Changing Gears

The wait is finally over for Tupelo, MS, which must feel like the Kate Middleton of car towns. Today, Toyota chief executive Akio Toyoda was set to join Mississippi Gov. Haley Barbour to finally open a $1.3 billion factory in Blue Springs, just outside Tupelo. The dedication is taking place two years after the factory was originally set to open.

Delay or not, many Midwest governors must wish they were in his shoes. While our region has a few foreign car plants, as well as  engineering centers, it has only gotten one of the big factories announced in past few years, the Honda plant in Greensburg, Ind.

Other states have beat out their Midwest rivals, like Georgia, which landed Kia, Tennessee, which got the newly opened Volkswagen plant, and Toyota, which picked Mississippi.

That state came up with $294 million in incentives, or $148,000 for each of the 2,000 jobs the plant is set to provide. About 1,300 people have been hired thus far, earning a starting wage of $15 an hour, rising to $21 after five years.

But Tupelo, a town of 38,000 about 90 minutes south of Memphis, has had to be patient. I wrote about the long wait today for The Atlantic Monthly’s Atlantic Cities page.

Although Toyota announced the plant in 2007, its opening today comes almost two years behind schedule. The recession prompted the carmaker to put the project on hold in 2009. Toyota finished the building, but didn’t install any equipment.

Inside the unfinished factory

With the recession still underway, Toyota ran into an uproar over cases of sudden unintended acceleration on its cars, which prompted millions of recalls worldwide. Just when it was getting over that, the Japanese earthquake struck, and now Toyota and other Japanese carmakers are wrestling with the impact of floods in Thailand.

Despite the delay, people in Mississippi say they were confident Toyota was coming. “Toyota has just been an unbelievable partner in this,” said Kathy Gelston, deputy director of the Mississippi Development Authority. “When they came to us and said, ‘we’re going to slow down the project,’ it was never, ‘we’re not going to build this.’”

But there was nervousness. “It was a legitimate question: is Toyota going to walk away?” says Dennis Seid, business editor at the Northeast Mississippi Daily Journal.

In June 2010, Toyoda woke up Barbour with the news that the plant was back on track. Today, Tupelo can now breath a sigh of relief that it is joining an elite group of cities with car factories.

But with the auto industry still seeing sluggish sales after the depth of the recession, will there be any other foreign plants for Midwestern states — or even Southern states — to vie for?

Gary Chaison, professor of industrial relations at Clark University in Worcester, MA, says the best hope in new Asian players.

“I think people are waiting to see if there will be a Chinese plant or an Indian plant built,” he tells Changing Gears. But as far as German, Japanese or Korean carmakers are concerned, “we’ve pretty much seen it.”