UPPER MIDWEST REGIONAL REVIEW
Matriculating in Michigan
They're not the only ones who find proximity to the University of Michigan and to the regional automotive economy a spark for innovative execution. So does the Toyota Technical Center (TTC), which first located its North American headquarters there in 1977. In May 2004, TTC welcomed the new 32,000-sq.-ft. (2,973-sq.-m.) design studio for Toyota's California-based North American design subsidiary, Calty Design Research, Inc.
"The addition of our new Ann Arbor design studio will enable Calty to provide complete North American production design from initial styling concept to final design production," said Kevin Hunter, Calty Vice President of Operations. Its first project will be the Toyota Tundra, which begins production in 2007 at Toyota's plant under construction in San Antonio, Texas.
Bruce Brownlee, general manager for corporate planning and external affairs for TTC U.S.A., points out that the Ann Arbor TTC facilities are second only to the original TTC complex in Japan. The subsidiary also operates TTCs in Brussels, Bangkok and Australia. But the Michigan facility has unique attributes.
"We've had a steady progressive expansion," he says of the Ann Arbor complex, starting in the early 1990s, expanding at the rate of 25 to 50 associates every year. "It's not something where we go out and hire 500 people at one time," he says. "It's more of a progressive process. In this region, there is a higher concentration of automotive engineers in that field."
A May 2004 report from The Wall Street Journal said Toyota plans to grow employment at TTC from 550 to around 1,000. That would go along with recent technical center investments in the area from Nissan ($40 million), Suzuki, Hyundai and Kia. The tech center trend applies to suppliers too: Take ZF Technologies' 148,000-sq.-ft. (13,749-sq.-m.) expansion of its technical center in Northville, Mich., a consolidation move that, when complete in November 2004, will welcome 500 employees into one location. The German driveline and chassis technology manufacturer is also expanding a plant in Lapeer, Mich., even as it builds a new plant in Hickory, N.C.
Although most of Toyota's training and development is done in-house, the area's progressive schools are intrinsic to that process, including Michigan State, Ohio State, Lawrence Tech, Michigan Tech, Purdue and the University of Wisconsin.
"We have the closest relationship with the University of Michigan, since we're located in their backyard," says Brownlee. "We have regular involvement with different engineering groups who want to study our system. Since we're a technical and R&D organization, it's not like we invite anybody in. But mostly it's through intern or co-op arrangements we have with the universities. I'd say those have really evolved in the last 12 to 13 years. We are involved in some advanced research activities with a number of universities, and we're growing that arena, but that's not related to our recruiting activity. "
And the reason TTC located in Ann Arbor in 1977 wasn't necessarily related either.
"Frankly, the original reason we established ourselves here was to be close to the EPA office," Brownlee says. "We had the need to certify the vehicles we were selling here, EPA has its HQ here for certification, so it made sense we should have facilities here."
And it makes sense for so many others to develop facilities in regional proximity. In fact, one of the investors in TTC, Toyota subsidiary Aisin Seiki, is building a new 57,587-sq.-ft. (5,350-sq.-m.) electronic parts facility of its own in southern Illinois, a $14-million investment that will begin production in June 2005.
According to Colliers International, 1.3 million sq. ft. (120,770 sq. m.) of new office space was under construction in the Detroit metro at mid-year 2004, with 500,000 sq. ft. (46,450 sq. m.) of that total in Washtenaw County, where over half was already pre-leased. Colliers also notes that "continued expansions of research and development activities, in the medical, high-tech and automotive industries, may spawn more retrofit projects on older, existing facilities which do not have the amount of docks or ceiling heights distributors now need." The report goes on to note that "most major purchases have been made by R&D firms related to the automotive industry." Nevertheless, R&D/high-tech vacancies were still at 21 percent.
Headquarters consolidation moves also favor Detroit. Witness the May 2004 move by GM subsidiary Saab from Norcross, Ga., to the complex occupied by its parent company in Detroit's Renaissance Center. It is the last of GM's eight divisions to locate there, and the move, expected to be complete in September 2004, will add 80 employees to GM's considerable Detroit footprint.
BorgWarner is moving from its Chicago base to a new 66,000-sq-.ft. (6,131-sq.-m.) world headquarters in Auburn Hills, Mich., which will be complete in April 2005 and be home to 70 employees.
"Every day we get a few steps closer to establishing ourselves in metro Detroit -- the heart of the global automotive industry, home to several of our customer organizations and the headquarters of three of our global business units," said Tim Manganello, BorgWarner chairman and CEO, at the July 2004 groundbreaking.
But the innovation is not limited to cars. Following BorgWarner's lead, Kellogg Co. is moving out of Illinois too, relocating its Keebler Moving Snacks unit from Elmhurst, Ill., to Kellogg's home base in Battle Creek, Mich.
Dow Corning in late 2003 established its new Compound Semiconductor Solutions unit in its home territory of Midland, Mich., "close to Dow Corning's critical mass of technical capabilities, research and development assets, and strong manufacturing disciplines," said Robert Johns, Global Director of Compound Semiconductor Solutions. "Consolidating our operations will give us synergies to accelerate our implementation, and achieve world-class quality material specifications and economies of scale."
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