“Generally speaking, transportation is certainly the biggest cost issue that assembly plants have to deal with, so it has a lot of influence on where you can even look,” said Mark M. Sweeney, senior principal at McCallum Sweeney Consulting in Greenville S.C.

Sweeney served as consultant for the Nissan plant that located in Canton Miss., as well as Nissan expansions in Smyrna, Ga., and Decker, Tenn.

European vehicle producers were conscious of transportation needs when they began setting up shop in the United States.

“When the Germans came over in the early 1990s, they were very export-oriented with their facilities, and they wound up with locations that are a little more port-sensitive, whereas Toyota, Nissan and other Japanese [automakers] are building plants to serve North American markets, and are a little more centrally located,” Sweeney said.

Finding a location that minimizes costs is extremely important in today’s automotive market, said Jim Bruce, president of Business Facility Planning Consultants in Norcross, Ga.

“In the auto industry, your inbound transportation of raw materials and components, and your outbound shipping of the finished goods are a large, significant part of the costs of producing the average vehicle,” he noted. “If you can keep those expenses down, then that’s a savings you can pass onto the customer and be more competitive in the marketplace.”

Bruce, who has consulted for Toyota, Navistar, Volvo, DaimlerChrysler and Volkswagen, described today’s automotive industry as extremely competitive with a lot of vigor, but also with a lot of surplus capacity.

“You still have lots of new facilities going up,” he said. “Ironically, sometimes the new plants are across the road from others that are shutting down. It just has to do with how well any given assembly plant or any given supplier to that assembly plant is prepared to serve the current economic need. You have some operations that are in terrible shape and others that are booming.”

Another industry expert who sees transportation as an important factor in the site selection process for motor vehicle plants is

Catherine Madden, a market analyst at Global Insight, an economic consulting firm in Waltham, Mass., said manufacturers like Toyota strategically plan their facility sites so they can offer an adequate supply of vehicles to that region.

She cited the automaker’s recent selection of San Antonio for its new truck assembly plant as an example of site selection driven by market proximity. The new Toyota facility, which is expected to open in 2006, will serve the booming market of Texas and surrounding states.

Buzz Canup of site location and economic development consulting firm Canup & Associates in Jackson, Miss., said logistics and transportation are important qualifying criteria in choosing an automotive plant site. Canup & Associates has done site location studies for Navistar, Volkswagen, Audi and Honda.

“You’ve got to essentially be at the crossroads of an interstate and major rail transportation,” he noted. “A piece of property that is roughly 1,000 acres in size, has the right configuration, has interstate or limited-access highway location and is adjacent to rail, has the proper work force density, and has the other attributes and characteristics that you are looking for — frankly, there are not a lot of those sites left.”

Michael Keating is research editor for Expansion Management magazine. He can be reached at mkeating@penton.com.