Kia Follows Trend

Recently Kia Motors announced that they had put Mississippi at the top of their list for a new plant, with Kentucky in second position. A key factor for Kia was that it was close to Hyundai, their parent company’s Alabama plant, which opened this year.

We’ve spent quite a bit of time tracking the movement of auto plants and their resulting suppliers. Our research shows a tidal wave of movement from the Indianapolis to Detroit corridor to a new one centered in the northern third of Alabama and Mississippi.

I’ve suggested that while these large assembly plants can put a huge strain on a small town, being within an hour or so of one can be a huge benefit for a community. The multitude of parts manufacturers that revolve around an assembly plant want to be in close proximity. Nissan’s new Canton, Mississippi plant has already resulted in new parts plants in over 20 towns in Mississippi.

Hyundai has already recruited in several suppliers to follow it to Alabama. My guess is that Kia’s decision to focus upon Mississippi is driven by a desire to be close to those same suppliers, generating cost savings and accessibility.

These recent auto moves are a lesson in the importance of industrial clusters for regions. They can have a very positive and dramatic impact.