German Engineering Helps Drive Economy
Mercedes has been building vehicles in Vance for two decades while BMW has also been producing vehicles at its plant in Spartanburg, S.C. for two decades.
So why would a German automotive company that supplies parts to Mercedes and BMW decide now – 20 years after those manufacturing facilities opened – to build its first North American plant and build it in Montgomery?
It has nothing to do with currency fluctuations or shipping costs, but everything to do with being in the hot North American auto marketplace, Gerhardi Inc. CEO Fredy Franke said at a groundbreaking ceremony at Montgomery Industrial Park. “We see North America as a growing market,” he said. “We see great opportunities to expand our customer relationships and also get new customers.”
GerhardiKunststofftechnik ManagingDirector ReinhardHoffman (left) spoke atthe groundbreaking. |
Although Gerhardi’s customers in Vance are 90 miles to 120 miles away and its BMW customer is about 340 miles away, company officials are looking at other potential customers. And they don’t have to look far. Franke said that Gerhardi is very interested in expanding its customer base with Korean automakers Hyundai in Montgomery and Kia in West Point, Ga. Hyundai Motor Manufacturing Alabama’s facility is nearby and the Kia plant is a short trip – 70 miles – down Interstate 85.
That’s why Gerhardi, whose parent company is Gerhardi Kunststofftechnik GmbH, is building an expandable 100,000-square-foot facility. There is room to add another 100,000 square feet, according to Franke.
The German auto supplier is investing nearly $38 million in its Montgomery facility and will create up to 240 jobs. That workforce could grow depending on customers and products, Franke said. The parent company, which has 1,400 employees, has increased annual sales from $50 million to $200 million.
Construction is scheduled to start next year and Franke said the company hopes to begin supplying Mercedes and BMW in early 2019. He said he’s confident of meeting the timetable. “It’s not too much time, but absolutely achievable when all parties work together as we did the last couple of months.”
He praised the new site, which sits across the street from DAS North America, a supplier to Hyundai and Kia. “It’s a fantastic location,” Franke said about the Montgomery Industrial Park site. He said there is “great access” to the Gulf of Mexico when Gerhardi needs to ship products and he talked about the “great access” to the Atlanta airport. “We’ll have very good access to our current customers and we’ll already have access to the potential customers.”
The company manufactures both interior and exterior parts including radiator grilles and chrome trims.
It took some time for economic development officials to recruit Gerhardi. An agreement was finalized back in April at 1:30 in the morning, said Reinhard Hoffman, managing director of Gerhardi Kunststofftechnik.
At one point, incentives were not enough to close the deal. Montgomery Mayor Todd Strange said that “we were short” and turned to Alabama Power, the State of Alabama and others to sweeten the offer.
During dinner and drinks in Montgomery, “the original site just wasn’t right,” recalled Hollie Pegg, assistant director of business development for the Alabama Department of Commerce. She said that someone mentioned another site in Montgomery and while on their way to view another location, company officials visited the Montgomery Industrial Park, which is owned by Montgomery County. “And here we are nine months later,” Pegg said at the groundbreaking.
The site selection process produced the “absolute right result,” Franke said. He talked about the “trust, flexibility, friendliness and support” during negotiations.
“This is a project that we thought might be impossible,” Montgomery County Commission Chairman Elton N. Dean Sr. said. “No mission is impossible if you’ve got the team of Montgomery County Commissioners, City Council, the Mayor and the Chamber.”
Strange: “It goes without saying that is does take a team – we know that every time. It is really about trust.”
Montgomery Area Chamber of Commerce Chairman of the Board of Directors A. Bruce Crawford said that Gerhardi “will launch its first ever North American dream here in the Capital of Dreams.”
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Spec Building Showed Vision
September 2016
By David Zaslawsky
Photography by Robert Fouts
About 18 months ago, Industrial Partners General Manager Nim Frazer had a vision for a spec building at the Montgomery Industrial Park.
He eventually signed an agreement with an architect last May and then sought bids from seven contractors. It took about six months, but a 167,000-square-foot building was constructed on an 11-acre site he bought from the Montgomery County Commission, which owns the Montgomery Industrial Park.
“This product – this industrial building – is nicer than any other industrial building in Montgomery in our opinion,” said Frazer, who has 18 buildings in his portfolio and more than 1.5 million square feet of space.
“You design a product that you think could be attractive and desirable for several different uses – for distribution, for manufacturing, for warehouse.”
His initial investment was between $4 million and $5 million, but that was for a shell and not a completed building. “Once we get a tenant in there, then we finish the building out,” he said.
Well, he now has a tenant in the spec building – Hyundai/Kia automotive supplier Nifco Inc., which is leasing about 100,000 square feet for its warehouse. Nifco, which is based in Japan, but has a subsidiary in Korea, produces interior plastic items such as air vents and arm rests for MOBIS Alabama and MOBIS Georgia, which directly supply the Hyundai Motor Manufacturing Alabama plant in Montgomery and the Kia manufacturing plant in West Point, Ga.
Nifco has an option on the site next door and could double its space. The company was storing products out of a multi-tenant 300,000-square-foot facility by the Montgomery Regional Airport and had about 80,000 square feet. “There was no room for them to grow and expand,” Frazer said. The company was expected to occupy its new building Sept. 1.
“Our company is certainly willing to take risks in order to do this,” said Frazer, whose initial investment has ballooned to nearly $8 million. “We have a lot of confidence in this location and we have a lot of confidence in this park, because of the access to the interstate and because it’s convenient between Kia and Hyundai for automotive and others.”
He still has about 66,000 square feet to lease and said that the building has multiple uses. There is a wall that separates the tenants. He does prefer one tenant for the space, which is $4.50 a square foot. “We’ve got a huge investment in this property so we have to get a return on it,” Frazer said.
He has been in contact with another automotive supplier and said that the space would be available in 45 days. “I am marketing this building all the time,” said Frazer, who is an industrial real estate broker and notifies local, regional and national colleagues about his properties.
Once the remaining space is leased, Frazer said he will either expand the building or construct a spec building at another site in the park. He has options to buy another 50 acres from the county.
