Nissan North America wants parts suppliers to set up shop as close as possible to its flagship plant in Smyrna. The Franklin-based automaker announced Tuesday the construction of a “supplier park” on its campus.
The company
plans to invest $160 million in the project, with substantial help from state and local government. Ten unnamed auto suppliers have already committed to establish operations on site, creating a projected 1,000 jobs. Already, 8,400 people work at the Nissan plant, which is considered the largest auto plant in North America.
“My goal is to get these suppliers to invest in Tennessee near to that big car factory,” Nissan senior vice president for manufacturing John Martin said. “I don’t want them to expand their traditional base in the Midwest. I want them to come down South and feed us and the other Japanese and Korean transplants that have come over into the South.”
Nissan has been moving more and more car production to the U.S. Now 85 percent of the vehicles sold in the U.S. are made in North America. That’s made streamlining supply chains more valuable. In 2013, Nissan
started building a similar complex near its plant in Canton, Miss., which now is home to
suppliers making glass assemblies, steering columns and wire harnesses.
In Smyrna, the suppliers will still be allowed to sell parts to Nissan’s competitors, even if they’re built on Nissan property. Martin says the additional volume should help drive down costs.
“There will be no exclusive supplier agreement,” he says. “The best way I can get my suppliers to be competitive is for them to supply and have volume leverage with other [car companies].”
The Case For Incentives
Since the motivation is to get parts suppliers closer to the production line to cut shipping costs and reduce other delays, Tennessee was not in competition with other states, unlike most economic development deals. Still, the state has agreed to give Nissan $35 million, with another $18 million in local tax breaks.
Economic and Community Development commissioner Randy Boyd argues the expansion warrants investing tax dollars.
“Without building this park, the suppliers wouldn’t have come,” Boyd says. “They would stay in Indiana or Iowa or wherever it might be. So we had to do this to give them a place to come to help attract them to Tennessee.”
The legislature still has to approve the state money. The Rutherford County Industrial Development Board
signed off on $18 million in tax breaks Monday.
The first set of companies could begin moving in by the end of 2016.
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