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GLOBAL AUTOMOTIVE
From Site Selection magazine, November 2019
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And the Winner Is...

Mahindra keeps ’em guessing about its new assembly plant.

GLOBAL AUTOMOTIVE
Some lucky location in North America will soon get to welcome  Mahindra grand opening like San Luis Potosí, Mexico, welcomed BMW in June when the German automaker opened its $1 billion, 2,500-job plant.
Photo courtesy of BMW

by Gary Daughters

India-based Mahindra Automotive North America (MANA) is sending mixed signals about a potential location for a new assembly plant that’s expected to create some 2,000 jobs. In a statement released August 8 from its Auburn Hills, Michigan, headquarters, Mahindra announced the signing of a letter of intent to “evaluate” Buick City in nearby Flint, a 400-acre (162-hectare) expanse abandoned by General Motors 20 years ago after nearly a century of operation.

“We think the former Buick City site in Flint would be a great fit for us,” said Rick Haas, MANA’S president and CEO. Great news, it seemed, for a city in need of a break.

Except this: “Mahindra,” the statement continued, “also is in discussion with several other states that have suitable sites. The decision about where to make this substantial investment will be driven in part by the financial incentives that are available from the State of Michigan.”

Mahindra’s announcement, and the evident ambiguity, appears to have surprised the non-profit RACER Trust, which owns Buick City under terms of GM’s 2011 bankruptcy. The agreement with Mahindra is “a letter of intent to purchase,” not evaluate, says Bruce Rasher, RACER redevelopment manager. Talks with Mahindra, Rasher suggests, are well down the road.

“When we have a signed letter of intent, it represents the conclusion of a negotiation over all terms and a meeting of the minds over those terms, including what the buyer’s ultimate commitment will be for investment, generation of new taxes and jobs,” Rasher tells Site Selection.

If Mahindra is seeking to leverage a lucrative incentives deal from Michigan, as several site consultants suggest, that could add ballast to a legislative push to re-up one of Michigan’s most generous business attraction programs. Jobs for Michigan, which allows large employers like Mahindra to capture a portion of income taxes paid by new hires, is set to expire at the end of the year, the rough deadline suggested by Haas for Mahindra’s site decision.

State Senator Ken Horn, chief sponsor of legislation to extend the program and to eliminate its current $200 million cap, tells Site Selection that Jobs for Michigan “might be one of the puzzle pieces that turns out to be the tie-breaker” in Mahindra’s decision. The program, he says, was decisive for Fiat Chrysler, which announced plans in May to build a $4.5 billion Jeep factory in Detroit, the Motor City’s first new auto assembly plant in 15 years. Fiat Chrysler’s Jobs for Michigan tax breaks reportedly are valued at $99 million over 10 years.

Global Automotive
Mahindra’s Rick Haas says Flint “would be a great fit.”
Photo courtesy Mahindra Automotive North America

Mahindra, not coincidentally, is in the running, along with three other auto manufacturers, to land a multi-billion contract to build a new fleet of delivery trucks for the U.S. Postal Service. USPS, which had expected to choose a contractor this year, has delayed its decision until 2020. Some reports have suggested that Mahindra might balk at going through with a new plant if the Postal Service contract goes elsewhere, but Mahindra has stated that it needs additional space to continue to build its Roxor off-road vehicle, currently manufactured in Auburn Hills, and to produce new offerings.

As for potential locations beyond Flint, Mahindra spokesman Richard Ansell declined an invitation to speak with Site Selection or to answer a list of questions via email, citing “the sensitive nature of some of the conversations we’re involved in.” Ansell was quoted earlier as naming the Carolinas, Arizona and Texas as possibilities.

Mahindra’s Global Reach

Wherever it lands, the new Mahindra plant joins an active company portfolio.

Furthering the ongoing trend of global partnerships within the auto industry, Mahindra assumed majority ownership of Ford Motor Co. operations in India through a $275 million joint venture announced October 1. Mahindra will own 51% of the venture and will take control of Ford assembly plants in Chennai and Sanand. The venture is to develop, market and distribute Ford brand vehicles in India, plus Ford and Mahindra brands in “high-growth emerging markets around the world,” read a statement.

With assets totaling $20.7 billion, Mahindra ranks 17th on the Fortune India 500 and offers dozens of vehicle types and models including SUVs, MUVs, light commercial vehicles, three-wheelers, tractors and over 20 models of cars. Anchored by its home-country portfolio that includes five plants that have produced more than 1 million vehicles, Mahindra operates manufacturing plants on six continents and employs 240,000 globally. In addition to a plant that opened in the Dube Tradeport Special Economic Zone in Durban, KwaZulu-Natal, South Africa, in October 2018, the company extended its global reach in August 2019 with the inauguration of its first auto assembly plant in Sri Lanka, in collaboration with Sri Lanka’s Ideal Motors. The plant’s initial vehicle is a compact SUV branded the KUV100, the first of “a slew of products” to be assembled at the plant over the next three years, says Mahindra.

Huntsville Cashes In

Although Mahindra isn’t naming specific sites, North Carolina’s Greensboro-Randolph Megasite, several times a bridesmaid for major automotive projects, may well be a contender. An economic developer who asked not to be identified tells Site Selection that a team from Mahindra toured the megasite and several other sites in North Carolina in early September. The site was in the running for the Mazda Toyota joint venture that went in 2017 to Huntsville, Alabama.

New global investments in Huntsville underline the ways in which an auto assembly plant is the gift that keeps on giving. Since spring, three Mazda Toyota suppliers have either announced or broken ground on projects representing combined capital investments of close to $400 million:

YKTA, a joint venture by a trio of Mazda and Toyota suppliers, is building a $220 million parts plant on the site of the emerging Mazda Toyota facility. The plant is to make structural body stampings and assemblies as well as chassis parts, and is to employ 650 workers.

Japan-based Vuteq USA is to invest more than $60 million and hire approximately 200 workers for a plant to produce interior and exterior plastic-injected parts.

DaikyoNishikawa broke ground in August on a $110 million plant on the Mazda Toyota campus that will employ approximately 380 workers in the production of plastic automotive parts.

Toyota, in July, adjusted course when it announced that the Huntsville plant will manufacture a “new, yet to be announced SUV,” rather than the popular Corolla, as previously planned. Toyota attributed the change of direction to “changing market demands and a growing consumer appetite for light trucks and SUVs.” Mazda’s plan to build a new SUV model hasn’t changed. The $1.2 Mazda Toyota plant is expected to create about 4,000 new jobs and be up and running in 2021.

Gary Daughters
Senior Editor

Gary Daughters

Gary Daughters is a Peabody Award winning journalist who began with Site Selection in 2016. Gary has worked as a writer and producer for CNN covering US politics and international affairs. His work has included lengthy stints in Washington, DC and western Europe. Gary is a 1981 graduate of the University of Georgia, where he majored in Journalism and Mass Communications. He lives in Atlanta with his teenage daughter, and in his spare time plays guitar, teaches golf and mentors young people.

 




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