From 2006: 'The Power to Surprise'

    McALLEN - Kia Motors Corp. may be considering a site bordering Mission and McAllen for its first North American automotive assembly plant, which would likely be a billion-dollar investment and create thousands of jobs in Hidalgo County and Reynosa.
    South Korea's second-largest automaker apparently now is seriously considering only two possible locations for the plant - the one here and one in Georgia near the Alabama line, according to one of the McAllen area's leading economic development officials.
    The Sharyland Plantation industrial park - south of Military Highway, between Bentsen Road and Farm-to-Market Road 494 - has about a 60 percent chance of
    landing the Kia plant, said Mike Allen, executive vice president for special projects at the McAllen Economic Development Corp.
    Meridian, Miss., had been touted as an early favorite to win the plant, but Kia officials reportedly are reconsidering the location because of population concerns, according to a consultant hired by the MEDC.
    "We're going after Kia," Allen said. "I know if we can get them here, we can sell them."
    But local officials have been having trouble getting the top Kia location decision-maker to look at the site, Allen said.
    Local and state economic development officials are considering pursuing several other automakers, but the Kia project is on the forefront for the McAllen Economic Development Corp., charged with recruiting companies to Hidalgo County and Reynosa. The South Korean automaker reportedly wants to begin construction on its first North American assembly plant by June.
    MEDC officials expect an announcement on where Kia will locate the plant sometime in the first quarter of this year.
    "Unfortunately, I cannot comment on any specifics at this time regarding Kia's search for a U.S. plant," spokesman Michael Choo wrote in an e-mail. "We are refraining from making any specific comments until a final decision is made." Seoul-based Hyundai Motor Co., South Korea's largest automaker, holds a major stake in Kia and apparently wants the smaller company, also headquartered in Seoul, to locate a production facility near its $1.1 billion plant in Montgomery, Ala. That would enable the two companies to share suppliers.
    Kia Motors Corp. and Hyundai Motor Co. are part of the Hyundai-Kia Automotive Group and operate as separate companies in the marketplace. But they share research and development facilities and parts distribution networks.
    Mississippi, Alabama, and Louisiana - all three at one time had been viewed as competitors for the plant - have been crippled because of Hurricane Katrina, McAllen Mayor Richard Cortez and Mission Mayor Norberto Salinas wrote in a Sept. 12 letter to Gov. Rick Perry seeking to enlist the governor's help luring Kia. "Other states will be in the competition soon," they wrote.
    In mid-November, local and state officials took a trip to Seoul, South Korea, and presented Kia officials with data that included labor force projections for the McAllen area compared with what were then viewed to be McAllen's main competitors: Alabama, Arkansas, Louisiana and Mississippi.
    MEDC President and CEO Keith Patridge; Pat Townsend Jr., president and CEO of the Mission Economic Development Authority; Paul Curtin, vice president and director of Hunt Valley Development, which owns the Sharyland site; and Aaron Demerson, Texas business development director for Gov. Rick Perry's office, went on the trip. "I think it was an eye-opener for the Korean companies," Townsend told local city and business leaders at the January MEDC board meeting.
    And Kia Motors stayed true to its brand slogan: "The Power to Surprise."
    Kia officials apparently changed their minds in November about the Meridian site, questioning whether its 40,000 population would be large enough to supply the labor force the automaker needs, according to a January article on the Web site of Southern Business & Development magazine, a trade publication. The publication said Crestview, Fla., was also in the mix at one point. In mid-December, Kia officials contacted Georgia about an available site in West Point, Ga., the article said.
    Mike Randle, editor and publisher of Southern Business, was quoted in a Dec. 10 article in The Clarion-Ledger, a Mississippi newspaper, as saying he understood Kia was looking at Texas but questioned the location because it is far from the Alabama suppliers. In late December, Automotive News, a trade publication, reported that Kia is considering Chattanooga, Tenn., Decatur, Ala., Hopkinsville, Ky., and Aiken. S.C., as well as reviewing sites in Mississippi.
    "We're trying to convince them that we are a better alternative than Mississippi or Alabama or Georgia or Florida or Arkansas," Patridge said.
    Local and state development officials aren't only thinking about Kia, though.
    William Boyd, a consultant hired by the MEDC, sent an Aug. 15 memo to Allen advising that Nissan Motor Co. also offered a possible opportunity for automobile production facility recruitment.
    Boyd's $194,000 contract calls for the Atlanta-based consultant to help the local development officials locate an auto plant in an industrial park in Hidalgo County by, among other things, identifying "mega sites" that could be suitable for automotive assembly operations, working to "open doors" at the corporate headquarters of automakers and gathering information on competing sites or states.
    "The one with the most immediate need is Kia Motors," Boyd wrote. "We are quite sure that Nissan also has plans for additional assembly operations in the United States. This fact has been privately and discretely relayed to us from knowledgeable sources within the company."
    Nissan may be making some decisions in the first quarter of this year, as well as a couple of other companies, Allen wrote in an e-mail to colleagues involved in the recruitment process.
    "I cannot overstate what a rare opportunity is developing here with two major automotive players considering projects at almost the same time," Boyd wrote. "As far as the McAllen area is concerned, it is as though the sun, moon, stars and planets were falling into line!"
    When asked about the possibility of Nissan expanding U.S. operations, Nissan North America Inc. spokeswoman Vicki Smith referred to Nissan Motor Co. president and chief executive Carlos Ghosn's Jan. 8 remarks at the North American International Auto Show in Detroit.
    "Our next phase of expansion will use existing sites," Ghosn said, according to an e-mail from Smith. "We're not there yet."
    Nissan has two vehicle assembly plants in the United States, one in Smyrna, Tenn., and the other in Canton, Miss.
    At least one consultant hired by the cities thinks a European manufacturer, possibly the Audi division of Germany's Volkswagen AG, could be in the market for a site, Townsend said. Another company, Magna Steyr, an Austria-based subsidiary of Ontario, Canada's Magna International Inc., has also been bandied about as a possibility. Magna does specialty manufacturing for companies including DaimlerChrysler AG.
    Patrick Hespen, spokesman for Audi of America Inc., said the automaker - which has assembly operations in Germany and Hungary - is not currently looking to put an assembly plant in the United States even though the automaker's sales have been increasing worldwide, especially in North America. "We still have lots of capacity left in the plants in Germany," he said.
    Hespen did not rule out the possibility of Audi building a North American plant in the future.
    Magna Steyr spokesman Daniel Witzani said the company's plans for expansion could include the United States, Western Europe and Asia. "We do have plans, but they are not at the stage of being discussed," Witzani said. "There are no concrete plans for the U.S. or a specific area in the U.S."
    The Mission-McAllen group's goal is to bring a manufacturing plant, whether Kia or another one, to a Sharyland industrial park owned by Hunt Valley Development, a subsidiary of Dallas-based Hunt Realty Corp.
    An automotive production plant and its immediate suppliers could take up 1,200 to 1,500 acres at the Sharyland location. The planned Anzalduas International Trade Bridge would connect the park to Reynosa, where a 16,000-acre industrial development could house additional suppliers.
    "It's got all the infrastructure in place," Patridge said. "It's absolutely perfect."
    The MEDC has identified two other sites that would be good for an auto plant, he said. He declined to identify them, citing possible spikes in land prices.
    "McAllen-Mission is the premier automotive site in the country," Allen said.
    An auto assembly plant in Sharyland would not be South Texas' first, but Allen said snagging Kia for the McAllen-Mission site will likely require an incentives package similar to what was offered Toyota Motor Corp. to put its sixth North American assembly plant in San Antonio. The plant, which McAllen didn't get a chance to bid on, will begin this year producing 150,000 Tundra pickups annually.
    Texas offered $133 million in incentives to Toyota to locate the $800 million facility.
    The 78th Texas Legislature started a $295 million Texas Enterprise Fund "to allow the state to respond quickly and aggressively to opportunities to bring jobs and employers to Texas," according to the governor's office Web site.
    The MEDC coalition has asked Perry and the Texas secretary of state to help with automaker recruitment, and a Perry aide has said McAllen-Mission would get the same set of incentives as Toyota got, Allen said.
    A deal with Kia would likely take $130 million to $150 million from the state plus money from an alliance of Rio Grande Valley cities for an incentives package, he said.
    Patridge said he doesn't know what McAllen's chances are of landing the Kia plant, but he is confident Hidalgo County will one day boast an auto assembly facility.
    "What's your chances of winning at the craps table in Las Vegas?" he said.
    Nevertheless, he said, the infrastructure McAllen, Mission and Hunt Valley Development have put in place at the Sharyland site makes the location competitive on a global scale, especially against the southeastern states, where several automakers have plants and suppliers located.
    "We can compete with the big leagues," Patridge said. "We are going to get an auto assembly plant here at some point."