai Motor Co. and Kia Motors together comprise the Hyundai Automotive Group.)
In addition, Mobis has longer-term plans to build new factories in India and Turkey, company officials said.
Back in Alabama, the state's burgeoning auto-industry fortunes have arrived at an opportune time. Alabama has seen some 32,000 textile and apparel jobs leave the state in the last five years. Helping ease the pain of those low-paying jobs lost are the 4,100 well-paying ones that DaimlerChrysler and Honda have created. And by 2005, DaimlerChrysler, Honda and Hyundai will employ a combined 10,500 in Alabama, according to the new AAMA study.
That's not including the considerable work force now laboring in some 55 Tier-1 facilities that the AAMA estimates are currently operating in the state.
With Mobis's arrival, those Tier-1 tallies will again begin a rapid rise, along with the Tier 2 and 3 operations that follow behind.
Meanwhile, as Mobis readies its Montgomery plant, Alabama's auto-manufacturing beat goes on. DaimlerChrysler is spending $600 million to double capacity at its Vance plant, while Honda is doling out $425 million to double the Lincoln operation's output. In other words, the cars keep falling on Alabama.
©2002 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.