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Foreign Direct Investment/Nissan North America Essay

1170 words - 5 pages

FDI Paper / Nissan North America In this paper I will investigate Nissan's foreign direct investment (FDI) in Canton, Mississippi. I will discuss decisions by Nissan and the economic picture in the region. I will also analyze the important reasons for the FDI in Canton and the forecast of the long-term results.While sales on automobiles are down around the globe, investments by car manufacturers and their subsequent suppliers are still barely surviving. Expansions and new assembly plants for everyone involved continue to surge ahead as original equipment manufacturers (OEMs) and assemblers attempt to carve out market shares.While manufacturers compete against each other, they seek more cost-effective production, tighter margins, and better logistics management from suppliers. With producers and suppliers in the auto industry constantly checking that their location is providing good value, development agencies are going all out to attract and retain their business.In the U.S., the world's biggest vehicle market, the stakes are high. Up against Asian and European manufacturers, American car markers continue to offer discounts and zero financing to boost sales. In the pickup truck category - largely driven by Detroit's Big Three, General Motors (GM), Ford and DaimlerChrysler - GM's Chevy pickup now has a new competitor Nissan, which has now joined the stampede (Efficiency Drive).Nissan has rolled off its first Titan pickup truck at its expanded factory in Canton, Mississippi. This is tough competition for the Big Three, which have been accused by Business Week magazine of having trouble staying ahead of the innovation curve. And now, with Nissan's $1.4 billion plant employing more than 5,000 workers and with an increased capacity from 250,000 vehicles to 400,000, GM and others can no longer keep their gears in neutral (Efficiency Drive).Nissan will add 150,000 trucks to the slow-growing U.S. truck market, in which approximately 2.3 million are sold annually (Efficiency Drive). Despite the odds, automakers continue to push margins and grab opportunities. Many U.S. economic development agencies entice these companies with attractive incentives and workforce training schemes. Mississippi provided a $293 million incentive package to land the facility, which will make pickup trucks, sport-utility vehicles and minivans. Nissan figures to cash in on the truck popularity in the U.S. by using these incentives. This also helps justify expansion into markets unavailable in Japan. The 2 million-sq.-ft. Nissan plant was announced in November of 2000, following an overachieving site selection that spanned only five months.Economic development agencies also know that with the assemblers come a host of suppliers that pour as many, if not more, jobs and tax revenues into the community. Locating close to their customer is important for these suppliers because the delivery of modules and systems must be made in a just-in-time (JIT) environment. In the case of...

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