Automotive companies follow the road to Kansas City
Automotive companies follow the road to Kansas City
There’s a growing stream of automotive manufacturers following the road to Kansas City, which is offering a range of benefits, which include incentives.
In April 2014 it was announced that Martinrea International of Canada would get more than $3.2 million in tax credits and job training incentives to come to Riverside and employ 290 people at a new auto parts plant.
Martinrea will qualify for as much as $2.6 million through the Missouri Works tax credit program and $640,000 through the Missouri Works training program if it meets job creation and investment criteria. Martinrea has partnered with the Kansas City-based Tutera Group to develop a 275,560-square-foot auto parts manufacturing facility to manufacture welded, corrosion-resistant engine cradles and automotive assemblies for the nearby General Motors Fairfax assembly plant in Kansas City.
“Missouri’s automotive industry is a driving force in our state’s expanding economy, and today we mark another milestone in its continued resurgence. Global companies like Martinrea are continuing to grow and invest in Missouri because of our experienced workforce, low energy costs, low taxes and stable economic climate,” Governor Jay Nixon said at the ground breaking ceremony for the new plant.
According to Nixon, automotive manufacturing and suppliers were moving overseas when he took office, and that people believed “it was just a matter of time before the last Missouri-made vehicle rolled off the line.” On his first day as governor in 2009 he issued his first executive order, which created the Missouri Automotive Jobs Task Force. In the summer of 2010, he called a special session of the General Assembly to pass the Missouri Manufacturing Jobs Act, a package of incentives to attract next-generation auto manufacturing. As a result, he said, Missouri’s auto industry has rebounded with investments.
In addition, a number of auto suppliers, including those serving both area plants have started operations in Missouri.
Automotive Industries (AI) asked Bob Marcusse Chief Executive Officer of the Kansas City (KC) Area Development Council (KCADC) what makes Kansas City an ideal base for automotive manufacturing.
Marcusse: The KC region’s transportation infrastructure (first in the nation for tonnage moved on rail; a major trucking center; expanding intermodal capacity; large regional air cargo facility; five interstate highways) – as well as two large auto assembly operations producing innovative products. Both logistics and the presence of major OEMs are key to driving location decisions by suppliers. Kansas City offers KC SmartPort, an industry-led organization dedicated to working with companies from all over the world and growing the region’s transportation and logistics industry. The combination of this unique industry support plus a low cost location to do business and the presence of two major assembly operations make KC a very attractive location for automotive suppliers.
AI: Tell us a little about why companies like Martinrea International decided to invest in KC?
Marcusse: Specific reasons cited have included a welcoming and supportive business environment, quality available workforce, central location and proximity to major automotive companies.
AI: What are some of the government initiatives that have helped boost KC’s position as an automotive manufacturing destination?
Marcusse: The KC region offers innovative and effective training programs like those offered by Metropolitan Community College, as well as state incentive programs including Missouri Works and Kansas’ PEAK. Both state programs allow companies to retain tax dollars when they reach specific hiring goals. Additionally, local communities have been aggressive with the use of property tax incentives.
AI: Who are some of the major automotive companies that have set up manufacturing bases in the region?
Marcusse: Ford and GM have both continued to invest in their KC-area facilities through the recession. Ford’s Kansas City Assembly Plant underwent a $1.1 billion investment by Ford to prepare it for production of the all-new Ford Transit van. Joe Hinrichs, Ford president of the Americas, says in a media release by the company: “Producing our Built Ford Tough Transit lineup in Kansas City is a big deal for the local community. Our investment in Kansas City Assembly Plant is about delivering world-class commercial vans for a new generation of commercial customers — while building on decades of leadership in the market and supporting new jobs throughout the region and across America.”
In 2013 General Motors announced a US$600 million investment in its Fairfax plant in Kansas City. The investment, according to the company, ranked among the largest it has ever made in an existing plant. It accounted for 40% of the US$1.5 billion that GM plans to invest this year in its North American plants in 2013, according to the company.
Kansas City is also one of only three locations in the U.S. manufacturing motorcycles for Harley-Davidson. In February 2013 the company completed a US$90 million modernization of its plant after signing a seven-year labor agreement in 2011 with the International Association of Machinists and Aerospace Workers (IAM) and the United Steelworkers (USW). At the time of signing the labor agreement, the Harley-Davidson company said the new production system was designed to provide greater flexibility for seasonal and other volume-related production changes, an enhanced ability to vary product mix in line with customer preferences including the customization of motorcycles at the factory, and greater production efficiency overall. The operating structure includes the use of flexible workers – unionized employees who work as required, depending on seasonal and other volume needs and to provide coverage for vacations and other absences.
AI: What role has KCADC played in the process of building up the city’s image as an ideal auto hub?
Marcusse: An aggressive marketing program focused on building relationships with decision makers in the automotive sector; promotion of our assets through national automotive leadership events; membership in the Center for Automotive Research.
AI: What is the OneKC economy initiative and how has it helped boost investment in the region?
Marcusse: KCADC represents an 18-county, two-state metropolitan region, marketing all of the assets of the region to attract net new investment and jobs. This model offers companies one point of contact and a process that meets their specific site location needs at a regional level. KCADC has led regional economic development for the KC market for nearly 40 years, directly influencing the attraction of more than 50,000 new jobs.