Southern hospitality: domestic import automotive manufacturers find success in the South and their numbers are growing

Automotive Industries, Oct, 2003 by Rob Wilson

The Lincoln Highway could come to serve as a solid line of demarcation between the U.S auto manufacturing industry of the last century and the burgeoning new industry of this century. Nearly all of the new auto assembly plants in place or going into place are located south of the Lincoln Highway as it meanders across the countryside. Yes, the strategy seems to be shifting to the mid south and deep south, but that's not where it all started.

Brought into being through the efforts of Indianapolis Speedway creator Carl Fisher, Goodyear's Frank Seiberling and Packard's Henry Joy, the Lincoln Highway was conceived in 1912 as the first paved highway running from coast to coast, connecting New York in San Francisco.

Although it starts and ends in large dries, the only large cities that lie in its path are Philadelphia and Pittsburg. In Gettysburg, Pa., it lies just 10 miles north of the Mason-Dixon Line. This highway is all about rural settings that shun complexity, sophistication, overtaxed and strangled infrastructure. It travels through latitude that's largerly devoid of attitude.

Honda's Marysville, Ohio, plant is just south of the Lincoln Highway, as is Mitsubishi's Normal, Ill, plant and so is the Toyota/General Motors NUMMI joint venture in Fremont. Calif., which does happen to be a UAW shop. Hey, GM's Saturn operation is situated there as well.

Dotting the Tennessee Valley, the foothills of the Appalachians, the Mississippi Valley, thousand of suppliers and service providers have set up operations to service the new, but established OEM operations of the overseas based domestic assemblers.

It started width Honda's Marysville plant, celebrating its 21st year next month, but that proved to be no more than a wake up call for the deaf. It was a treated as a curiosity, but even after the trend became contagious and overseas based assemblers spread elsewhere no substantive actions were taken to level the playing field.

Honda remained on the move. The engine plant in Anna, Ohio, opened in 1985. A Canadian assembly plant was added in Alliston, Ontario, in 1986. An assembly plant went into place in East Liberty, Ohio, in 1989. Automatic transmissions started production in Russell Point, Ohio, in 1996. Honda Manufacturing in Lincoln, Ala., started producing the Odyssey and V6 engines in 2001.

Plants were also added tot other products like lawn mowers, ATVs and the engines that power them in North and South Carolina. To date, Honda has now built more than 20 million vehicles and 50 million other power producers here in North America.

But it would only a matter of time before these plants got union organized, right? That would square the deck. After 20 years it is demonstrably apparent these workers like the way they are treated, are satisfied with their benefits, their lifestyle and their job security. They simply don't see the need to have a third party between them and the company. To the UAW, they just say No!

In 1982, the domestics did get lucky with the onset of the minivan, pickup truck and SUV craze. It was like hitting the lottery for the domestics. The Japanese and Europeans didn't see that coming at all and these were vehicles of little interest in home or other makers. But the very success of the domestics in these models served to mask the market share problems they were having with conventional automobiles. The war of attrition in passenger cat market share was taken square on the chin.

Big 3 UAW negotiations recent]y concluded peacefully and with some concessions that attempt in small ways to close the gap between transplants and domestics. But strapped with delirious pension costs, medical benefits only a teacher would expect, and substantially higher wages, that gap is still a chasm.

The new mood of collaboration is a hopeful sign, but not much has been accomplished in two decades and it's doubtful the Big 3 will have 20 more years to solve the puzzle. It could be argued that had they not caught that truck craze right, there would have been no reprieve from the transplant onslaught. Without the minivan bonanza, Chrysler would clearly be history.

The temporary hiatus has ended. The earlier paucity of product offerings in the minivan, truck and SUV segments among Japanese and European builders and their heavily skewed U.S. market specific consumption have served to accelerate the assault of overseas based assemblers and they have chosen the mid south and deep south as the current destinations of choice. Now they have the truck and SUV product well in hand, a second wave is now surging.

These topics were extremely active subjects of discussions at the recent Management Briefing Seminar in Traverse City, Mich. Presentations by Japanese auto executives were particularly well taken in and attended. What are their secrets to success? What can we emulate and build into our own processes and products? Suppliers believe they are more fairly treated and rewarded by the overseas based domestic assemblers and they are keen to get aboard these new initiatives and those in the future.