Toyo Tire & Rubber Co. Ltd. has selected a site in Bartow County, Ga., for its first U.S. passenger tire plant, calling the 150-acre rural plot northwest of Atlanta the ``most suitable'' of several it surveyed.
Toyo will receive tax breaks and other financial incentives from local, regional and state governments that could add up to several million dollars to build the plant in Georgia.
The company has budgeted $150 million in a first phase to build a 1.03 million-sq.-ft. facility, with an initial annual capacity of 2 million passenger and light truck/sport-utility vehicle tires and 350 employees at start-up, set for the first quarter of 2006.
The company will finance the project at least in part through industrial development bonds issued by the Cartersville-Bartow County Joint Development Authority, according to the project's memorandum of understanding.
Toyo eventually could invest another $250 million in the factory and create 550 more jobs in two phases, depending on demand and other market conditions, according to Shozo Kibata, president of Toyo Tire (U.S.A.) Corp. Mr. Kibata, also a corporate officer of the parent company, will become president of Toyo Tire North America Inc., a new subsidiary created to operate the plant.
The second phase of the project-essentially to double capacity-could be implemented as early as two to three years after the initial startup, Mr. Kibata said, while the need and timing for the third would be reviewed upon completion of the second phase.
Toyo intends to use its proprietary ``T-pro'' automated manufacturing system, which it claims offers the flexibility to produce small production runs of multiple lines of tires while maintaining the quality standards of more conventional manufacturing, Mr. Kibata said. The facility will have its own rubber compounding capacity and will be powered by natural gas and electricity, he said.
About 430,000 square feet of the factory will be used for warehousing, Toyo said, to service its markets in the Southeast and along the eastern seaboard.
Toyo originally acknowledged three and a half months ago it was favoring the Bartow County site over other, undisclosed locations in the Southeast. One of those sites was Prattville, Ala., local authorities there later divulged.
The firm chose the Bartow County site, near the town of Cartersville (pop. 12,000), for several reasons, Mr. Kibata said, including its proximity to areas of growing demand, access to rail and highway transportation and a skilled local work force.
A group of local property owners sued to stop the local development authority from rezoning the site to industrial, but the group-Residents Against Spot Zoning (RASZ)-dropped their opposition later when they claimed they were threatened with a countersuit by a government authority and landowners who favored the location.
Going ahead, RASZ now intends to monitor progress on the project ``diligently,'' said the group's chairman, Rick Moore, ``to ensure they cross all the t's and dot all the i's properly. All along, our primary objection was that public matters, i.e. rezoning, were conducted in secret.''
Additionally, he said, members of the group are running for local office in the hope of returning openness to local government.
Toyo hopes to start clearing land in July or August after it obtains environmental and other building-related permits. Groundbreaking should take place by October or November.
According to RASZ, the state of Georgia will own the land and the local joint development authority will own the building; Toyo will then lease both. Toyo declined to comment on this arrangement.
Mr. Kibata said Toyo's decision to build a plant in the U.S. was based in part on ``robust'' demand in North America and limited global capacity to serve the market.
``We could have gone to China or Mexico or South America,'' Mr. Kibata said, ``but we felt we needed a quality labor force to go with our advanced (manufacturing) technology. We also wanted to minimize the currency risks associated with overseas plants.''
Toyo reported about $500 million in sales in North America in 2002-representing more than a third of the firm's global tire sales. That was good for about a 2- to 3-percent share of the North American replacement markets for passenger and light truck tires and closer to 4 percent in the medium truck tire markets. Toyo has not disclosed North American sales for 2003.
Among incentives Toyo is receiving are a 10-year phased property tax abatement, job training, a $1,750 tax credit for each job created and tax credits for jobs created at ports in Savannah and Brunswick, Ga., according to information from the Cartersville-Bartow County Joint Development Authority. The phased abatement, scheduled to reduce by 10 percent a year, would be re-established at 100 percent if or when Toyo goes ahead with the second and third phases, said Melinda Lemmon, economic development director for the city and county.
Toyo also would be exempt from state and local sales taxes for equipment purchases. The incentives offered are available to most qualifying companies moving into the area or expanding existing activities, Ms. Lemmon said.
Bartow County and the cities of Cartersville and White will cooperate on developing access and extending utilities to the site. The state will issue $8.1 million in bonds and grants to reimburse the development authority for much of its costs.
Toyo will get a head start on employee training thanks to Georgia's state-funded ``Quick Start'' program, which helps pay for training. The tire maker will send a number of workers to Japan to be trained as trainers, Mr. Kibata said.
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Factory facts
* Owner: Toyo Tire & Rubber Co. Ltd.
* Where: Bartow County, Ga.
* Size: 1.03 million square feet
* Cost: $150 million (Phase 1)
* System: Toyo's proprietary ``T-pro'' automated manufacturing method
* Annual capacity: 2 million passenger, light truck/sport-utility tires
* Employees: 350 at start-up in first quarter of 2006