Two Seat Makers, Three Warrens Since Professor Warren Johnson founded the company in 1885 to manufacture his invention, the electric room thermostat, Johnson Controls (JCI) has grown an automotive division that had $15 billion in 2002 sales from its 275 locations.In 2003 Johnson Controls will deliver interior components for more than 35 million vehicle units worldwide.         Now a JCI JV, seating manufacturer Bridgewater Interiors, is opening a new plant in Warren, Mich., to serve Ford's Michigan operations, making seats for Expedition and Navigator models beginning in 2004. The 250,000-sq.-ft. (23,225-sq.-m.) facility, which will employ 600, is located on the grounds of the former Detroit Arsenal Tank Plant, which shut down in 1996. That was the same year that Bridgewater, partly owned by minority-owned Epsilon, was established. JCI's Plymouth Township facility will see some of its production shift to the Warren facility, while initiating production of seats for Ford's Focus and Lincoln Town Car models.         In Warren, Ohio, where GM in 2002 announced a $500-million renovation of its Lordstown complex, Magna International subsidiary Intier Automotive is building a $12.5-million, 90,000-sq.-ft. (8,361-sq.-m.) facility that will employ 179 in the making of seating systems for the Chevrolet Cobalt. It too will begin production immediately in 2004. The project benefited from a 10-year, 60-percent tax abatement from Trumbull County and a 9-year, 70-percent job creation tax credit from the state of Ohio. After a search that evaluated sites on both sides of the Ohio-Pennsylvania border, the facility will be situated in Vienna Township's multimodal AEROPark, near the Youngstown-Warren Regional Airport, which is already home to operations from Delphi, Timken Latrobe and Android Industries. Intier operates 65 plants worldwide, and the Warren project is just one of several new business contracts between the company and GM.

Suppliers of Suppliers

OEMs are counting on the same collective energy to power their bevy of top suppliers. In concert with a move toward supplier parks located near assembly plants, the automakers are also seeking even more price cuts from them. In late November 2003, Ford announced it was asking its top 100 suppliers to find a way to reduce prices to the automaker by 3.5 percent by the beginning of 2004.
        Yet even as they consolidate and realign, and continue to be squeezed for price concession, major players like Tire-1 Delphi continue to foster their own spheres of influence in facility development.
        Early in 2003, Taiwan-based Macauto Industrial Co. was looking to site its first U.S. plant in order to serve Delphi's longstanding Harrison Thermal Systems operation in Lockport, N.Y., near Buffalo. It found its niche in Rochester, where up to 22 workers were expected to be turning out film valve cartridges by the end of 2003.
        And in Indiana, Ohio-based Viking Industries is investing $28 million to renovate a plant in New Castle that will make steering columns for Delphi, creating up to 184 jobs. That follows on Delphi's ongoing $243-million, three year investment in the electronics products lines at its Kokomo, Ind., manufacturing facilities, as the company steers its capital investments away from mechanical componentry and toward electronics. (Delphi plants in Olathe, Ks.; Tuscaloosa, Ala. and Flint, Mich., are facing potential consolidation, even as the company's outlook improves for 2004.)
        As Viking invests in Indiana, an Indiana-based company is looking to the newly discovered automotive state of Texas for its next facility investment. In its first five years of operation, plastic part maker Tasus Corp. will create 100 jobs and invest some $13 million at its 100,000-sq.-ft. (9,290-sq.-m.) plant, which will serve Toyota's forthcoming San Antonio truck plant.
        In the non-merger story of the year, ArvinMeritor tendered a $4.4-billion offer for Dana Corp., a move ultimately rejected by Dana leadership and shareholders. Amid all the turmoil, Dana did complete two unrelated deals. It signed an agreement with the United Auto Workers to allow it to organize workers at its 200 U.S. factories. Until now, the union has only represented workers at nine of those operations. And as part of its effort to shed non-core assets, Dana sold its Morganton, N.C., plant and production equipment from plants in Toluca, Mexico; Glasgow, Ky.; and Humboldt, Tenn. to Louisville, Ky.-based technical services provider Sypris Solutions. The deal transfers 600 employees to Sypris. (At press time, Dana announced the further divestment of its $2.2-billion aftermarket division.)
        The company's latest project is an automotive systems group technical enter in Toledo, where 450 engineers will be employed. Dana's Phil Zmuda said the choice came down to Michigan, Indiana and Ohio (the top three states in new automotive plants from January-November 2003), and "Toledo won for the major reason that they had Port Authority financing."

Parks and Parcels

In Hagerstown, Md., a Mack Truck expansion announced in 2002 has blossomed into the establishment of parent company AB Volvo's center of excellence for its Volvo powertrain division's heavy-duty diesel engine family. While engines for the Mack line have been made in Hagerstown since 1961, Volvo truck engines for the North American market have been made until now in Skˆvde, Sweden. The 1.5-million-sq.-ft. (139,350-sq.-m.), 1,200-employee complex will receive an investment of approximately $150 million.

The Mack Truck engine complex that's operated in Hagerstown, Md., since 1961 will soon see an investment of some $150 million from parent company AB Volvo to make it the center of excellence for all of its North American truck engines.

        Timothy Troxell, executive director of the Hagerstown Economic Development Corp., says, "The work force here understands they need to be as technically efficient as the new machinery coming into the plant." In this case, that meant some important union negotiations hammered out just prior to the announcement. There is one other unique arrangement to the deal as well.
        "The state has made an offer to Mack to purchase land adjacent to Mack's faciity and turn it into a vendor village," says Troxell. "It's about 100 acres [41 hectares], all contiguous to the plant. We've seen it be successful to our south, and we'd love for something like that to happen here at Mack too."
        Unfortunately for Hagerstown, that very homegrown supplier base proved a thorn in its side as 2003 drew to a close. GST Autoleather will cut more than half of the 215 workers at nearby Williamsport's cutting operation in order to open a new facility in Nuevo Laredo, Mexico.
        Those losses will be somewhat offset by around 100 jobs expected to be transferred to Williamsport from a facility the company is shutting down in Reading, Pa. Company leaders pointed out that it made sense to move the cutting operation closer to the sewing companies, most of which have moved to Mexico.
        The supplier park is something a lot of companies would like to see. Ford and a bevy of Mexican suppliers have signed on to the concept around their planned Hermosillo expansion, and Toyota is doing the same in Baja California, while contemplating the idea for its San Antonio complex as well.
        "In the past, we have liked to be close, but not too close," Dana's Phil Zmuda told the SEDC audience. "But in the next year or two, we may be asked to be on a campus setting."

Japanese Joint Ventures Abound

Like the Denso-Kyosan Denki joint venture that chose Mt. Sterling, Ky., earlier in 2003, other Japanese JVs are following in their OEM big brothers' footsteps in establishing plants in North America. Of course, Kentucky, with its critical mass of Japanese suppliers to Toyota, often is high on the list.
        On the Ohio River's banks in Maysville, Brookville, Ohio-based supplier Green Tokai Co., known for its paint-film technology, is expanding its product line of rubber and plastic moldings and strips, adding 60 new jobs to its previous payroll of 250 by the end of 2003. The company serves Honda Motor Co. as well, which recently expanded its own operation just north in Anna, Ohio.
        In October 2003, Wytheville Technologies – a joint venture of four Japanese companies led by ball joint manufacturer Somic Ishikawa – announced it would build a $31-million, 150,000-sq.-ft. (13.935-sq.-m.) expansion at its steering component plant in Wythe County Progress Park in Wythe County, Va., where it will more than double employment from 62 to 164.
        Like many of those other JVs, the primary end user is Toyota, which will receive around 75 percent of the plant's output. And like the decision-making at many such plants, a location at the juncture of two Interstates (I-77 and I-81) was hard to beat.
        So Virginia beat out North Carolina and Tennessee for the project. Located in an enterprise zone, the project will benefit from some $400,000 in grants, as well as infrastructure and training assistance. Somic also operates JV plants in such far-flung locations as China, India, Thailand, France and Maine.
        Larry Corvin, manager of finance and human resources for Wytheville Technologies, says the plant should be up and running by September 2004. And he agrees that the potential for Japanese JVs is great.
        "It's substantial," he says. "If you visit Japan and see the support operations over there that need to be localized, you realize what kind of opportunity still exists for these kinds of operations in this country."