Superior to Open Plant in Arkansas : Maker of Wheel Rims Cites Rising Demand, Proximity to Market
Superior Industries, a Van Nuys-based maker of wheel rims for cars, says its plans to open a factory in Arkansas were prompted by increased demand and the company’s desire to be closer to its auto-maker customers.
Superior, which already operates plants in Van Nuys and in suburban Toronto, Canada, announced last week that it is spending $10 million to acquire and remodel a 160,000-square-foot factory in Fayetteville, Ark. The company plans to start the renovation in August and to begin production at the end of the year.
“They’ve been operating at flat-out capacity and they still have an awful lot of commitment through 1989,” said Joseph Phillippi, who follows Superior for the E. F. Hutton brokerage firm in New York. “They really need this plant.”
Had Been Looking
Superior had been looking for a plant in the Midwest or in the South--where most of its customers are--for six months, Phillippi said. The company bought the Arkansas plant from NI Industries, which used it to make springs for agricultural equipment, trucks and trains.
The Fayetteville factory, which shut down just more than a month ago, is in good condition, a spokesman for Superior said. He added that it easily can be converted to make Superior’s products, sporty cast-aluminum wheel rims.
Christopher Cedergren, a senior analyst for J. D. Power & Associates, a Westlake Village auto industry consulting firm, said many equipment manufacturers have cut shipping costs by moving closer to the car plants they supply.
No Local Expansion
Phillippi said “there’s no way” Superior would expand production in California, given the expense of shipping products east of the Rockies, where most car plants are situated.
Auto plants, which formerly were mostly in the Northeast and Midwest, increasingly have been moving into the South. Nissan operates a modern plant in Smyrna, Tenn., and General Motors has announced that its new Saturn plant will be in Spring Hill, Tenn.
Analysts said the migration to the South stems largely from incentives from local governments and the area’s relatively light union activity. In Superior’s case, Fayetteville officials have promised to issue low-interest bonds to help finance the project.
Superior also has clashed with unionists, and is trying to block the United Auto Workers from gaining a foothold at its Van Nuys plant. The union won a representation election in August, 1984, but the company filed objections with the National Labor Relations Board. On Jan. 31, the regional NLRB office upheld the vote, but Superior has appealed to NLRB officials in Washington.
Gilbert Luna, an organizer with UAW Local 645 in Van Nuys, discounted the possible role of the dispute in Superior’s decision to move into Arkansas. He said he thought the site was selected because of its location. Company officials declined to comment on the union issue.
Superior has enjoyed increasing profits. In 1985, the company’s net income was up 64% over the previous year, to $7.2 million. Sales were up 17%, to $130.8 million.
The Arkansas plant will employ 250. About 1,200 work at the Van Nuys factory, and another 250 are at the Canadian plant.
