Hino Motors is still feeling the effects of the recession but company executives said Monday that the addition of a $20 million truck frame rail line to its factory in Marion will help it build U.S. market share.
The company will add 25 jobs once the line is up to speed with equipment coming from a Hino Motors Manufacturing USA Inc. plant that closed in Long Beach, Calif., in 2008. In the interim, Hino has been using frame rail from Japan in its medium- and light-duty trucks.
The Marion parts plant has about 440 workers, though plant manager Kevin Ohneck said some of those employees work only when the factory has enough orders. The plant makes rear axle assemblies for Toyota Tundra pickups plus suspension components and other parts for the Tundra and the Toyota Sequoia SUV.
The frame rail line includes a series of machines that form 600-pound steel plates that are up to 36 feet long. One machine bends up the sides lengthwise, another takes out any bows or other deformities. A laser drills up to 246 holes so the rest of the vehicle can be fixed to the frame. Machines blast the rails smooth then paint and bake them. The pieces, formed from metal supplied by U.S. Steel, are hoisted by heavy-duty straps and moved by overhead conveyors.
The finished rails are trucked to Williamston, W.Va., where all Hino trucks to be sold in the U.S. are assembled, and to a plant in Ontario, Canada.
“As the economy gets better, we hope we will be able to ship more (frame rails) and run a second shift,” Ohneck said. The lines that make the Tundra and Sequoia parts have been running two shifts, he said.
Arkansas officials spent years lobbying Toyota Motor Corp., Hino and other vehicle makers to use the site in Marion for a vehicle assembly plant. Other auto parts makers have opened in the Mississippi Delta area of Arkansas. But Marion was passed over for Toyota’s Tundra assembly plant, which went to San Antonio, and Toyota named Tupelo, Miss., as the site for an SUV plant, though it is on hold because of the slow economy.
Hino Senior Vice President for Sales Robert E. McDowell said restarting frame rail production will help Hino move toward having 50 percent of each truck assembled from American-made parts. That will help build sales in cities and states that require a certain percentage of vehicle parts to be made in the U.S., he said.
Hino has 10 percent of the U.S. market in its classes of trucks, McDowell said.
The next big step for the company will be building an engine plant, but it will be years before even preliminary plans begin, executives said, citing the recession.
“Right now, our commercial truck sales volume does not require that we investigate building a second plant. When that time comes, and we are confident that our sales will continue to increase, we will explore location options,” Hino Vice President and General Counsel Sandy Ring said. “But this investment speaks for itself: Hino is pleased to be in Arkansas and we are committed to a long term presence.”
Hino spent $235 million to open its plant in Marion, but when it came time to train workers, the company had a problem with high turnover and low skill levels. Gov. Mike Beebe, who couldn’t be at the ceremony, sent a letter that acknowledged the worker readiness problem and said the area has developed programs to better train workers.
Glen Fenter, president of Mid-South Community College in nearby West Memphis, said the school has created “as fine a system for training workers for this type of company (as there is) in the country.”
Fenter said students from the region are training at the Hino Skills Academy in Japan, and Japanese Hino workers are training in Crittenden County. He also praised Hino for the way it has managed lower production brought about by the recession.
In February 2009, Hino laid off 140 workers, but those employees are called back when orders generate enough work for them, Ohneck said.
State incentives for the frame rail line came to $2 million, including a $500,000 grant and a loan of $1.5 million to help cover the cost of moving equipment from Long Beach to Marion, said Joseph T. Bailey, director of business development for the Arkansas Economic Development Commission.
Yauso Tanigawa, president of Hino’s U.S. subsidiary, noted that the frame rails form the spine of a vehicle.
“I hope this will be the backbone of our business, too,” he said.