Suddenly, Detroit is where the action is for plant investments

March 7, 2020

Automotive News

Alexa St. John

DETROIT — The Motor City’s auto industry once fretted about the seemingly endless stream of capital investment going to rival vehicle assembly plants and supply chains in places around the Southeast and Mexico.
But suddenly, it’s all about Detroit again.

General Motors, Ford Motor Co. and Fiat Chrysler Automobiles have launched a wave of economic development across the greater Detroit area over the past year. New manufacturing projects represent billions in renewed commitments to the auto industry’s traditional capital city. With them comes a decade of business opportunities for the region’s contractors, tooling suppliers, consultants, engineers, parts makers and skilled and hourly workers.

Among the largest investments is FCA’s pledge of $1.6 billion for a second Jeep assembly plant at its Mack Avenue Engine Complex, along with $900 million to modernize the Jefferson North Assembly Plant for the Dodge Durango and Jeep Cherokee.

FCA also is investing $1.5 billion for production of the new Jeep Wagoneer and Grand Wagoneer at its Warren, Mich., truck plant.

GM is pumping $3 billion into electric vehicle and battery module production at its Detroit-Hamtramck Assembly plant. The automaker announced last month that it added 800 workers for a third daily shift at its Lansing Delta Township crossover plant, as well as 400 at its Lansing Grand River facility to bring back the second shift.

Ford invested approximately $750 million to build the Ford Bronco at its Wayne, Mich., manufacturing facility. At its Dearborn, Mich., manufacturing site, Ford pledged nearly $700 million to support production of new electrified variants of its F-150 pickup. Ford also sank $250 million into its Flat Rock facility south of Detroit and $740 million into new mobility projects at its campus in Detroit’s Corktown neighborhood.

Right climate

The investment surge is a reflection of the automakers’ belief that the U.S. market offers growth potential. But the decisions to invest in and around Detroit stem from “aggressive and welcoming” efforts from government leaders at the state and local levels, said Glenn Stevens Jr., executive director of Michauto, an organization within the Detroit Regional Chamber created to “protect, retain and grow” the state’s auto industry.

“There has to be the right business climate for companies to want to either locate here or expand here,” Stevens told Automotive News. “It’s sometimes said that Detroit was the Silicon Valley of the 1920s and ’30s. We’re actually seeing that kind of happen again.”

The investments are a sharp contrast to previous decades, when assembly plant projects gravitated to Alabama, Kentucky, Mississippi, South Carolina and Tennessee. While GM, in particular, struggled with North American factory overcapacity, international competitors BMW, Honda, Hyundai, Kia, Mercedes-Benz, Nissan, Subaru, Toyota and Volkswagen yearned for more North American plants.

The new Detroit-area investments “tell a tale of where the industry is and where it’s going,” Stevens said.

Work force challenge

But Detroit’s automakers still face some challenges — chief among them, talent.
“It’s one thing to announce an investment,” Stevens said. “But you’ve got to have a skilled work force that can make that plant go.

“As we design and engineer next-generation propulsion systems and vehicles, having the right skilled talent in place to do this is absolutely going to be the key factor in really long-term sustainable growth for the city, the region and the state,” he added.

Detroit must transition its work force to keep up with these plant investments and shifting market demands, he said.
“We want people to look at a company like Ford as a high-tech, global and growth- related company,” Stevens said.
“When you look at tech companies like a Google or an Amazon, that’s how people perceive them — as high-tech, global, growth.

“If we’re going to compete for talent in Detroit or in the region, we need the automotive and the mobility industry to be viewed the same way — high-tech, global, growth.”

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Official: Auto industry perfect platform to help diversify Michigan’s economy

By Michael Wayland

MLive.com

Diversifying Michigan’s economy doesn’t mean giving a cold shoulder to the automotive industry, according to Sandy K. Baruah.

In fact, the Detroit Regional Chamber president and CEO believes the auto industry is the key component to spurring economic diversification in the Motor City, southeast Michigan and throughout the state.

“There’s no better platform to diversify an economy than this very complex, very high-tech and growing automotive sector,” he told MLive.com Monday. “When we look at the automotive sector we’re not just thinking of just the four-wheel wonders.”

Baruah said the auto industry nowadays is just as much about technology and engineering as it is manufacturing, which is why officials launched MICHauto late last year.

The group — overseen by an advisory board of some of the state’s top auto execs — is designed to work closely with other industry leaders and economic development agencies around the state to help Michigan’s auto industry compete with other regions around the country and around the world that are building automotive hubs.

“It’s a brand of Michigan,” said Chip McClure, CEO of Meritor Inc. and member of MichAuto. “As you look at it going forward, I think it’s going to be a very strong brand – both from an engineering and automotive side, as well as a broader side even outside of automotive.”

MICHauto is one of the most notable achievements of the chamber’s “2011 to-do list” that was set during the 2011 Mackinac Policy Conference in June, according to officials.

The chamber made its first to-do-list during the 2010 Mackinac Policy Conference as a way to show officials from the public and private sectors what progress has been made in regards to concerns brought up at the annual gala of politics and business executives.

The 2011 list ranged from working with a Harvard professor to better identify the state’s most promising industries to improving the relationship between the state – particularly the east and west regions.

This week, the chamber released an updated to-do list identifying its accomplish thus far – MICHauto being one of them.

Other accomplishments included collaborating with the Grand Rapids Area Chamber of Commerce on numerous activities, including two business delegations; working with delegates from Washington, D.C. on ways to spur economic growth in Michigan; supporting local business leaders and bringing them all together with public officials; and launching a mentorship program to connect business leaders with college students.

“We’ve made pretty good progress on all seven items, but there will be a few things we’ll focus on (before this year’s conference),” Baruah said.

The 2012 Mackinac conference will once again have a heavy automotive presence, according to Barauh.

Announced speakers at this year’s conference — from May 29-31 at the Grand Hotel on Mackinac Island — include Ford Motor Co. Chairman Bill Ford Jr., Michigan Gov. Rick Snyder, three-time Pulitzer Prize winner Thomas L. Friedman and Roger S. Penske, founder and chairman of Penske Corp.

“The Conference focuses on how to position Michigan to prosper in the global economy – and clearly the auto industry will continue to play a vital role in embracing the realities of globalization and building a roadmap to prosperity for our city, region and state,” said Henry Ford Health System CEO Nancy Schlichting, who is chairwoman of the 2012 Mackinac Policy Conference, in a release.

Here is the 2011 Detroit Regional Chamber “To-do List”:

  1. Improve collaboration between East and West Michigan businesses and key institutions.
  2. Incorporate southeast Michigan’s leading and most promising clusters into the regional economic development strategy.
  3. Work with Harvard Professor Michael Porter to convene the Great Lakes governors to accelerate the development of a Great Lakes “super regional” strategy.
  4. Convene relevant institutions and leaders to drive the “Outsource to Detroit” initiative.
  5. Convene business, labor and educational leaders to develop and document the factual benefits of doing business in a globally competitive Michigan, and the benefits of the global marketplace to Michigan.
  6. Establish a mentorship initiative engaging graduates of the Detroit Regional Chamber’s Leadership Detroit program.
  7. Education: Support the governor’s education agenda and the new education achievement system.

Why Austin, Texas Wants to Be An Autos City (Yes, Austin) via Forbes

By Micheline Maynard originally for Forbes

When you think of Austin, Texas, the first things that come to mind are probably the University of Texas, food, music, and the South by Southwest festival. But now, Austin wants you to think of it as an automotive capital.

Isn’t Austin too deep in the heart of Texas? How can it compete with Detroit, let alone other established Southern auto cities like Lexington, Ky, Nashville, Tenn., Jackson and Tupelo, Miss.? And isn’t an auto industry focus at odds with Austin’s hip reputation?

Austin’s tactic is to home in on companies that are developing advanced technology, explains Adrianna Cruz, vice president of global corporate recruitment for the Austin Chamber of Commerce.

It’s using the Formula One race in November, which will be held in Austin, to draw attention to its bid to be included in the nation’s automotive centers. Although there have been some doubts about whether the race will happen, tickets are now on sale and it’s set to be  the first F1 race in the U.S. since 2007, when the circuit last came to Indianapolis.

“The auto industry is going through a change and a shift. There’s a focus on battery technology and making things cleaner and safer,” Cruz says. “If there’s a location to look at as we discuss how to do things differently – how do we make cars smarter, safer, better for environment – Austin wants to be on the leading edge of those discussions.”

Cruz says a series of companies have already invested in automotive technology projects there, including US Farathane, a leading source of plastics for the auto industry. It announced in December that it is opening a 250,000 square foot facility in Austin, creating 228 jobs.

Austin has operations by Freescale Semiconductor, which has a long track record with General Motors and ActaCell, started as a spinoff from U-T, which is developing the next generation of lithium-ion batteries for electric vehicles.

It also has SMSC, a multi-media network company that supplies European carmakers including Audi, BMW, Land Rover and Volvo; and TASUS, an injection-molding company. In addition to all that, SXSW will feature a series of speakers on electric vehicles and other automotive topics this year.

Cruz says these companies are turning out to be “the best ambassadors” for the city’s claim on automotive expertise. Her office often asks representatives from these companies to meet with firms that are considering investments in Austin. “What we hear over and over again is that companies come with an expectation, and what they find in Austin exceeds their expectation,” Cruz says.

To be sure, Austin has a lot of competition in staking its automotive ground. As our Changing Gears public media project reported, Louisville and Lexington recently teamed up to establish an advanced manufacturing cluster, and the Detroit Regional Chamber of Commerce has launched MICHAuto, an effort to stress the state’s automotive prowess.

But Toyota’s San Antonio assembly plant, 74 miles southwest of Austin, showed the state can be an active player on the automotive scene, said Cruz. She maintains the city is in a prime location between Detroit and car companies’ operations in Mexico, as well as Latin America.

It also doesn’t hurt that Austin is already seen as one of the country’s most attractive cities. “Austin has a lot of wonderful things going for it: a great place to live raise a family, the school system is very good, people are comfortable and happy in their work, and at night they may go play in a band,” Cruz says.

Detroit Regional Chamber launches initiative to attract automotive business to Michigan via:mLive.com

by Michael Wayland originally for MLive.com

In an effort to keep Michigan the “epicenter for the global automotive industry,” the Detroit Regional Chamber has formed MichAuto.

Chamber CEO and President Sandy Baruah said the new group will work closely with other economic development agencies — and industry leaders themselves — to help Michigan’s auto industry compete with other regions around the country and around the world that are building automotive hubs.

“While it is exceptionally clear to all of us that we need to diversify our economy in the great state of Michigan, let’s not do that at the expense of our state’s number one innovator, the automotive industry,” he said at an event Thursday night formally launching the new group.

By collaborating with economic development organizations, MichAuto hopes to use the automotive industry as a platform to drive economic diversification and compete with other states that have attracted automotive business.

Officials said nearly every new auto plant built in the U.S. in the past 10 years has been built in the southern United States.

“If Michigan is going to continue its role as the undisputed epicenter for the global automotive industry, we’re going to have to make some noise,” Baruah said. “We’re going to have to fight for it and we’re going to have to be vocal advocates.”

A MichAuto Advisory Board will serve as strategic advisers with oversight of the association’s direction and activities. Members include Rodney O’Neal, CEO of Delphi Automotive plc; Chip McClure, CEO of Meritor Inc.; Allan Gilmour, president of Wayne State University; Stephen Polk, chairman, president and CEO of R.L. Polk & Co.; and Tom Manganello, partner at Warner Norcross & Judd LLP.

Manganello said Michigan has somewhat taken the automotive industry for granted, and to have MichAuto, a “one-stop shop” for automotive investments, will help the entire state.

“Having a one-stop shop opportunity to just plug-in to the automotive network for Michigan is really important,” he said. “There’s a lot of other states out there that are really just trying to eat our lunch.”

The chamber is currently seeking MichAuto members that do business in Michigan or would like to do business in the state.

Email Michael Wayland: MWayland@mlive.com and follow him on Twitter at twitter.com/MikeWayland

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Group links auto advocates via:The Detroit News

Daniel Howesoriginally for The Detroit News

In the depths of the automotive collapse three years ago, Sandy Baruah headed the Small Business Administration and found himself lobbying Congress to support a federal rescue of Detroit’s automakers and their sprawling supply chain.

He encountered trade associations representing auto interests in South Carolina, Tennessee, Mississippi, Alabama and Texas. But Michigan, the historic and still undeniable home to the industry that put the United States (and many foreign countries) on wheels? Nope, nothing quite like its rivals — until now.

Days before the North American International Auto Show opens amid rising sales for Detroit, cautious optimism and an assurance that the hometown companies and their union finally may have come to terms with their myriad shortcomings, here comes MICHauto. It’s a new automotive trade association intended to be a one-stop advocacy and economic development shop for the Big Mitten’s auto interests.

All of them — from General Motors Co., Ford Motor Co., Chrysler Group LLC and such major suppliers as Delphi Automotive PLC, Meritor Inc. and BorgWarner Inc. to smaller suppliers, state universities and community colleges minting the engineers and assembly line workers of tomorrow.

“The international auto industry is a growth industry,” Baruah, now CEO of the Detroit Regional Chamber, said in an interview Thursday. “It’s the most integrated industry out there. We have to fight in the international marketplace … for what is rightfully ours as a Michigan auto industry. We just can’t assume it’s ours.”

No, we can’t, if the past 30 years, historic bankruptcies and horrifying job losses are any guide. They are, which is why as much as the pain of the past three years (and more) may stand as an iron-clad argument to diversify Michigan’s economy, they also make the case to care for what produced so much of the state’s modern-day prosperity lest it disappear.

“Michigan needs to expand beyond the auto industry,” says Tim Manganello, chairman of Auburn Hills-based BorgWarner and a member of MICHauto’s CEO advisory board. “But it makes no sense to ignore the big dog that created the wealth” and is a foundational industry for the state and a cornerstone of American manufacturing.

He’s right. The question is how to find the balance that MICHauto and others seek.

Under former Gov. Jennifer Granholm, state economic development policy unofficially distanced Michigan from its gritty, unionized, oil-and-metal automotive present. Too often, it sided with the labor-dominated past and lofty visions of the future instead of pushing to compete in the hard-headed present.

Her mantra was advanced manufacturing and green propulsion systems, life sciences and homeland security, even as business taxes remained uncompetitive and CEOs routinely complained of a bureaucratic maze that made the investment process protracted, expensive and frustrating.

Under Gov. Rick Snyder, a business-minded Republican with roots in high technology and venture capital, taxes for smaller firms are set to decline this year, job creation is up and the automakers given up for dead are booking fat profits on comparatively meager sales volumes in the bellwether U.S. market.

Talk about timing. Now is as good a time as any in the past dozen years, or more, to launch something like MICHauto, a chamber-staffed enterprise with a positive, credible story of restructuring and redemption to tell would-be investors from the States and abroad:

The hometown industry has mostly come to terms with its bad, old habits. It is charting a more realistic path with organized labor. It is delivering one solid product after another, and demonstrating a knack for integrating advanced technology and clean propulsion into its vehicles — hardly the markers of losers who cannot build anything people want to buy.

MICHauto aims to become an advocate in Lansing for issues that affect the automakers and their suppliers; to lead economic development efforts, including international trade missions; to serve as a public voice and trade association for the industry; to work with partners, especially universities, community colleges and the United Auto Workers, to ensure a continuing flow of talent to employers.

“At the very least, we’re going to be collaborating with the union,” Baruah says. “We’re not going to act like the UAW doesn’t exist. That’s just not reality in Michigan.”

No, it isn’t. Nor is the dated caricature of an industry that can’t get its proverbial act together — because it has, and it’s just getting started.

dchowes@detnews.com
(313) 222-2106

Daniel Howes’ column runs Tuesdays, Thursdays and Fridays.

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