For Tupelo and Toyota, a Shared Second Chance
For the past four years, Tupelo, Mississippi has been the Kate Middleton of auto plant towns, waiting for its crown prince: Toyota.
Today, the town’s version of a royal wedding will finally take place, when Toyota officially opens its eighth North American assembly plant, a few miles away in Blue Springs.
When that happens, Tupelo will join the elite ranks of Toyota manufacturing towns such as Georgetown, Kentucky, Princeton, Indiana and Buffalo, West Virginia.
The factory, announced in 2007, will provide a fresh identity to a city of 38,000 people, which has long been known primarily as Elvis Presley’s birthplace and the site of a Civil War battle. (It is not, however, the home of Tupelo honey, which is actually produced in Florida.)
But like Middleton, who earned the nickname “Waity Katy” for her long courtship with Prince William, Tupelo, too, has been forced to be patient.
While four years have passed since Mississippi’s governor, Haley Barbour, announced the deal to land the $1.3 billion project, it has actually been a decade since Tupelo began vying for an automobile factory, spurred on by a flood of development by foreign carmakers in southern states.
“We’ve been waiting for this for a long time,” says David P. Rumbarger, Jr., the chief executive of Tupelo’s Community Development Foundation.
Selling Tupelo, which sits about 90 minutes south of Memphis, presented a challenge. It lacks a major university, unlike its neighbor Oxford, the home of the University of Mississippi.
While its well-kept neighborhoods are dotted with neat bungalows and solid churches, Tupelo can’t boast the lush scenery endemic to other Deep South cities.
“I don’t have a river, I don’t have a mountain, I have an interstate and some railroads,” Rumbarger says.
Tupelo’s best case then, and now, has been its long history in manufacturing, particularly the furniture industry, which was its dominant employer through the 1990s. Tupelo also is home of one of Cooper Tire and Rubber’s few remaining American factories.
That manufacturing background, Tupelo’s proximity to Memphis’ international airport, and the state’s aggressive incentives package all helped the town clinch the factory in 2007.
But as Tupelo has found out, the announcement was only one stop on its 10-year journey. It expected the plant to open in late 2009, but has had to hang on two years longer, due to an auto industry recession that still is not completely over.
For the town and the company, the experience has been a lesson in “perseverance and patience,” says David Copenhaver, vice president of production and administration support for the Toyota factory.
Since the original announcement, Toyota has changed the vehicle planned for the plant three times – from the Highlander, a sport utility-like vehicle, to the hybrid-electric Prius, and finally the Corolla, the compact car that Toyota sells all over the world.
Something else changed, too: Toyota’s position in the automotive world.
In 2007, Toyota sat atop the industry in terms of profitability and prestige, surging past Ford to rank behind only General Motors in global sales. It turned hamlets like Georgetown into bustling communities, attracting billions of dollars in spillover investments.
States like Arkansas and Tennessee were banging on the company’s door when it heard that Toyota planned to build another North American factory to feed that demand.
But Barbour, who had spent years courting Japanese automakers, beat the pack with a 20-year tax break and $294 million in incentives, or about $148,000 for each of the 2,000 jobs the factory was set to provide.
In Tupelo, which had tried and failed to win the pickup truck plant that Toyota built in San Antonio, the business community was ecstatic at the initial news.
On East Main Street, Coldwell Banker Realty hung a welcome sign on its pale yellow building. The city issued permits for new businesses and housing. Developers put up new apartment buildings, hoping to attract some of the newcomers hired at the plant.
Sushi restaurants popped up in a place more accustomed to the fried green tomatoes, catfish and banana pudding served at Romie’s Grocery, a popular local restaurant north of Tupelo’s downtown.
But in late 2008, almost in an instant, auto sales in the United States collapsed, and Toyota’s sales and profits soon followed, forcing the company to put the brakes on its global expansion plans.
Tupelo suffered, too. Its unemployment rate, which was 7.4 percent when the Toyota factory was announced, climbed into double digits, as some small manufacturers closed their doors.
In the middle of all that bad news, Toyota dispatched executives to Mississippi to deliver the word that the factory was being put on hold until further notice. Construction was completed, and then the lights were essentially turned out until things got better.
For Tupelo, the news was a body blow, though not a surprise to Rumbarger, a faithful reader of Automotive News, the industry trade publication.
He had watched as the Detroit companies closed factories and dealerships, and as foreign automakers cut production at their American factories. Toyota, he figured, would have to announce its own cuts. “You can’t have an industry drop by 5 million car sales a year, and not have nothing,” he said.
Toyota insisted it would follow through on its commitment to Mississippi, and took steps to assure state and local officials that it was not backing away.
It paid about $9 million in interest on the bonds that the state had issued to finance construction and road improvements at the plant site, according to Kathy Gelston, the deputy director of the Mississippi Development Authority.
It also made two annual payments of $5 million each to a $50 million education trust that it had set up for students in three counties in northeastern Mississippi.
“Toyota has just been an unbelievable partner in this,” Gelston says. “When they came to us and said, ‘we’re going to slow down the project,’ it was never, ‘we’re not going to build this.’”
But there was some nervousness. While there were no layoffs, four of the 110 Toyota staff members at the plant decamped to the new plant that Volkswagen was building in Chattanooga, Tenn., according to Copenhaver.
In the meantime, the company’s financial crisis deepened when quality concerns sparked by episodes of unintended acceleration prompted the carmaker to recall millions of vehicles.
“It was a legitimate question: is Toyota going to walk away?” says Dennis Seid, business editor at the Northeast Mississippi Daily Journal.
Finally, in the middle of a June night in 2010, Barbour was awakened by a call from Toyota chief executive Akio Toyoda, with word that the plant was being taken out of mothballs.
That meant that hiring at the plant could finally start with the first 1,300 workers. The state received 41,000 applications for the positions, which pay a starting wage of $15 an hour, rising to $21 an hour after five years.
That’s on par with wages paid by automakers in the Deep South, and about what newly hired workers at Detroit auto companies are getting.
But it’s sharply less than the $28 an hour wages earned by veteran workers at GM, Ford and Chrysler, while Toyota workers in Georgetown also are paid in that range.
Meanwhile, five auto suppliers, some part of Toyota’s corporate group, also have opened factories, and are paying several dollars an hour less than the mother plant, according to Seid.
“These aren’t traditional auto wages. But these are hard times, and they can’t expect traditional wages,” says Gary Chaison, professor of industrial relations at Clark University in Worcester, Mass. “These workers can’t look at this as a 1950s or 1960s automotive job. They have to see this as the best they can get.”
Based on those wage rates, the biggest question for Tupelo is whether it can ever expect to see the kind of growth that’s taken place in Georgetown, the model for all the other southern auto towns.
When Toyota arrived there in 1986, Georgetown had one freeway exit, one McDonald’s and you could get from one side of town to the other in about 15 minutes.
Now, the population has swelled to 22,000 people, with new subdivisions, parks, schools, dozens of restaurants, moderately priced hotels, and the summer practice center of the Cincinnati Bengals.
Traffic jams have become common on Cherry Blossom Way when the 2.5 mile-long Toyota manufacturing complex goes through its daily shift change.
There are a few early signs that Tupelo is echoing Georgetown, says Seid.
Over the past four months, Tupelo has seen three new hotels open, including a Best Western Plus and a Hampton Inn and Suites, and three new restaurants, including a Longhorn Steakhouse and a Buffalo Wild Wings.
Meanwhile, Romie’s has added a barbeque restaurant downtown and plans to cater one of the big parties that is being thrown this week to celebrate the opening of the Toyota factory.
Co-owner Rob Lesley is excited by the town’s growth prospects. He says he already knows his new customers, some of them Japanese, by name. “They love the ribs,” he says.
Above images by Micheline Maynard