Week of August 13, 2001
Blockbuster Deal of the Week
from Site Selection's exclusive New Plant database
Eight Supplier Facilities Will Cluster Near
Nissan's Mississippi Plant
By JACK LYNE
JACKSON, Miss. -- The press conference was a microcosm of auto-industry clustering: Nissan Senior Vice President of North American Manufacturing Emil Hassan and Mississippi Gov. Ronnie Musgrove were joined by representatives of no less than nine auto suppliers -- CalsonicKansei North America; Johnson Controls; Lextron; Mi-Tech Steel; PPG Industries; Systems Consultants Associates; T&WA; Tower Automotive; and Visteon.
Like Nissan, that small supplier army is coming to Mississippi to build, Hassan explained. The nine firms will build eight new plants to supply the new Nissan assembly plant rising just outside Canton, 30 miles (48 km.) north of Jackson. In the aggregate, the eight facilities will span more than 650,000 sq. ft. (58,500 sq. m.).
Modular System Offers Competitive EdgeThe modular scheme is a present-day twist on Henry Ford's moving assembly line. Plants assemble finished modules, built from numerous parts by suppliers, who deliver the modules on just-in-time schedules. The system's time demands dictated that top-tier suppliers had to locate near Nissan's Mississippi plant.
The strategy offers Nissan a significant competitive edge. Assembling pre-built modules reduces inventory-space needs, while freeing Nissan to focus on its core competencies, design and performance. More significantly, the system can make cars faster, more efficiently and more cheaply, evidence suggests. The Ann Arbor, Mich.-based Center for Automotive Research, for example, released a survey that concluded that using modules can reduce U.S. vehicle costs by as much as 15 percent.
But modular manufacturing has a contentious U.S. history. The United Auto Workers has long opposed it, charging that it eliminates jobs and lowers wages. Union officials have asserted that UAW workers at final-assembly plants earn average hourly wages of US$23.50, compared with UAW-represented supplier plants' $13.50 hourly rate, and non-union supplier plants' hourly rate of about $10.
UAW objections, in fact, forced General Motors to abandon its 1999 plans to install modular assembly in three U.S. plants. Now, however, with the threat of jobs moving offshore, some local unions have taken a softer line. GM, for example, will implement modular assembly at the new plant it's building in Lansing, Mich.
Nissan's plants, on the other hand, are non-union. Workers have twice rejected union membership at Nissan's factory in Smyrna, Tenn., where the Tokyo-based automaker is also installing the modular system.
2,200 Suppliers Vied for Nissan BusinessThe nine companies gathered at the Jackson press conference are only the first wave of suppliers for Nissan's plant, which may employ as many as 4,000.
Nissan's Smyrna plant has attracted more than 100 supplier facilities. Mississippi officials have estimated that the Canton plant's suppliers will invest some $140 million in building plants.
Nissan has a huge pool of potential suppliers. More than 2,200 suppliers initially expressed interest in the Canton business, Nissan officials reported. Nissan winnowed that group down to some 1,300 suppliers. Working in conjunction with the Mississippi Development Authority (www.decd.state.ms.us), Nissan prepped those firms in February at a three-day, invitation-only conference in Jackson.
State Businesses Feeling ImpactAnalysts have estimated that the Canton plant may create 26,000 spin-off jobs. Numerous state businesses have already gotten involved.
Two of the first wave of suppliers unveiled at the press conference are headquartered in Jackson - Lextron/Visteon Automotive Systems and Systems Electro-Coating. "These investments show that Mississippi is a great place to do business, and Mississippi-owned suppliers can compete with anyone, anywhere," Musgrove said.
Philadelphia, Miss.-based W.G. Yates & Sons (www.wgyates.com) has been tapped to handle construction of the Nissan plant. "We looked at capability, competitiveness, cooperative attitude and, most importantly in this case, we wanted to try and use a Mississippi contractor," Hassan explained.
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