Along for the Ride
CANTON, Miss. -- Each workday, Yolanda Goodwin says a quick “thank you” as she arrives at the blindingly white truck plant sprawling next to Interstate 55.
If Japan’s Nissan Motor Co. hadn’t decided to build its first full-size pickup, and if it hadn’t picked this small town for the factory, the 28-year-old single mother still might be working 70 hours a week in two jobs
At Nissan, Goodwin puts in a 40-hour week that allows her to spend evenings and weekends with her kids. She hopes to buy a new home near the plant and plans to rent out her small house 100 miles away. “Thanks to Nissan, I’m going to be a landlord,” Goodwin said.
Lenny Sage, 38, is grateful, too. He runs Universal City Nissan, the nation’s largest Nissan dealership, where sales are booming. He expects that the big Titan pickup and two full-size sport utility vehicles that will roll out of Canton over the next eight months will attract even more customers to his dealership on Cahuenga Boulevard.
Now he needs to make room for them all. Sage waved an arm at the curving glass in front of the tiny showroom. “We can’t fit a full-size truck in there. We can’t even get one through the doors,” he said. So he’s expanding his showroom and adding bigger auto repair areas as part of a $12-million redesign.
Economists call Goodwin’s new house and Sage’s remodeled dealership the ripple effect.
Nissan tossed the stone into the pond in 1999 when it decided to challenge U.S. automakers in the full-size pickup market, the last big segment still dominated by the domestic “Big Three.”
The Japanese company’s commitment to spend $1.4 billion to build a plant in Canton, population 13,000, kicked off a chain of events that will pump billions into the U.S. economy. And it underscores how important foreign automakers have become to this country’s financial underpinnings.
Canton is the 10th Japanese auto and pickup truck assembly plant to open in the United States since 1982. More than half of Japanese passenger vehicles sold in the U.S. are made here, and Japan’s automakers continue to eat away at market share held by General Motors Corp., Ford Motor Co. and Chrysler, owed by Germany’s DaimlerChrysler. Last year, Japanese automakers had 27.6% of the U.S. passenger vehicle market, up from 19.4% in 1982. The Big Three saw their share dip to 61.7%, down from 75.5% in 1982.
“These import carmakers are not computer companies headquartered here but making their machines in China,” said Sean McAlinden, economist at the Center for Automotive Research in Ann Arbor, Mich. “They are making cars in North America with North American parts and North American workers.”
The Nissan plant in Mississippi began production May 27 with the rollout of the redesigned 2004 Quest minivan. Most of the 2,000 employees were on hand to cheer; when the plant is fully ramped up in about a year, it will have 5,400 on the payroll. Annual wages and benefits will top $300 million, with production wages averaging $20 an hour -- in a state where the average is $12.84.
By McAlinden’s calculations, the Nissan plant in Mississippi should spawn some 30,000 jobs across the country, about half of them in the auto industry, going to people who will make radios or suspension systems for Titan pickups or who will sell them at the company’s 1,100 U.S. dealerships.
The rest of the jobs will be part of the wider ripple, spreading from support positions in Nissan’s ad agency in Los Angeles and construction work at Sage’s dealership to restaurant jobs near the plant in Mississippi.
Nissan expects a lot from Canton. At peak capacity, the plant should produce 400,000 vehicles a year: the Quest minivan, two versions of the Titan, two full-size SUVs and hot-selling Altima sedans.
That rollout schedule -- five vehicles in eight months -- is the most ambitious attempted by a new auto factory with an unproven workforce, said Tustin-based industry analyst James Hossack of AutoPacific Inc.
New Life for Small Town
Founded in 1834, Canton was the center of a wealthy plantation area before the Civil War, with the gently rolling terrain ideal for the cultivation of cotton. The cemetery holds a many Confederate graves and the city is home to a memorial to black soldiers who fought for the Confederacy. Its tree-canopied streets and antebellum mansions draw tourists and filmmakers; the turn-of-the-century downtown of brick buildings, with a courthouse in the center of the square, was used for the Depression era-film “O Brother, Where Art Thou?” starring George Clooney.
Despite a downtown renovation, Canton has been one of the poorest cities in the region. Data from the 2000 census show that its unemployment rate was 6.7% and median annual household income was about $24,000.
Now, Nissan is expected to bring big changes. Canton Mayor Fred Esco Jr. said the town’s population is expected to double in the next 10 years.
The decision to build the Titan pickup was made by Carlos Ghosn, Nissan’s charismatic president. In a July 1999 meeting with U.S. dealers at Nissan North America Inc. headquarters in Gardena, they asked Ghosn to give them a full-size pickup to compete in the most lucrative segment of the market.
Two months later, Ghosn gave the project a “go.” The quick decision was typical of the Brazilian-born Ghosn, who has turned the Japanese auto business on its heels.
He was named Nissan president in 1999 when Renault acquired controlling interest in the company, which was on the verge of a bankruptcy filing. Nissan had lost billions of dollars and was mired in a costly web of supplier contracts. Its models were so bland that it was running ads featuring its old Datsun 240Z sports car to grab viewers.
Ghosn started out by laying off thousands of workers as he shuttered five unprofitable factories in Japan and moved the work to other facilities -- including to some in the United States.
A Driver’s Brand
Nissan’s turnaround in the U.S. began with its rugged, low-priced, four-wheel-drive Xterra SUV. Ghosn encouraged his designers to develop unique, sporty designs and to compete as a driver’s brand instead of a maker of middle-of-the-road family cars. Nissan added several more hits including the redesigned Altima in 2001, the Nissan 350Z sports car and Murano SUV last year and the redesigned Maxima sedan this year.
For its fiscal year ended March 31, Nissan posted a profit of $4.1 billion. Ghosn wants Nissan, which sold 2.8 million vehicles worldwide last year, to add 1 million sales by 2005.
To help reach that goal, Nissan hopes to sell 100,000 Titan pickups a year.
Big pickup trucks haul in big profits. Carmakers reap a profit of $2,000 to $7,000 on each full-size pickup sold in the U.S., analysts said. One reason is there are relatively few changes each year in trucks’ body styling, so there is a huge economy of scale in buying parts. Also, a truck is fairly simple: It has an engine, transmission, a big flat bed, a small cabin and fewer overall parts.
Dealers don’t like to talk profits, but Edmunds.com says that full-size pickups typically carry a dealer profit of about $1,200 -- almost 40% better than a mid-size family sedan.
Competing with such icons as the Ford F-150, Dodge Ram and Chevrolet Silverado, the Titan faces a tough market.
Toyota Motor Corp., the first Japanese carmaker to crack the domestic truck market, introduced its full-size Tundra in the 2000 model year. But Toyota’s truck wasn’t quite as big as competing vehicles, and buyers of full-size trucks value size. Tundra sales have tapered off, taking just 4.4% of the market through May of this year.
The Titan, designed at La Jolla in Nissan’s main U.S. studio by a team headed by chief designer Diane Allen, is every bit as big as its Ford, GM and Dodge rivals. The Titan extended-cab model is expected to start around $25,000, about the same as comparably equipped models of the bestselling Ford F-150.
At Universal City Nissan, Sage is excited about the company’s comeback. Sage was a toddler in 1970 when his father, Morrie, built the dealership on a narrow, five-acre lot between Cahuenga Boulevard and the Hollywood Freeway. Back then, he said, the average Datsun economy car “wasn’t much bigger than a shoebox.”
Then came the company’s near-collapse in the late 1990s. “In 1996 we laid off about 35 employees,” he said. Business fell by 30%, so Sage focused on selling used cars. “Nissan just didn’t have anything anybody wanted.”
Now he’s busy supervising the dealership’s expansion and redesign, and the addition of a five-level parking structure. He bought an adjacent one-acre parcel and demolished a three-story office building to make way for the bigger Universal City Nissan.
A Boost for Mississippi
The big construction contract, though, was in Mississippi, which outbid four other Southern states to win the truck factory. Mississippi spent nearly $400 million to get things ready, purchased the 1,400-acre site and put in $80 million for job training.
After handing Ghosn the state’s formal bid package, Mississippi Gov. Ronnie Musgrove passed the Nissan chief a slim silver cell phone. “It was programmed to work from Tokyo to dial my home phone number,” Musgrove recalled. “I told him to call me on it when he made the final decision.” Ghosn did.
The Canton plant is a huge boost for Mississippi.
Consider Davidson’s, a small restaurant serving shrimp and oyster po-boys in a turn-of-the-century brick building on Canton’s central square and a popular lunch spot for Nissan workers. Debbie Davidson, who opened the eatery two years ago, has enlarged it and also expanded her catering business to handle growing crowds and events at the Nissan plant. She started with five employees and now has 12 full-time cooks and waiters and a dozen part-timers.
After word went out that Nissan was hiring, more than 70,000 workers applied for jobs. Goodwin, the single mom, was one of them. She was earning $7.65 an hour plus benefits as a full-time quality control inspector at Peavey’s Electronics in her hometown of Meridian, and $6 an hour at her 30-hour-a-week second job as a cashier at the local Sack-N-Save supermarket.
She earned enough to make the mortgage on a modest two-bedroom house but had little time to be mom to 10-year-old Taneisha and 8-year-old Tia. Her aunt took care of the girls.
Then a former boss urged her to apply at Nissan. Goodwin went through a four-week pre-employment training session funded by the state during which screeners observed her and others as they performed tasks to test their auto assembly skills.
Months went by. Goodwin had given up when she came home one evening last July and found a Nissan envelope in her mailbox. She opened it, saw the word “congratulations” and, she remembered, “I jumped up and down and screamed.”
Her job is running a giant press that stamps out small metal parts used in the Titan truck frames. Goodwin makes $14.34 an hour now and gets almost $7 more in benefits. By late next year her pay will be at the plant average of $20 an hour.
The governor calls the factory “a barrier breaker.” It has generated several thousand jobs as more than a dozen supply companies have moved into the state to service Nissan. Three parts suppliers have built facilities in the Canton plant to speed delivery of critical parts; half a dozen others are located in an industrial park a few miles away.
One is Systems Electro Coating, owned by the Cooley family and headed by patriarch Bill Cooley’s daughter, Toni, 42. Started two years ago, System Electro applies rust-proofing to the frames used in Nissan’s vehicles. The small firm soon will be providing 41 jobs, mostly for low-income residents, with a $1.2-million annual payroll and a direct investment of $20 million in plant and equipment.
The region around Canton is in an area of the state “where there is a lot of wealth, and a lot of poverty,” Bill Cooley said. “Nissan’s presence will do a lot to balance the equation.”
‘We Are Nissan People’
There’s little doubt how employees feel: They wear caps and shirts with “Nissan” in big red letters when they go to the park, to social events and even to church.
“We want people to know that we are Nissan people,” says Malcolm Sutton, a 42-year-old former Wal-Mart employee, hired last year to work in the plant’s chassis department. His wife, Dannette, is waiting to hear whether Nissan will hire her too.
Sutton, a Mississippi native, lived in Detroit for 15 years and worked for a supplier that made parts for GM. He returned home four years ago. Now that Nissan has put down its roots in the community, so has Sutton.
He bought a piece of land that’s an easy commute from the plant and he’s buying a double-wide mobile home to park there. It will be the first home he has ever owned.