Week of January 14, 2002
  Project Watch
Toyota Picks 700-Acre Tijuana Site, But What Will Go There?

TIJUANA, Baja California, Mexico -- Ending a four-year search and months of feverish speculation, Toyota has selected Tijuana, Mexico, as the site for a new assembly plant.
        Far less certain, however, is exactly what kind of operation will occupy the Toyota site over the long term.
        Toyota's Tijuana site announcement, however, does at least shut down an inordinately active rumor mill about the Japanese automaker's Mexican destination. The site search was marked by no fewer than five Mexican governors telling the national press that their state was a lock for the coveted Toyota plant.
Toyota's arrival "will thrust the local economy and broaden the perspectives of our state worldwide," said Baja California Gov. Eugenio Elorduy Walther.

        The one state selected, Baja California, whose economic base primarily rests in light manufacturing, could see major changes with Toyota's arrival, said Gov. Eugenio Elorduy Walther.
        "Baja California realizes today, in a search for regional development to benefit its inhabitants, an important project that will thrust the local economy and broaden the perspectives of our state worldwide," Elorduy said at the project announcement in Tijuana.

A 700-Acre Site
But just how much heavy industry - and many suppliers - Toyota will bring to Baja remains the subject of conjecture.
        For certain, the site that Toyota has selected is huge. The tract on Tijuana's east side spans 700 acres (280 hectares).
        For the moment, Toyota has said only that the sprawling site will be home to a plant will assemble truck beds for Tacoma pickup trucks. Construction of the Baja plant will begin this spring, with production startup scheduled for 2004, Toyota officials reported.
        Even with that announcement, though, some industry observers expect the huge Tijuana site to eventually evolve into a full-blown vehicle assembly operation. If that turns out to be the case, the Mexican plant would likely involve an investment of more than US$1 billion and would employ thousands of workers.
        Toyota officials, however, have not yet divulged such a long-term plan for the Tijuana site. "We're still looking at the overall business plan for the Mexico project," an anonymous source inside Toyota told The San Diego Union-Tribune. "The only thing that has been decided is that we will be assembling truck beds in Tijuana."

No Figures Announced for
Total Investment, Employment
The lack of firm details on the Baja project is one source that's fueling continued rumors. Japan's largest automaker, in fact, hasn't yet announced figures for total investment or employment at the Tijuana site.
        Toshiaki Taguchi, president and CEO of Toyota Motor North America, was sketchy about details at the Tijuana site selection announcement.
        "As you know, Toyota recently announced plans for selling vehicles in Mexico," Taguchi said. "We are very excited about establishing manufacturing operations here as well. We very much look forward to becoming a member of the local community and are pleased to have Baja California as the newest member of our growing North American family."
        Toyota officials said that details of the Tijuana operation's initial employment and investment "would be provided in the coming months."
        The unveiling of the Tijuana site pick comes after Toyota's announcement last summer that it was incorporating a Mexican sales affiliate, Toyota Motor Sales de Mexico. The Mexican sales arm will begin sales, service and marketing operations of Toyota vehicles in Mexico during the second quarter of 2002 after a dealer network is established. Initial sales in Mexico will probably be limited to Corolla and Camry models, Toyota officials.
        The Tijuana site pick and the Mexican sales setup mark a return to Mexico for Japan's largest automaker. The company pulled out its Mexican manufacturing operations in the mid-1960s because of what it considered restrictive operating rules.

Conjecture Almost Certain to Continue
For the moment, most industry analysts are anticipating that Toyota will begin Mexican manufacturing modestly, setting up a relatively small truck-bed assembly plant that will employ 300 to 500 workers.
        Setting up such a truck-bed plant, they say, would increase the volume of North American parts used in the Tacoma pickup. Moreover, such an operation could be readily switched over into a full vehicle assembly plant.
        That long-term scenario for a switchover gains weight from the Tacoma's performance in the U.S. market. Tacoma sales increased by 10 percent in 2001, accounting for more than 10 percent of Toyota's 2001 U.S. sales of 1.74 million trucks and cars. That performance marked a 7.5 percent annual increase and pushed the automaker's U.S. market share to 10.1 per cent - its first double-digit U.S. figure.
        But even if Toyota sets up a truck-bed plant, rumors over the prospect of a major assembly plant in Tijuana aren't likely to subside. Conjecture is almost certain to continue in the aftershock of three bombshells that hit the press last year:
President Vicente Fox (pictured) emerged from talks with Toyota executives last year and told Mexican reporters that the company promised that it would build a Mexican assembly plant.
  • Yoshi Inaba, head of Toyota's U.S. sales unit, said, "We have no choice but to build another assembly plant in North America, if we are serious" about reaching the company's goal of selling 2 million vehicles in the U.S. market by 2006. That 2006 goal is four years earlier than what Toyota originally planned.
  • President Vicente Fox emerged from talks with Toyota executives last year and told Mexican reporters that the company promised that it would build a Mexican assembly plant.
  • Nikkan Kogyo Shimbun, a Japanese business daily paper, reported that Toyota planned to have a Mexican assembly plant building 50,000 Tacoma pickup trucks per year operative by 2004.

Toyota Spokesperson: No California Jobs Lost
If Toyota does indeed opt to begin with a truck-bed assembly plant in Tijuana, the Mexican operation will take over work that is now handled by Fremont, Calif.-based New United Motor Manufacturing, Inc. (NUMMI), a joint venture between Toyota and General Motors. A 540-employee NUMMI plant in Long Beach now builds about 180,000 truck beds a year.
        None of the Long Beach employees, however, will lose jobs, according to a Toyota spokesperson. The affected California workers will instead shift over to making catalytic converters, steering columns and other vehicle parts, he said.

Editor's note:
Watch for the Mexico review in the November 2002 issue of
Site Selection.

320-Worker HT Hackney Facility
East Tennessee Business Park's First Tenant

HT Hackney Chairman and CEO Bill Sansom (fourth from left) stands with members of the development team that assisted in his company's expansion in Kingston. Also pictured, left to right, are Roane County Commissioner Una Coffman, Roane County Commissioner James W. Harmon, Roane County Executive Ken Yager, Chief of Staff for Gov. Don Sundquist Alex Fischer, and Roane County Industrial Development Board Chairman Steve Kirkham.
KINGSTON, Tenn. -- The brand-new Roane Regional Business and Technology Park has gotten off the ground with a bang: HT Hackney Co., No. 82 on the Forbes Private 500, has signed on as the park's first tenant. A diversified firm involved in wholesale groceries, gas, oil, furniture manufacturing and bottled water, Knoxville, Tenn.-based HT Hackney has announced that it will build a distribution center in the park that will employ some 320 workers.
        Room to grow was the rationale behind the deal. The company selected the Kingston, Tenn., location after it was unable to expand either of its existing distribution center operations in Knoxville and Alcoa, Tenn., HT Hackney officials explained.
        "We just couldn't find a piece of property acceptable to us that we could get zoned. We have to have interstate access. That's extremely important to us," said Bill Sansom, HT Hackney chairman and chief executive officer. "We worked a long time to put it in Knox County (which includes Knoxville, the county seat), but couldn't make it happen."
        Roane County officials, however, found a way to make the deal possible. The county was nearing completion of first-phase construction at the 655-acre (262-hectare) Roane Regional Business and Technology Park. Significantly, the park is adjacent to I-40 and sits less than three miles (4.8 km.) from the I-40/I-75 interchange.

New Facility Will Consolidate
Two Existing Operations
HT Hackney has purchased 64 acres (25.6 hectares) in the park, Roane County officials reported. The company will build a $15 million, 300,000-sq.-ft. (27,000-sq.-m.) distribution facility with a 12,000-sq.-ft. (1,080-sq.-m.) service center for its trucks, according to HT Hackney officials. The new center will consolidate the company's existing distribution operations in Knoxville and Alcoa, they said.
        HT Hackney's 320 new jobs will pack a strong proportional punch in the local economy. The city of Kingston has a population of some 5,300 residents, while Roane County has some 52,000 residents.
        "We consider this the announcement of the decade," said Steve Kirkham, chairman of the Roane County Industrial Development Board. "HT Hackney will bring a quality operation to Roane County that will be an asset to the development of the park and Roane County."
        County officials are anticipating that HT Hackney will be only the first economic ripple generated by the campus-like Roane Regional Business and Technology Park. Located some 35 miles (56 km.) from Knoxville, the park will include a 61-acre (24.4-hectare) greenbelt designed to preserve natural surroundings and historical landmarks. Roane County executives are anticipating total annual benefits of more than $28 million when the park reaches full occupancy.
        "From the beginning, this park has been an investment in Roane County's future," said Ken Yager, Roane County Executive. "With HT Hackney as our first tenant, we are establishing the groundwork for a prosperous industrial park which will benefit the entire county."

Flanders' Auto Cluster Adds Tower Automotive's $62 Million Plant

Gent, Belgium
Tower Automotive picked the city of Gent (pictured) to serve Volvo's plant in the city. Three other Belgian auto assembly plants are located within a radius of 40 miles (64 km.): Ford in Genk, GM-Opel in Antwerp and Volkswagen in Vorst.
GENT, Belgium -- Flanders' highly concentrated automotive cluster is adding yet another bricks-and-mortar member: Minneapolis-based Tower Automotive is building a new $62 million, 300-employee plant in Gent, Belgium. Tower's first manufacturing facility in the Flanders region, the plant is being built near Volvo's main assembly plant in Gent. Located on a greenfield site, the facility will produce and deliver welded car body assemblies to the Swedish automaker's plant.
        The global automotive supplier's facility will include a 150,000-sq.-ft. (13,500-sq.-m.) production facility and a 200,000-sq.-ft. (18,000-sq.-m.) logistics building, according to company officials. The plant's layout, Tower officials explained, anticipates further future expansion of the facility, including the possible addition of a stamping plant.
        "This new facility will enable us to provide a higher level of service today while positioning the company to manage our growth more efficiently and effectively," said Tom Pitser, leader of Tower Automotive Europe.
        Tower officials expect the facility to begin delivering its first components to the Volvo plant in September 2002. The Gent plant, however, won't reach full-capacity production until September 2003, they said.

Belgium Boasts Highest
Per-Capita Auto Production
Flanders' robust auto cluster strengthens Tower's expansion potential at its 32-acre (12.8-hectare) site in Gent, company officials said. Said Pitser, "[The company's] efforts are supported by the infrastructure Flanders' automotive cluster offers, giving us additional advantages as our operations expand."
        Belgium's auto assembly industry turns out more than 1 million vehicles a year - an auto productivity level unmatched on a per-capita basis by any other country in the world. Four Belgian auto assembly plants are located within a radius of 40 miles (64 km.): Ford in Genk; GM-Opel in Antwerp; Volkswagen in Vorst; and Volvo in Gent. Some 260 suppliers support that cluster, and three Flanders ports collectively distribute more than 2 million vehicles a year. "The addition of Tower Automotive to the region further strengthens this industry sector, and we are pleased to welcome them to Flanders," said Luc Fabry, business development director for the Chicago office of the Flanders Foreign Investment Office.

Incentives Help Convince FiberCore to
Site First U.S. Plant in Alabama

AUBURN, Ala. -- Persuaded in part by generous incentives, FiberCore Inc. has selected Auburn, Ala., as the site of its first U.S. manufacturing plant. The plant, which will focus on manufacturing multimode fiber for building telecommunications and data networks, will involve a capital investment of $30 million.
        FiberCore, however, will only invest $10 million in the $30 million plant. The remaining $20 million, FiberCore officials explained, will come from a 15-year loan provided by Retirement Systems of Alabama (RSA), which manages over $25 billion in assets. The RSA loan will carry an 8 percent interest rate, with equal semiannual installment payments. The property, plant and equipment at FiberCore's Auburn operation will serve as collateral for the loan, according to company officials.
FiberCore President and CEO Aslami praised the RSA for structuring the $20 million loan to allow for what he called "sequenced growth."

        "We are very pleased to have entered into this agreement with the RSA, which will allow us to expand our presence in the U.S. market for multimode fiber," FiberCore President and CEO Mohd A. Aslami commented at the project announcement. "The addition of a facility in the U.S. is key to our being better able to serve our U.S. customer base and provide them with faster delivery times."
        Charlton, Mass.-based FiberCore will form a wholly owned subsidiary, FiberCore U.S., as part of its Alabama operation, Aslami added.

FiberCore Also Getting Free
Land, $10 Million in Incentives
FiberCore's Alabama plant is also receiving other incentives.
        The city of Auburn is donating the FiberCore U.S. plant site, which is valued at some $1.1 million. In addition, the company will be eligible over the next 20 years to receive tax abatements, tax credits and other city and state incentives "that have an estimated current value in excess of $10 million," according to FiberCore officials.
        The Auburn plant will join FiberCore Inc.'s two existing manufacturing facilities in Campinas, Brazil and Jena, Germany. Aslami praised the RSA for structuring the $20 million loan to allow for what he called "sequenced growth."
        "Completion and start-up of the U.S. facility will be approximately 15 months from when we break ground," Aslami said. "Given our desire to sequence our growth, we would hope to be able to move forward by the end of 2002 in order to have the plant up and running in 2004. We are fortunate to have flexibility to the commitment schedule in our agreement with the RSA so that we can build when the market is ready for additional capacity."
        FiberCore's incentives, however, aren't totally open-ended in terms of time. Under the terms of the agreements that the company reached with RSA and the city, the funding commitment and land grant expire on Sept. 30, 2002, unless FiberCore makes an initial draw by that date.

Editor's note:
Watch for
Site Selection 's annual wrap-up of European corporate location activity in the July 2002 issue.
For a look at our 2000 review, see "UK Remains No. 1 with Foreign Investors" in the July 2001 issue.

pw0114bpw0114b ©2002 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.