Kia Motors Corp. recently announced that it will build a $1.2 billion automotive assembly plant in the city of West Point, Ga., creating more than 2,800 jobs at the plant. The business deal includes a commitment from five supplier companies to locate in Georgia, creating an additional 2,600 jobs.
The new assembly plant, scheduled to begin testing operations by May 2008 and reach full production by 2009, will build two vehicle lines and include an engine assembly line, paint shop, training center, welcome center and two adjacent supplier facilities. To bring the plant online as quickly as possible, the Georgia Department of Technical and Adult Education’s (DTAE) Quick Start program will build and staff an on-site training center to provide custom training and serve as a community training center.
The 2 million square foot assembly plant will be built on a portion of a 3,300-acre site at the intersection of I-85 and Webb Road in Troup County. About 2,200 acres will be dedicated to the plant and future expansions. The remaining property will be used for roadwork and other infrastructure improvements. The company, owned by Korea-based Hyundai Motor Co., anticipates the plant will produce 300,000 vehicles per year.
“Kia Motors has entered an aggressive growth phase in the U.S. and the decision by KMC to build a manufacturing facility in West Point, Troup County, Georgia is the latest example of the company’s commitment to the marketplace,” said E.S. Chung, President and CEO, Kia Motors Corp. “Kia has made tremendous investments in design, engineering and production resources to better meet the needs and desires of American consumers, and this new plant will produce high quality, well-styled vehicles with the safety features and affordability that customers expect from Kia.”
Troup County, located in west Georgia, will see a significant economic boost from the opening of the Kia facility. In addition to the assembly plant, the five supplier companies that have committed to locate near the Kia site in Georgia will fit into Kia’s “just-in-time” inventory strategy. The “just-in-time” strategy seeks to streamline production time and costs by locating parts and materials suppliers in close geographic proximity to the assembly plant. These five suppliers will employ an estimated 2,600 workers.
State Incentives
The state will purchase the site for the plant for approximately $35.7 million and will conduct site preparation work, including grading, at a cost of $24.8 million.
The state Department of Transportation will provide road improvements, including creating a new interchange and access road, at a cost of $30 million. Much of the roadwork is anticipated to come from federal interstate highway funds.
A rail spur will be connected to the site at a cost of $6.05 million.
The state will build and staff a 70,000-square-foot training center on the Kia site that will provide custom training for the company and serve as a community training center. The construction, furnishings, and equipment of the center are expected to cost $20.2 million. Maintenance and operations expenses of the center over a five year period are expected to cost the state $5.5 million. The Quick Start program of the Department of Adult and Technical Education (DTAE) will develop a training curriculum and provide training courses for employees of the plant at an estimated cost of $5.7 million. The $5.7 million cost to the state for the training program has a market value to the company of approximately $14.5 million.
At 2,893 jobs created, the company will receive $75.9 million in job tax credits against its tax liability created over five years. At the contractual minimum of 2,500 jobs, the company will receive $65.6 million in job tax credits against its tax liability over five years.
Company estimates indicate approximately $13.9 million in sales tax exemptions will be available on its capital expenditures (purchase of manufacturing equipment, replacement parts, material handling equipment and other qualified purchases).
A local community organization that will be determined at a future date will apply for and administer a $40.5 million grant that will cover specialized training equipment, “train-the-trainer” programs and other hard assets not covered in any other incentive category.
With the estimated 2,893 jobs created, the total state incentive package is worth $258.25 million ($89,550/job). The total package lowers to $248.05 million if 2,500 jobs – the contractual minimum – are created.
The city of West Point and Troup County negotiated a local incentive package with the company that provides $130 million in property tax abatements over 15 years.
The locals and utility providers have also agreed to provide about $21 million in infrastructure improvements (water, sewer, gas, power, etc.).
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