It’s not hard to imagine that a new automotive plant will bring a positive economic impact to the community where it locates. That’s even more true when the plant attracts supplier shops
to the same area.
But there are also significant advantages to both the OEM and its suppliers when they are close to each other. That’s why, when Nissan moved to Canton, Mississippi, in 2003, it immediately built room for suppliers, and why the company did the same again when it expanded with a new supplier park 10 years later.
At the time of the 2013 announcement, Nissan officials said that the expansion, which was supposed to support the movement of production for the Murano SUV to the U.S., would also “support more than 800 jobs, including an expected 400 newly created supplier jobs.”
The supplier park expansion added 1.35 million square feet to Nissan’s footprint in Canton.
Dan Bednarzyk, Nissan vice president for total delivered cost, said in 2013 that “Today’s groundbreaking supports our efforts to bring more Nissan cars and trucks to our plant in Mississippi and means more Mississippi jobs. Additionally, the supplier park will help make us more globally competitive at our Canton Mississippi plant.” The plans included making improvements to the supplier logistics center building located at the south end of the Nissan campus.
“The supplier logistics center will serve as an immediate space for suppliers, ” Nissan said in a press release. “The integrated logistics center will be used for multiple purposes supporting operations including inbound production parts, outbound returnable containers and supplier operations.”
Gov. Phil Bryant hailed the decision. “The addition of the new supplier park will bring more manufacturing jobs to Mississippi and serves to strengthen our growing automotive sector.”
Nissan was reportedly seeking 10-15 additional parts suppliers to move into the area at the time of the 2013 expansion — to begin with. Nissan had already proven that point when the plant first opened, and the strategy it followed was already in place in 2001, when the Canton plant spun off of the established operation in Smyrna, Tennessee, says Dave Boyer. Boyer was vice president for manufacturing at the Nissan plant in Canton when it began. “The plant was my responsibility, ” he says.
The way Nissan courted suppliers to its site was not common at the time. “Nissan made headlines in 2001 and 2002 by building the Canton plant with a degree of supplier-automaker cohabitation new to the North American industry, ” Lindsay Chappell wrote in Automotive News. “Plant designers created a weatherproof conveyor system that brought parts to the vehicle assembly line from supplier lines in an adjacent building. Separate companies sorted subcomponents at one end of Nissan’s plant, sequenced them to match Nissan’s production schedule and delivered them to Nissan workers at the assembly line. Over the past decade, the concept spread around North America, blurring the line between the activities of automakers and suppliers.”
“It really comes down to the fact that we build our cars in sequence, ” says Boyer, now retired. “When we were in Smyrna, all of the suppliers, basically that Nissan needed — probably about 75 percent of them — were right there in that area. And we build vehicles in sequence, so parts have to be there at the exact time.
“So when we decided that Mississippi would be the site for the new plant, we knew we could attract some suppliers to come down. But it’s very difficult to get them all to move. And when you build the parts in a sequence, it’s more difficult the further away you are.” For some suppliers, the move was cost prohibitive. “A lot of them couldn’t afford to relocate to Canton and a lot of them were still in Tennessee, ” Boyer recalls. “They continued to ship us product from Tennessee and they shipped it on time. It just meant that there was a little bit higher inventory on both sides.”
But for those who did move, the proximity to the Canton plant reaped immediate benefits, he says. “Some of the main suppliers agreed to come down so that they could be very close and it wouldn’t be an issue to supply the parts on time. We did originally put a building up, a warehouse with the sole purpose of letting suppliers rent spaces out of the warehouse so that they could build the product right on site, ” Boyer says. “I think we originally had eight in there. In addition to making it easier to supply the parts, it also makes it easier for the customer as well as Nissan to maintain a smaller inventory which saves money and space for both the supplier and Nissan.”
Consider a couple of examples showing how both the OEM and the suppliers benefitted: “The vehicles we built in Mississippi were the large vehicles and all of the trucks and the SUVs actually had frames, ” Boyer says. “So, our frame supplier moved there. And that enabled them to run a truck back and forth between their facility and ours, bringing the frames in. The same thing with the seats — the seat supplier was right down the street and delivered the seats right to the plant. And both the frames and the seats were automatically unloaded from the trucks. There was nobody had to touch them. They arrived at the facility, were unloaded and went directly into our system and directly into the assembly line. They saved a lot of money.”
The economic impact of the Nissan plant was hard to miss in Canton. “We brought 5, 000 jobs for the Canton plant, plus 1, 500 onsite contractors, so that made the total at the plant 6, 500, ” Boyer says, adding that because of the suppliers, about 4, 000 more came at the same time. “When we began, the economic impact, just from Nissan, was $200 million a year. That was just paychecks coming to Nissan employees. So we were paying them two hundred million bucks a year which they were in turn spending in the community.”
Today, it’s hard to imagine Canton without Nissan’s influence, local residents say. “I’m not as familiar with the supplier park and the different businesses that are located there, but if you stop at a gas station or restaurant between Gluckstadt and Canton on any given day you will see someone wearing a uniform associated with the auto industry, ” says Michael Simmons, the associate editor and publisher of the Madison County Journal. “Nissan uniforms are more abundant and I’ve seen them everywhere from the grocery store to a kid’s birthday party.”
Text by Nick Patterson