Report: Arkansas submits proposal for $1.6 billion Toyota-Mazda auto plant

by Wesley Brown ([email protected]) 2,739 views 

Arkansas is said to be one of 15 states that submitted a bid for the secretive $1.6 billion giant auto plant that Japanese automakers Mazda and Toyota plan to build in the U.S. by 2021, according to a story Thursday by USA Today.

At least 15 connected states across the eastern half of the U.S. are competing for the right to land the Toyota-Mazda joint venture expected to employ up to 4,000 workers and have an estimated annual production capacity of approximately 300,000 units.

According to USA Today, the two Japanese automakers recently issued a blind request for proposals to states in the Midwest, mid-Atlantic and South, according to two people familiar with the plans who were not authorized to speak publicly because the process was confidential.

Told only that an unidentified employer was weighing its options for a massive project under the code name Project Mitt, state economic development officials delivered preliminary proposals, including potential tax incentives, job training programs and infrastructure investments.

The USA Today report comes exactly two weeks after Toyota Motor Corp. and Mazda Motor Corp. first announced an agreement to enter a business and capital alliance, with the aim of strengthening the companies’ ongoing partnership first created in 2015 and to further grow the Japanese automakers’ footprint in the U.S.

At the new plant, Mazda expects to produce cross-over models that the smaller Japanese automaker will introduce to the North American market. By producing vehicles in the U.S., Mazda said it aims to build a production structure to further grow in North America and allow the company to more quickly respond to its customers’ needs depending on the region and model.

For Toyota, the world’s largest automaker plans to produce the Corolla for the North American market at the new U.S. facility. By further increasing its production capacity in the U.S., Toyota said it is pursuing management that is closer to the region and responding to the growing North American market that stretches from Canada to Mexico.

According to preliminary details of plans for the U.S. auto plant, both companies will contribute equal funding for the multibillion-dollar project. Once pending approvals and authorization by relevant government agencies are in place, the companies will begin to examine detailed plans with the goal to begin operations in 2021. In addition to the plans for the giant U.S. auto plant, the joint agreement signed by the automakers will allow the companies to jointly develop electric vehicles and connected-car technologies, collaborate on advanced safety features and expand complementary products.

Toyota and Mazda said they also intend to improve competitiveness in manufacturing through this new production collaboration. Toyota also has a new plant under construction in Guanajuato, Mexico, where the world’s largest automaker recently changed plans to produce the Tacoma truck there instead of the Corolla.

According to the USA Today article, Arkansas could be a top candidate for the plant because it was a finalist for the last new Toyota plant that landed in Blue Springs, Miss., in 2011. It also said Arkansas has broad latitude in issuing bonds to raise funds for infrastructure, land acquisition and job training, as well as offering sales tax exemptions, income tax credits and a payroll rebate program through the Arkansas Economic Development Commission (AEDC).

On the negative side, a Toyota plant in Arkansas could be too far away from suppliers, the article said. Still, AEDC spokesman Jeff Moore said the state “certainly has interest” again.

“We certainly have a very good toolbox of incentives to assist,” Moore told USA Today.

Moore was not available to speak with Talk Business & Politics on Thursday afternoon. However, under the leadership Gov. Asa Hutchinson and AEDC Chief Mike Preston, the state has aggressively put itself in a position to compete for so-called super-projects and large foreign economic development ventures that have been off the radar in the past. The state’s best tool has been the gradual expansion of Amendment 82, the broad economic development legislation that helps to finance economic development projects across the state. In November, Arkansas voters approved a measure to remove the cap on the amount of bonds the state can issue for such projects.

Hutchinson’s predecessor, former Democratic Gov. Mike Beebe, first put the legislative carrot stick to good use when he pushed the General Assembly to give Big River Steel a $125 million bond package to build a $1.3 billion steel mill in Northeast Arkansas. But it was Hutchinson who cut the ribbon at the dedication of the 450-worker mill that began production on March 1, 2017.

Yet, Hutchinson and Preston were unable to convince defense giant Lockheed Martin to bring its $30 billion Joint Light Tactical Vehicles (JLTV) project to the company’s giant industrial facility in Camden. Despite the legislature’s approval of an $87 million bond financing package in May 2015, the Pentagon selected Wisconsin-based Oshkosh Defense to build 55,000 of the new battlefield-ready, all-terrain vehicles for the U.S. Army and Marine Corps.

Besides losing out on the 2,000-worker Blue Spring, Miss., plant that began production of Toyota’s Corolla brand in 2011, Arkansas also was a finalist in the bid to land the $800 million Toyota Tundra truck plant in 2003 that went to San Antonio. As a consolation, Denso Corp. of Japan announced four months after the Toyota bid that it would locate a new $35 million auto parts manufacturing plant in Osceola, bringing some 500 high-paying manufacturing jobs to the recession-wracked Delta region.

Toyota is the former parent of Denso and still owns a 20% stake in the Japanese auto parts giant, which has 140,000 employees worldwide.

The USA Today article did not provide any details on where Arkansas would locate the new Toyota-Mazda plant if it won the high-stakes, multistate bidding war. AEDC promotes two so-called “Advance Arkansas” locations to industrial prospects interested in large-acre sites that feature adaptable land space with utilities and other infrastructure that allow easy access to rail, interstate and river transport.

A Metro Little Rock megasite is located in Saline County, just south of the capital city. The undeveloped, 2,045-acre site is situated just two miles off Interstate 530 headed toward Pine Bluff and includes a rail spur to the Union Pacific railroad line.

The state’s other superproject location is the same West Memphis site that was pitched to Toyota in 2011 and 2003. That 1,420-site is just off the Mississippi River in Crittenden County, about 15 minutes from the Memphis International Airport and the FedEx Corp international hub.

That Arkansas megasite is also near Interstates 40 and 55 and a 600-acre Union Pacific intermodal facility and BNSF Railway freight yard. Crittenden County and West Memphis also jointly operate a port across the river from the international Port of Memphis, which is the fourth largest inland port in the U.S.

Toyota-owned Hino Motors also has a plant in Crittenden County that has continually made axles and related parts for Toyota’s Tundra, Tacoma and Sequoia brand pickups and the company’s own uniquely designed trucks and flatbeds. Hino recently announced plans to expand its operations in Marion to include 563,000 square feet of manufacturing and office space. The Toyota subsidiary first opened the Marion plant in early 2006 with an initial investment of $280 million and an employment target of 600 employees. AEDC lists Hino as the largest manufacturer in the Crittenden County area.