Nissan Plans Big Expansion of Its U.S. Auto Plant

Nissan announced Monday that it plans to dramatically expand its U.S. car and truck manufacturing operations here by 1992 and make its Tennessee complex the largest single auto plant--American or Japanese--in the United States.

The expansion will create 2,000 new jobs, increasing employment at the complex to 5,100 within three years, the Japanese auto maker said. The plant’s production capacity will jump to a staggering 440,000 cars and trucks a year, up from the current annual rate of 240,000.

By contrast, most auto plants in this country produce only about 250,000 cars annually.

Jerry Benefield, president of Nissan’s U.S. manufacturing operations, said the firm will also add a third car line at the plant but refused to identify which model. Industry analysts, however, said it will be a redesigned Stanza, Nissan’s compact model.

Currently, Nissan produces its Sentra subcompact car, as well as all of its light pickup trucks, on Smyrna’s assembly lines.

Nissan said it will invest $490 million to add 1.2 million square feet of space to the massive Smyrna facility--which currently has 3.4 million square feet of space--making it the largest plant under one roof in the United States.

Nissan’s Smryna complex will remain slightly smaller than Honda’s rapidly expanding Ohio operations, which will soon have the capacity to produce more than 500,000 units annually. But Honda’s assembly and components manufacturing operations are spread out among several plants in different small towns in central Ohio; Honda is now building a second final-assembly plant in East Liberty, Ohio, not far from its first in Marysville.

In addition to final assembly of a third vehicle, the expansion will also allow Smyrna to produce major components for Nissan’s proposed joint venture with Ford to build minivans in a Ford plant in Ohio.

Nissan’s announcement comes at a time when Japan’s second largest auto maker seems poised for a recovery in the American market, where its aging products and unoriginal car designs have led to slumping sales in recent years.

To counter its image as a dull car maker, Nissan has launched an ambitious new product strategy in the 1989 model year. The company is introducing four all-new products during this model year. A new Maxima sedan and a new 240SX performance model came last October, the Axxess minivan replaced the Stanza wagon last month and a new Z car, the 300 ZX, designed to appeal to sports car enthusiasts, will come in May.

Meanwhile, next fall, Nissan will launch its new Infiniti line of luxury cars to compete against Honda’s successful Acura line, and Toyota’s new Lexus luxury division.

“I think this is the turnaround year for us,” Benefield said. “Last year we didn’t have any new cars, and this year we have four, with more to come later.”

But some analysts still wonder whether the increasingly glutted auto market can absorb additional domestic production capacity. With every major Japanese auto maker now producing cars here, they are finding it increasingly difficult to sell all of the cars they ship here from Japan. As a result, many analysts warn, some of the new Japanese plants in the United States will fail.

“It’s going to be a real turkey shoot, it’ll be difficult for anyone to come in and get another 200,000 units like Nissan wants to do,” said Bill Pochiluk, an analyst with Autofacts, a Paoli, Pa., research firm.

One setback that Nissan has already suffered recently came when the Treasury Department ruled earlier this year that two-door utility vehicles imported from Japan, notably Nissan’s popular Pathfinder, must be classified as trucks, and thus must be levied with a 25% import duty. Previously, they had been defined as cars, and so were hit with only a 2.5% tariff.

Nissan has been forced to significantly increase Pathfinder prices as a result, potentially damaging the momentum of one of its hottest products.

As a result, Benefield said Nissan may eventually produce Pathfinders in Smyrna in order to avoid the duties.

“It’s not currently being studied, but it’s something we might look at,” Benefield said.

Meanwhile, the Nissan expansion, to be completed in the summer of 1992, seems to deal a blow to the efforts of the United Auto Workers to organize Nissan’s work force. With thousands of new employees entering the plant, the union may find it difficult to win over the majority needed to win a certification election.

Last summer, UAW officials said they had enough signed union cards to call for an election at Nissan, but planned to wait until they had a clear majority.

Since then, however, Benefield said the company, which opposes the union’s campaign, has not heard from the union.

“It’s been over a year since they had their ceremony to celebrate their card-signing drive,” Benefield said, “and they still haven’t called for any election.”

Frank Joyce, a UAW spokesman, said the expansion shouldn’t have any impact on its drive at Nissan, which he described as “ongoing.”