Auto supplier Tasus Corp. knew that its newest plant in the U.S. would go in the Southeast.
Its original operation in Bloomington, Ind., was running over capacity, making it difficult to meet new business demands from the South either from there or its injection molding plant in Georgetown, Texas, which was mostly dedicated to auto production in Texas and Mexico.
In addition, new contracts were coming in from key customers expanding in the South. So the company began looking for specific sites, and found itself heavily recruited by communities anxious to grow as part of a new Southern auto production hub.
"It's amazing how aggressive economic development has gotten, with training incentives and site preparation work," said Melanie Hart, president and CEO for Tasus, which is part of Tsuchiya Co. Ltd. of Nagoya, Japan.
In the end, it was the state of Alabama that came forward with a location in the northern city of Florence and an incentive package that covered the cost of the land, much of the construction of the 104,000-square-foot facility and additional tax abatements covering the business for 10 years.
Northwest Muscle Shoals Community College stepped up to help fill the training gap, creating an 18-month injection molding program, installing an injection molding machine and robotics.
"It's phenomenal what they've done," Hart said during a phone interview from the Oct. 29 grand opening of the Florence plant.
The plant initially is focusing on injection molding lighting components for North American Lighting Inc., which has expanded its own production in neighboring Muscle Shoals, Ala.
Eventually, the Alabama site will supply customers in that state as well as Tennessee, Mississippi and Georgia. Tasus Indiana will ship to customers in Michigan, Indiana, Ohio and Kentucky. Texas will continue to focus on that state and Mexico while Hamilton, Ontario, oversees supply to automakers near Toronto.
Tasus is part of a rapidly expanding trend for the U.S. auto market. Southern states have become the focus of future growth, both bringing in new plants and expanding the number of models produced there. Volkswagen AG's new plant in Chattanooga, for instance, is hoping to double production within the next few years.
In nearby Cullman, Ala., German auto supplier Rehau AG + Co. just announced plans to invest up to $3 million for its first North American technical center, specifically for the auto industry. Currently, product development for the Rehau, Germany, supplier is based out of Germany, with prototype parts and systems sent either there or to its North American base in Leesburg, Va.
The new center in Cullman — adjacent to a manufacturing site that is already undergoing a $115 million expansion to make bumper assemblies for Daimler AG's Mercedes plant in Tusca¬loosa, Ala. — will have injection molding, painting and assembly and employ 45 engineers.
Alabama is not alone in rapid development in the Southeast thanks to the auto industry.
South Carolina's Anderson County alone has seen Ireland's Mer¬gon Corp. announce a $4.4 million expansion for injection and blow molding, is approving tax benefits for an $11.5 million expansion for Plastic Omnium Automotive Exteriors LLC, and is offering three project inducements to expand or locate there.
In 2000, the North American auto industry made only 25 percent of its 17 million vehicles in regions south of Ohio, said Mike Wall, an auto analyst for IHS Inc. In 2016, it is expected to make half of them there.
"You don't necessarily have the generations of workers that have grown up in the auto industry down there, but that can be a good thing or a bad thing," said Bill Rinna, senior manager of forecasting for Troy, Mich.-based LMC Automotive. "It can be a good thing in that they don't have the Midwest bias of taking the auto industry for granted, and your workers there won't feel pressured to join a union."
Add together the economic development incentives, new training programs and lower overall employee costs, and the region becomes very attractive, he said.
It was pure business that brought Tasus to Alabama, Hart said. Its new customer, North American Lighting, has been expanding in Muscle Shoals to supply key customer Toyota, as Toyota ramps up U.S. production.
The demand for Tasus in the region was so strong, it launched production nine months ago from a temporary facility in Florence while its plant was under construction. The new site already employs 56 people and launched with $8 million worth of business; that figure is expected to reach $10 million in the next year.
Tasus has a standard development model for all of its production plants — build an initial facility of about 100,000 square feet with space for a 50,000-square-foot expansion, then grow to house 30-35 presses with clamping forces of 150-1,450 tons.
Even on the first official day for Florence, Hart said she could see a time coming soon when Tasus would look to expand there.
The biggest issue facing Tasus — and other companies moving into the new auto production hub — is the need for skilled labor.
"There is a significant shortage of mold makers," Hart said. "It almost seems like they're the last to come, but those companies are a lot smaller and the investment for them is significant."
A new study of vendor tooling supporting the North American auto industry by Harbour Results Inc. backs up the concerns about a lack of toolmaker support in the South. The bulk of the 750 tooling suppliers to the auto industry are centered around Detroit and neighboring Windsor, Ontario, as well as near Chicago and Toronto, said CEO Laurie Harbour.
Some European automakers and suppliers have talked about supporting a move by their toolmakers into the South if the existing production base does not respond, she said.
"We are absolutely going to lose future work to the South if they don't act," she said.
Southern states are trying to step up training for the growing auto production base, though. In addition to training programs such as the one at Northwest Muscle Shoals Community College, the state of Alabama is taking high school counselors to tool shops to help them learn more about the skills needed there, and help steer their students into manufacturing.
Alabama has also launched a requirement that all high school students take at least one skilled-trades class, Harbour said.
Tasus said it is likely to expand its workforce there from 56 people to 180 at full capacity.