The Norman Transcript
September 17, 2006 01:20 am
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By Randall Turk
Transcript Business Editor
A Norman attorney and economic development consultant says a project to bring MG North America’s production headquarters to Oklahoma is on target.
Marc Nuttle, who was on the lead negotiating team that landed the carmaker, also heads Oklahoma Sovereign Development LLC, a major investor in the enterprise. Nuttle is coordinating procedures on three continents to open the MG manufacturing plant in Ardmore. MG’s worldwide headquarters will be in Oklahoma City and its research and development center at the University of Oklahoma.
“Our business plan calls for production of MG cars by summer 2008,” Nuttle said. “It takes at least a year to build a plant and 90 days to train assembly line employees. We’ll have to break ground by the first of the year.” Simultaneously, the newly designed MG vehicles must be certified to meet U.S. safety standards, a process that takes about a year, Nuttle said.
On July 12, Nanjing Automobile Corporation (NAC), China’s oldest carmaker, announced it will locate an auto assembly plant and parts distribution center in the Ardmore Air Park. The company expects to employ at least 500 initially, including 300 assembly workers when production gets into full swing. NAC also builds other major automotive lines, including Fiat cars and Iveco trucks.
The Ardmore plant will produce the mid-engine, rear wheel drive MG TF Coupe. The coupe and a roadster, to be built in England, are updated models never produced by MG. The roadsters will be rolling off the assembly line when NAC begins operating a Longbridge, England plant that was mothballed by a bankrupt MG/Rover Co. last year.
NAC purchased MG’s facilities and tooling equipment for $97 million, disassembled the production plant and shipped everything to Nanjing. The Nanjing MG operation, due to go online by the end of the year, will manufacture drivetrains for all MG vehicles, including a line of sedans to be assembled there. The Longbridge assembly plant is expected to resume operations by the first of the year.
“We’ve been finalizing the framework agreement with time lines,” Nuttle said, “and who’s responsible for what contracts.” He said Sovereign Development has management responsibilities for U.S. and U.K. startup operations. The detailed contracts will cover MG supply and distribution, from establishing dealerships and pricing to quotas governing the quantity of cars each country will market. Nuttle said NAC is seeking about 300 U.S. “quality dealers” already selling other car lines to take on MG sales. “They’re calling us,” he said.
“An American team is in place in Longbridge, establishing a network for the cars, parts and service,” Nuttle said. “Today, there are 3.2 million MGs on the road in Europe that will need parts and service. Right now, Caterpillar has the service contract.”
MG already has the name identification needed for successful sales. “There are thousands of MG car clubs,” Nuttle said. Before the company’s bankruptcy, it was selling 170,000 cars a year in Europe. They were competing with the BMW 300 series.”
Nuttle said he is continuing to research air cargo facilities that will become the basis for “just in time” manufacturing at the Ardmore Air Park. “Air cargo gives us a port of entry for the entire world, a comparative advantage.”
Nuttle said just in time manufacturing, which minimizes the need for large inventories, will give Oklahoma the advantage of leveraging its central location to distribute cars throughout North America.
Another major partner, the Chickasaw Nation, is providing tax advantages and benefits that were critical to convincing the Chinese company the Oklahoma economic model will compete on a worldwide basis, Nuttle said.
The Chickasaws have an option to purchase 160 acres near the Ardmore Air Park for the assembly plant and associated businesses. The Chickasaw Legislature has approved the option, now awaiting the signature of Chickasaw Gov. Bill Anoatubby, he said. The Chickasaw land could be placed in trust with the federal government, making it exempt from property taxes.
The Chickasaws also have pledged to pay for water, sewer and roads serving the plant. “This is a commitment on their part to create mainstream jobs for the plant and its suppliers and vendors,” Nuttle said.
State incentives are another important part of the formula. The Quality Jobs Program will provide a 5 percent tax credit for creating good paying jobs. The state’s Career-Tech system will provide technical training for employees. And the state legislature has set aside $15 million from the newly created “Opportunity Fund” for upgrading the runways at Ardmore Air Park to accommodate 747 cargo planes.
The University of Oklahoma component also is vital to the deal, Nuttle said. “NAC is adamant about R&D. The initial role of MG’s R&D Center will be in ‘homologation,’ or getting the cars certified for federal safety standards.” OU will be involved in engineering and designing future MG models, he said. “NAC also is interested in fuel efficiency and hybrid battery research.”
A visit to Norman after announcing the plant decision in Oklahoma City was a positive experience for NAC officers, Nuttle said. “The city and OU are beautiful. The people are nice. It was the first trip to the U.S. for Yu Jianwei, president of Nanjing Automobile Corporation. He was very impressed.”
The partnership created to bring MG to Oklahoma required public and private sector teamwork and exhaustive preparation. Nuttle said Don Wood, executive director of the Norman Economic Development Coalition, “found the deal and invited me to the table.”
He said MG North America sent requests for proposals to all 50 states. “The Oklahoma Department of Commerce needed a site to pitch, possibly an airport with access to runways taking 747s.” While the university’s Westheimer Airport cannot accommodate large jets, Wood provided the catalyst for future developments, Nuttle said.
NAC narrowed its search to six states, then three. In February, the Oklahoma team joined Alabama and North Carolina in making presentations to NAC management in Longbridge.
“Alabama was offering $25 million up front that didn’t have to be repaid,” Nuttle said. “I asked NAC if they had a 25-year plan. I told them they would make more money in Oklahoma long-term. Later they bought our economic model.”
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