Toyota: How Mississippi Engineered the Blue Springs Deal

Toyota Corolla.jpg

A big crowd gathered earlier today to welcome the first Corolla that rolled off the assembly line at Toyota’s tenth U.S. plant in the tiny hamlet of Blue Springs, Mississippi. Situated in Union County, just 17 miles from Elvis’ hometown of Tupelo, the new plant is the latest new automobile manufacturing facility to fly the flag of a foreign manufacturer in the Deep South.

The opening culminates a year of project announcements in the area. Mercedes-Benz will invest $350 million to add capacity to its plant just outside of Tuscaloosa, joining Navistar, the nation’s top manufacturer of school buses and medium-duty trucks, which also announced plans to expand in Alabama. In neighboring Tennessee, eleven automotive related projects totaling $300 million have been announced since June. A commissioner from the state’s economic development office recently said that one third of the manufacturing jobs in the Volunteer State now relate to the automotive sector.

But the growth of the auto industry in the area is not a stroke of fate. “It was a deliberate strategy, a regional strategy,” said David Rumbarger, President and CEO of the Community Development Foundation for Tupelo/Lee County. In 2001, three northeast Mississippi counties, Pontotoc, Union, and Lee, formed the PUL Alliance with the goal of luring a major automobile manufacturer to the area. Two years later, they identified the Blue Springs site, began looking for a tenant, and named the endeavor the Wellspring Project.

“At the time, North Mississippi said, ‘We’ve got to diversity our economy here’ and we narrowed it down to automotive,’” said Josh West, Economic Developer for Pontotoc and Union counties. Nissan’s announcement in 2000 that it would open the state’s first assembly line plant in Canton proved it could be done.

Furniture manufacturers, anchored by Ashley Furniture, Lane Furniture and Southern Motion, had long provided the region’s economic backbone (as recently as the 2007 Economic Census, more workers were employed in the state manufacturing furniture than automobiles). But, as with the textile industry, the industry slowly declined through downsizing and outsourcing, forcing locals to explore how to best capitalize on the area’s skilled labor force. The members of the PUL Alliance also probably couldn’t help but notice that the annual compensation cost for workers making automobiles is three times higher nationwide than for those manufacturing furniture.

Furniture manufacturing provided a good labor basis for the region, West said, “but the computer technology and robotics needed to be taught.” To that end, the PUL Alliance formed a consortium of four area community colleges to offer the skills needed at the Blue Springs facility.

“Each (college) couldn’t teach all the needed courses by themselves,” Rumbarger said, referring to courses on working with sheet metal, tool and dye technology and robotics, among others. “When we put the four institutions together, it helped spread the education of the workforce. It allowed the whole region to upgrade their skills.”

After approaching Ford and other domestic manufacturers (“I spent a lot of time in Detroit," Rumbarger said), Toyota announced in 2007 that it would break ground in Blue Springs, originally to make the Prius; Toyota later announced the plant will make only Corollas. Automakers have generally avoided opening up new plants in states where the United Auto Workers have a long history, choosing instead sites in the South with right-to-work laws that prohibit workers from being forced to join unions if their co-workers do so.

“It’s definitely a benefit to us to be a right-to-work state,” West said, estimating that less than two percent of private employees in the northern Mississippi area belong to unions.

The plant received 35,000 applications for 1,300 available spots, hiring mostly locals, with plans to hire more next year. Of course, a spin-off of every new auto plant is the wealth of suppliers who move into the area, producing seat bumpers, plastics, metals and other auto parts that add an estimated 1,000 jobs to the area. With Nissan’s Canton plant a four-hour drive south, suppliers have additional incentive to set up shop.

According to Rumbarger, economic development officials in the area had a wage target of 15 to 28 dollars an hour for the jobs at the Blue Springs plant, an increase from the average hourly manufacturing wage in the area of $13.50. With the median home value in Union County at $79,200 and a per capita average under $18,000, the wages paid by Toyota should make home ownership easily attainable to its plant employees. The area has also seen an increase of 200 home starts this year compared to last.

“I would speak to community groups and ask if anyone knew somebody who worked for Toyota. A couple of hands would go up,” Rumbarger said. “Now when I pose the question, nearly half of people know somebody who worked for Toyota. That’s the difference over the last 18 months.”

Andy Sywak is the former publisher of the Castro Courier newspaper in San Francisco. He now lives in Los Angeles.

Photo: Toyota Corolla by Paulo Keller