Week of August 4, 2003
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Port Itawamba
Max Home's new plant will be near tri-modal Port Itawamba (pictured) on the Tennessee-Tombigbee Waterway. Photo: Tennessee-Tombigbee Waterway Development Authority
Max Home's 275-Worker Plant Pulls Up Chair in Northeast Mississippi

by JACK LYNE, Site Selection Executive Editor of Interactive Publishing

FULTON, Miss. — A big, speed-boosting building and a strong, eager work force: That, said furniture-maker Max Home, was the one-two combo that convinced the company to seat its new 275-worker plant in Fulton, Miss.
        One crucial consideration for Max Home, explained CFO Larry Gentry, was the availability of a 233,930-sq.-ft. (21,054-sq.-m.) local facility known as the River Oaks Building. Max Home wants to rapidly ramp up the new production operation that it's bringing to Fulton, 124 miles (198 kilometers) southwest of Memphis, Tenn.
        The rapid move-in and retrofit in Fulton will enable Max Home's Northeast Mississippi operation to be up and running in the River Oaks Building as soon as this fall, Gentry said. The plant, which will be located near the Tennessee-Tombigbee Waterway, will begin shipping its output before year's end.
        The Fulton plant will manufacture high-end furniture, including upholstered sofas, chairs, ottomans and loveseats. Those products will be aimed at the department store market.
        The work force that will make that furniture was the other dominant driver in Max Home's aiming its site selection at Itawamba County.
        "One thing that certainly played into us coming here was the reputation of Itawamba County's people," said Gentry. "Itawamba County has a good reputation for having hard-working people and a good labor pool to draw from."

Local Jobs Will Cut Commute Time
Max Home, Gentry added, feels that its 275 new jobs will be a strong draw for the small county's labor force. Itawamba County has a population of some 23,000 residents, 4,000 of them living in the county seat in Fulton. Local workers have a ways to travel to reach larger job markets such as Tueplo, Miss., a city of some 35,000 residents some 21 miles (34 kilometers) west of Fulton.
        "The county exports most of its labor," Gentry said, "and we believe we can provide employment for county people so that they don't have to drive 40 to 50 miles (64 or 80 kilometers) every day to go to work."
        The Fulton plant will have a projected annual payroll of $6.3 million, Gentry said.
        Gentry and three of the other Max Homes principals - Aaron Larry, Bruno Policchicio and Marty Silver - are no neophytes in the furniture business. All were previously involved with starting up Bauhaus USA.
        The four Max Home principals sold Bauhaus to La-Z-Boy Inc. in 1999. Their earlier experience, however, gave them in-depth knowledge of the Mississippi region that they selected: Bauhaus has four furniture plants in the greater Tupelo area.
Tupelo Furniture Market
Mississippi's clout in the furniture industry is reflected in the 1.5 million-sq.-ft. (135,000-sq.-m.) Tupelo Furniture Market (pictured), which houses 800 vendors and is the second-largest furniture show space in the United States.

        The Magnolia State as a whole, in fact, is ripe site selection turf for the furniture industry. Mississippi is home to more than 280 furniture plants, generating some $1 billion a year in wages for almost 50,000 workers. Hickory Hill Furniture, in fact, is one of Itawamba County's largest employers, with 260 workers.

County's Third Recent
Manufacturing Announcement
Like Max Home's principals, Itawamba is no stranger to success.
        Itawamba's per-capita income has increased $3,236 in the last three years, now totaling $20,119, according to the Itawamba County Development Council (ICDC). That surge has raised Itawamba's per-capita income to the second-highest among Northeast Mississippi counties.
        Moreover, Max Home marks the county's third manufacturing announcement in the last six months. Tupelo-based PeopLoungers earlier announced a 150-employee furniture plant, which opened in June. The third manufacturing announcement came from steel-maker Instill, which is preparing to start up its 30-worker plant, said ICDC Executive Director Tim Weston.
        Teamwork, Weston explained, accounts for much of the area's business-recruiting success.
        A wide range of city and county officials worked together with the Mississippi Development Authority (MDA) in landing the Max Home project. Weston, though, particularly credited Gov. Ronnie Musgrove (D) and the state's economic development arm for their roles in facilitating the county's recent business recruiting roll.
        "Gov. Musgrove has been good to Itawamba County," Weston said. "We could not have had these successes without his and the MDA's help."
        Fulton and Itawamba County officials are taking a symbolic step to make their latest success feel at home. They've agreed to rename the road that runs to the new Max Home plant as 101 Max Place.
        The new moniker fits well with Max Home's ambitious vision for the Fulton facility.
        "This plant will be a showplace for us," Gentry said, "and we wanted to locate in a town that reflected that image."



Brighton, Mich.
Japan's Mitsuba is the second international company to come to Brighton (pictured) of late, joining Germany's Eberspaecher, which picked the city last year for its manufacturing plant.

Incentives Help Sway Mitsuba's Michigan Choice for Testing/Research Center

by JACK LYNE, Site Selection Executive Editor of Interactive Publishing

BRIGHTON, Mich. — Incentives proved to be a decisive factor in swaying Mitsuba's decision to site its first stand-alone U.S. testing and research center in Brighton, Mich., a small city of 6,700 residents 46 miles (74 kilometers) northwest of Detroit.
        American Mitsuba, the Kiryu City, Japan-based company's U.S. subsidiary, had boiled its short-list locations for the project down to Brighton and Monroeville, Ind. Mitsuba has a production facility and its U.S. research base in that Hoosier city.
        But Mitsuba also had a long-time Michigan connection. The company, which designs and tests auto motor assemblies, windshield wiper systems, power-window regulator motors, starters, and cooling fans, in 1987 picked Mt. Pleasant, Mich., 110 miles (176 kilometers) northwest of Brighton, for its first U.S. manufacturing plant. Mt. Pleasant, in fact, is American Mitsuba's headquarters location.
        What broke the standoff between the two states' sites was Michigan's incentive package, according to Wolverine State economic development officials. The Michigan Economic Development Corporation (MEDC) provided American Mitsuba with a 10-year Single Business Tax credit valued at US$1.6 million. In addition, the city of Brighton is offering a 10-year local tax abatement worth about $918,200.
        The payoff in landing the project is 85 well-paying jobs. Average salaries at the Brighton testing and research center will be $57,000 a year, Mitsuba officials said.
        "We would like to thank the city of Brighton and the Michigan Economic Development Corporation for encouraging American Mitsuba in this venture," American Mitsuba President and CEO Toshifumi Kohno said in announcing the company's decision.

City Landed Eberspaecher's First North American Plant Last Year
American Mitsuba's center marks the second international recruiting success of late for Brighton. Last year, the city landed Eberspaecher North America's 58,000-sq.-ft. (5,220-sq.-m.) manufacturing facility, the first North American production operation established by Germany's Eberspaecher, a Tier 1 supplier of automotive exhaust systems.
Dana Foster
The Mitsuba Eberspaecher "Quality sites and incentives" are boosting Brighton's attractiveness, said City Manager Dana Foster (pictured).

        "American Mitsuba's decision to locate in Brighton closely follows Eberspaecher North America's recent decision to construct its first North American manufacturing facility here," Brighton City Manager Dana Foster noted. "These developments indicate that the city, in partnership with the MEDC, is providing quality sites and incentives that make Brighton attractive to high-caliber firms."
        The state's incentives will also be a high-caliber investment for Michigan, according to the MEDC's analysis. The state will forego $1.62 million in revenue over the life of the tax credit, but it will realize a revenue gain of $3.4 million, the MEDC found. Total personal income generated over the tax credit's 10-year lifespan will be more than $44 million, according to MEDC analysts.
        "American Mitsuba's new R&D center will be an excellent addition to Michigan's growing Technology Tri-Corridor," said Gov. Jennifer Granholm (D).
        Brighton's industrial attractiveness extends beyond incentives, however. The city gains location cachet from its position at the junction of I-96 and US-23. And the local labor pool gets a considerable numbers boost from Brighton's position at a four-city junction that also includes Genoa, Hamburg and Green Oak Townships.



San Antonio
Toyota's on-site park would guarantee that San Antonio (pictured) was ensured of landing at least 500 of the 5,300 anticipated Toyota spin-off jobs.

Toyota Pondering 500-Worker
On-Site San Antonio Supplier Plant

by JACK LYNE, Site Selection Executive Editor of Interactive Publishing

SAN ANTONIO, TexasToyota's 2,000-employee, US$800-million vehicle assembly plant in San Antonio, Texas, may be verging on taking a new twist: an on-site supplier park.
        The automakers' top officials have been discussing setting aside part of the 2,000-acre (800-hectare) south San Antonio site for a park that would house important Tier 1 suppliers, Toyota Motor Manufacturing North America Vice President of External Affairs Jim Wiseman disclosed. The company's current thinking, said Wiseman, is to dedicate some 500 acres (200 hectares) to the park, which would house five to 10 suppliers and some 500 workers.
Wolff
Toyota's discussions with Bexar County Judge Nelson Wolff (pictured) have gone as far as considering which part of the San Antonio site would house the park.

        The San Antonio supplier park would be a venturesome, unorthodox step within the North American auto industry. The, idea however, is far from a done deal.
        At this point, the park is strictly in the exploratory stage, emphasized Wiseman, who called it "far too early" to discuss leasing park arrangements. The automaker will decide sometime this fall whether to proceed with the project, he said.
        Toyota, however, clearly seems serious about the concept. Bexar County Judge Nelson Wolff reported that his discussions with the automaker have gotten as specific as which part of the site would house the park.

Parks a North American Rarity
On-site supplier parks are relatively common within the Asian and European auto sectors. They're a rare breed, however, at North American auto plant sites.
        Nonetheless, auto industry analysts contend that such operations offer numerous advantages - which is just what's driving Toyota to look at a San Antonio park.
        The Texas park would give the automaker what Wiseman calls "the extreme just-in-time set-up." Having suppliers so near would lower Toyota's warehouse space requirements, as well as its shipping and inventory costs, at the same time increasing flexibility to respond to assembly schedule changes. In addition, the extremely short supplier pipeline would facilitate faster defect identification, boosting parts quality.
        On-site parks also provide supplier advantages, chief among them lower inventory and faster response time.
        On the other hand, on-site parks present suppliers with a "building shadow" effect quite unlike the kind that's a prominent post-9/11 location concern. Tight proximity to well-paying auto plants often pushes up on-site suppliers' wages. But such wage worries are generally outweighed by the prospect of losing an on-site spot to a rival supplier.

Ford Chicago assembly plant
Ford Motor Company is building a supplier park near its Chicago assembly plant (part of which is pictured). Photo: Graycor

Ford Has On-Site Chicago Park
Toyota's San Antonio idea has a North American auto-industry precedent: Ford Motor Company's 155-acre (62-hectare) supplier park in Chicago.
        Ford's park isn't quite on its Chicago assembly plant's site, lying half a mile (0.8 kilometer) east. But Ford and development partner CenterPoint Properties are building the park, which is set for completion next year.
        The Chicago park's initial phase includes 1.5 million sq. ft. (135,000 sq. m.) of manufacturing, distribution and storage space. Twelve suppliers to date have signed nine-year leases, including Brose, Lear, Tower and ZF-Lemforder. By next year, when assembly begins on the new Freestyle SUV and the Five Hundred sedan, almost half of the Ford plant's external purchases will come from the supplier park.
        "The supplier park will increase our flexibility, allow for quicker response to customer preferences, lower our inventory costs and help control our shipping and capital costs," said Roman Krygier, Ford group vice president for manufacturing and quality.
        Ford's scenario in Chicago differs somewhat from Toyota's in San Antonio. Ford's plant, for example, is an existing 79-year-old operation; and the supplier park is on a former brownfield site that had been vacant for 40 years.
        Non-union Toyota, on the other hand, won't face an obstacle Ford had to overcome: U.S. labor's historic opposition to such on-site parks.
        Such operations, union leaders have contended, often shift auto jobs to less unionized suppliers. Ford blunted that objection by agreeing to retain all of its Chicago plant's hourly workers for the introduction of the Freestyle and Five Hundred.

Other Local Players Creating Parks
San Antonio officials are warmly welcoming Toyota's idea. An on-site park would ensure that the city lands 500 of the 5,300 Toyota spin-off jobs that Gov. Rick Perry (R) is predicting.
        A delegation of city and county officials in June recruited about a dozen of the automaker's major suppliers during a visit to Japan at Toyota's invitation. With the plant not scheduled to open until 2005, Toyota hasn't yet tapped suppliers.
        While Toyota is mulling over the on-site park, other local players are creating their own supplier-attracting sites.
KellyUSA
KellyUSA (pictured in part above), the former Kelly Air Force Base, is building its own supplier park with 513,600 sq. ft. (46,224 sq. m.) of leasable space.

        Among them is local developer GP Properties and Investments, the lead company in a consortium planning to build two industrial parks across the street from the Toyota plant. The consortium already has the 522 acres (209 hectares) under contract, according to GP Properties' principle Gerard Pastrano, with 494 acres (198 hectares) planned for an industrial park and 28 acres (11 hectares) for a distribution park.
        The Greater Kelly Development Authority (GKDA) is also getting in on the Toyota supplier-space act. GKDA officials have designated 40 acres (16 hectares) of property at KellyUSA, the former Kelly Air Force Base, to build a supplier park. The park would house six buildings with 513,600 sq. ft. (46,224 sq. m.) of leasable space. GKDA officials, however, say that their park is aimed at Toyota's smaller supplier operations - tenants wanting between 5,000 and 15,000 sq. ft. (450 and 1,350 sq. m.) of space.


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