Citing a corporate strategic goal of increasing “local production for local consumption,” Yokohama will build the factory on a 500-acre site north of West Point in Clay County. The 931,000-sq.-ft. plant is scheduled to start production by the third quarter of 2015, capable of producing 1 million tires a year in the project's first phase.
The plant eventually could turn out up to 4 million tires “in accordance with future business growth,” YRC said.
Hikomitsu Noji, YRC's president and representative director, said the decision to build this plant “re-affirms our commitment to the North American market and to the continued mutual success of Yokohama and its business partner—our dealers.”
Speaking at an April 27 press conference held after a signing ceremony in West Point with state and local officials, Mr. Noji called this a “historic day” for Yokohama.
“This new plant will have a tremendous impact on the Golden Triangle region and on our state as a whole,” Mississippi Gov. Phil Bryant said, “and I welcome this highly respected company to Mississippi and look forward to our partnership in the years to come.”
Joe Higgins, CEO for the Golden Triangle Development LINK—an economic outreach organization for the region—called Yokohama's decision to locate in West Point a “testament to our eager and hard-working community.”
Yokohama supplies truck and bus tires to customers in North America from the GTY Tire joint venture plant in Mount Vernon, Ill., and from plants in Japan and Thailand, the latter of which is being doubled in size, in part to meet growing demand from North America.
YTC does not expect to alter these supply arrangements going forward, according to Andrew Briggs, director of marketing communications and product planning for YTC.
The company has not yet disclosed the plant's specific product mix—that is, it's not known whether wide-base singles might be built there.
Yokohama Rubber disclosed its plans for the U.S. plant April 22—the same day the Mississippi legislature met in extraordinary session to consider and eventually pass a package of economic and tax incentives worth approximately $130 million to Yokohama.
The Japanese tire maker said it considered building a plant in the U.S. “necessary” to meet increasingly growing demand for its brand and further strengthen a system aimed at “local production for local consumption.”
The firm had been searching for an appropriate site for the plant for more than half a year, starting with potential sites in 3,000 counties across the southern tier of the U.S.
The project will result initially in 500 jobs, according to Mr. Bryant, who oversaw efforts to attract Yokohama to the state—courting YRC officials in Japan and in the U.S. during several visits—and who called the state legislature into extraordinary session to consider the incentives package.
Mr. Bryant and state and local officials managed to keep the project—dubbed internally “Project Triathalon”—under wraps for more than six months, until state legislature action was needed to move it to a conclusion.
The project potentially could mean up to 2,000 jobs longer term, Mr. Bryant said, and will have a positive impact on the state's economy for years to come. Should YRC exercise its options to expand the plant accordingly, the investment over time would exceed $1 billion, company and state officials confirmed.
West Point is a town of about 11,000 inhabitants. It is the county seat of Clay County, located southeast of Memphis, northeast of Jackson, Miss., and due west of Birmingham, Ala. The county's major businesses include Southern Ionics Inc., Babcock and Wilcox, and Haas Industries Inc./Mossy Oak Camouflage Co.
YRC settled on West Point and the Prairie Belt Industrial Park project for a variety of reasons, spokespersons for the tire maker and the state said.
Clay County has the second highest unemployment rate in the state—in the 18- to 20-percent range—a byproduct mostly of the closing eight years ago of a Bryan Foods Corp. processing plant.
Ironically, though, catering to the needs of the food processor over the years turned into an unexpected advantage for the city/county, according to Kathy Gelston of the Mississippi Development Authority: the municipality has excess waste water handling capacity, more than enough to handle Yokohama's needs.
That fortunate consequence means less infrastructure investment and the potential of an accelerated construction timetable, she said.
Among the incentives the state has arranged for YRC are:
c $9.5 million to purchase land near West Point for the plant;
c $48 million for infrastructure investments;
c $12 million for a training center;
c Income tax exemption for up to 25 years (providing Yokohama creates and maintains at least 1,000 jobs for 10 years);
cSales tax exemptions for machinery, equipment, tooling, etc., used in manufacturing; and
c Restrictions on the ability of a municipality to change its boundaries to incorporate an industrial site not currently within those boundaries; etc.
Ms. Gelston said these incentives are similar to what the state offered Toyota Motor Co. several years ago for its Canton assembly plant.
In addition, Mississippi is a right to work state, she added, meaning no worker is compelled to join a labor union should one exist at a business enterprise.
The Mississippi Development Authority estimates the potential net effect on Mississippi's economy at nearly $915 million over 20 years over the value of the incentives.
This is YRC's second truck tire capacity expansion announcement in recent weeks. On April 17 it disclosed plans to spend $82 million to build a plant in Rayong Province, Thailand, that will double truck tire capacity in Thailand to 700,000 units a year.
These projects tie into YRC's “Grand Design 100” strategic plan—to add as much as 20 million units of new annual production capacity worldwide in the 2014-2017 period, boosting global capacity by more than 30 percent to 86 million units annually. It follows by just a few weeks a sweeping management reorganization at YTC in preparation for what YTC called an “aggressive” growth plan in North America.
That plan includes the establishment of a separate sales company in Mexico.
To reach this reporter: [email protected]; 330-865-6145.