Automotive Manufacturing Sector Boasts Record Production and U.S. Expansions

After a long slump, manufacturing is back, and that means a surge in construction to catch up on a backlog of projects that major owners—Nissan and Caterpillar to name a few—have had on their wish lists for years.

When the financial crisis hit, U.S. manufacturers and suppliers cut costs by closing factories, stalling facility expansions and reducing jobs. Now, the picture has changed entirely, and the sector’s economic recovery can be seen in terms of new construction square footage. After bottoming out in 2009 at 36 million square feet, building activity in the manufacturing plant sector has risen gradually to reach 54 million square feet in 2014, and is anticipated to rise to 61 million square feet in 2015, according to Dodge Data & Analytics’ Construction Outlook

FMI forecasts manufacturing construction will grow 8 percent in 2015 to $55 billion, as improving energy supplies and deteriorating geopolitical situations around the globe make returning to the United States a more desirable option, and foreign companies seek to locate closer to their U.S. markets.

Economic activity in the manufacturing sector expanded in February for the 26th consecutive month, according to the Institute for Supply Management’s “Manufacturing ISM Report on Business.”

With the country’s GDP rising 3 percent in 2014 and forecast to rise another 3 percent this year, manufacturers will see a higher capacity utilization rate and an increase in plant construction. Expansion this year will go beyond energy-related projects to include facilities for goods such as automobiles, large equipment, tires and parts, the Dodge report says.

For example, Alcoa Inc. recently completed a $300 million expansion of an aluminum plant in Davenport, Iowa, and has launched a $275 million expansion of a factory in Knoxville, Tenn., that builds lightweight aluminum alloys for automobiles.

BMW is investing $1 billion in its automobile assembly plant in Spartanburg, S.C., which will become its largest production site and increase the plant’s capacity by 50 percent in 2016. 

Nissan’s U.S. production has increased more than 254 percent since 2009, and in 2014, it built a record 950,000 vehicles.

With this rebound comes a load of job opportunities, many of which are in the construction industry. As the automotive industry becomes profitable, it is creating jobs at the fastest pace in 15 years, with 500,000 jobs created since 2009, according to the U.S. Department of the Treasury. The manufacturing sector as a whole netted 15,000 new hires per month in 2014, the National Association of Manufacturers reports.

Automotive Power

Brindley Construction, LLC, Pulaski, Tenn., has been busy building for Tier 1 and Tier 2 suppliers to the automotive industry, including a 62,000-square-foot addition for a plant for Magneti Marelli, an international automotive company; a 15,000 square-foot addition and retrofit of the existing 240,000 square-foot facility with a 550-foot press for North American Stamping Group, an automotive parts maker; and a 30,000-square-foot project for Integrity Tool & Mold.

“What we’re finding is that the automotive industry was depressed for so long, that they didn’t invest any money in expansions for existing plants or buy new equipment,” says Charlie Evans, Brindley Construction’s director of operations. “They held out as long as they could. Now that the auto industry has rebounded, we are being asked to perform some jobs that would normally take a year in just five months.”

Another Tennessee company, T.W. FriersonContractor, Inc., located in Nashville, is part of the rebound in automotive-related construction that has been occurring for the past five years.  As a design-build contractor, T.W. Frierson has worked as a construction partner with companies such as Nissan and industrial engineering and lean manufacturer Ghafari, which is based in Dearborn, Mich.

“Our part of the world is very active in the automotive recovery,” says E. Dean Taylor, Jr., co-owner and president of T.W. Frierson. “With Nissan North America right in our backyard, and their uptick in production, we are seeing a trend of more construction activity among their suppliers.”

Many parts manufacturers, such as stamping companies, are relocating to southern states such as Tennessee, Mississippi and the Carolinas from the traditional centers of Michigan and Canada due to lower labor and shipping costs. For example, Nissan has invested significantly in its engine facility in Decherd, Tenn.

Heavy Equipment Gains

Concrete and grading company Wayne Brothers Incorporated, Davidson, N.C., is seeing a significant rise in its manufacturing business as well. The company was a key member of the project team to build the equipment foundations, concrete slab and pit walls for a new Caterpillar plant to manufacture large axles for mining equipment—installing more than 6,000 cubic yards of concrete and foundations exceeding 15 feet deep.

Wayne Brothers also completed the excavation, backfill, concrete formwork, embed and unisorb installation, and metal fabrication for a new 490,000-square-foot facility for Siemens Gas Turbine production. As with many current projects in this sector, the construction team was pushed to move quickly, and Wayne Brothers met the challenge by completing its portion of the contract two months ahead of schedule. 

In addition to tight time frames, contractors must meet the strict quality control requirements manufacturers require to accommodate the state-of-the-art equipment to be installed inside these facilities.

“More so than in other sectors, owners are seeking high-quality structural foundations and strict tolerances necessary for the equipment to be efficient,” says Isaiah Wayne, project executive for Wayne Brothers. “The complexity of the equipment they’re purchasing drives each design and the corresponding complexity of the supporting structures around it.”

Bright and Modern Materials

Gone is the outdated model of a manufacturing facility as a dark, dirty warehouse.

“Manufacturing has changed from grease and oil and hot environments to facilities that are brilliantly lit and efficiently cooled,” says Kathy Pigg, Brindley Construction’s executive vice president. “Many of these buildings are built to the level of a clean room on a medical or hospital site.”

In addition, design and construction teams are paying closer attention to the longevity of the facility. They’re choosing advanced finishes for corrosion prevention and reducing damage to concrete surfaces, as well as top-quality air filtration to improve the environmental quality for the manufacturing workers inside.  

While not as common in manufacturing as in commercial construction, more project owners are beginning to seek out green building techniques and LEED certification due to state incentives. For example, the Caterpillar axle plant will be first new manufacturing project to be LEED certified in North Carolina. In the automotive sector, Volkswagen’s Chattanooga manufacturing plant was recently awarded LEED Platinum certification.

However, with the manufacturing industry being highly cost-driven, green materials and processes may be taken off the table if the owner is particularly budget-cautious, Pigg says.

Pre-engineered buildings are still a popular trend for saving materials costs. For example, T.W. Frierson is working with Fluor on a heavy industrial aluminum processing plant in Kentucky that will be built of multiple 70-foot-tall pre-engineered frames. In addition, with manufacturing space being highly expensive, owners are prioritizing cost-efficiency by building less sophisticated, ancillary facilities to existing plants, rather than building entirely new plants.

“Owners will try to move anything offsite that they can because manufacturing space can cost three to five times as much as basic distribution space,” Taylor says.

These ancillary facilities meet functions such as pre-sorting automotive parts, providing shipping and distribution space, and creating storage for warranty and replacement parts. “These ancillary buildings allow them to free up manufacturing space and in turn have facilities very close to the main plant, which is critical,” Taylor says.

Efficiency: The Name of the Game

In manufacturing, many interior components must be custom-designed and engineered to meet a highly specific need. Combine this with the trend toward fast-tracking, and that means an extreme amount of coordination is necessary.

“Brindley Construction works with suppliers during pre-planning to identify long-lead items,” Evans says. “These materials are not standard or off the shelf, especially for projects involving robotics and magnetics. We have to carefully sequence the just-in-time deliveries in between all the concrete and steel work.”

Educating the owner about design and construction phasing, especially when working with smaller manufacturers, is essential to keeping everyone happy, Pigg adds. “When working with independent Tier 1 and Tier 2 suppliers, you have to become a true partner early on, during pre-planning. We’re finding that it’s best if the owner knows how long it actually takes to do things and remind them of the potential pitfalls.”

Careful integration of every subcontractor’s jobsite labor schedule is required to keep operations lean and productive. 

“These top manufacturing projects require more project planning than a typical industrial or commercial project, and typically more coordination to meet the client’s expectations. Often their needs are more stringent than what they have on paper, and the level of QA/QC is well above and beyond what a contractor might first expect,” Wayne says. 

For the past three years, Wayne Brothers has been utilizing BIM to schedule and coordinate its concrete installation work in conjunction with the equipment design, as well as to work through discrepancies to bring them to the client’s attention before they become problems.

T.W. Frierson, which performs a lot of design-build work, creates efficiencies by single-sourcing responsibility within the firm.

“This helps drive the process when the owner is trying to make decisions from a financial standpoint,” Taylor says. “We are able to produce budgets and scope documents that help them understand what they’re getting for their money, and we are able to create savings by making minor changes to the building design or suggesting different types of materials. All of that goes hand in hand, but having that in-house single source of responsibility lets us move more quickly than with a traditional design-bid-build setup.”

Even with these efficiencies built into the process, the No. 1 challenge for contractors still looms: finding a qualified supply of craft professionals to meet future demand.

“As a self-performing contractor for concrete and structural steel, finding people that want to be part of the work culture is very difficult,” Taylor says. “The biggest challenge is trying to staff our crews and keep people in the industry."


Airbus Assembly Line Project Reaches Final Stages

Airbus is gearing up for its first U.S.-based final assembly line in Mobile, Ala.—part of the trend toward expansion in equipment manufacturing and assembly within the United States. The more than $200 million construction project is on schedule, under budget and on track to reach completion in time to deliver the first aircraft to JetBlue in 2016. 

The project team includes contractors Hoar Program Management, BL Harbert International, LLC, and Rob’t J. Baggett,Inc.

Thompson Engineering is performing quality assurance material testing. Four of the 11 Mobile Aeroplex at Brookley campus buildings are complete and have been turned over to the owner, and three currently are being occupied and utilized by Airbus employees. The central utility plant also is up and running, providing utilities to all buildings throughout the campus. 

The primary building used in the assembly process—known as the Final Assembly Line (FAL) Hangar—is approaching substantial completion, with Airbus personnel and the construction team working side by side to install the tools and equipment that will be used in the assembly process.

The remaining six buildings on campus—hangars, storage facilities and a delivery center, which will be used for final aircraft testing and title transfer to the buyer—are on schedule to be completed shortly after the FAL Hangar in mid-summer. 

Upon completion of the building and site construction, a significant number of commissioning activities will occur to fully test the process equipment and systems.

Lauren Pinch is a contributing writer to Construction Executive. For more information, email pinch@abc.org, visit www.constructionexec.com or follow @ConstructionMag