New Auto Company Gets Former GM Plant in Louisiana

By Brendan Moore

06.18.2009

A new auto manufacturer has decided to build their new environmentally-friendly car in a former GM plant in Monroe, Louisiana. The company, supported by the millions (billions?) of T. Boone Pickens and employing Tom Matano, the former head of design at Mazda, is expected to employ about 1400 workers at the plant.

louisiana-map-w-highways

Louisiana state and local parish (no counties in Louisiana) officials have assembled an incentive package worth about $67 million, which will expand and revamp the factory. Federal assistance will come in the form of the U.S. Commerce Department’s Economic Development Administration’s contribution of as much as $5 million for rail and infrastructure improvements. The new company also has applied for engineering and manufacturing loans under the Advanced Technology Vehicle Manufacturing Loan Program.

The company is named V-Vehicle Company and is headquartered in San Diego, CA. V-Vehicle. The founder and CEO of V-Vehicle is Frank Varasano. The company is backed by investors that include the Silicon Valley venture capital firm Kleiner Perkins Caulfield & Byers and James Davison, of Ruston, La.

And who is James Davison, you might ask? Davison is the owner of the plant, whose most recent tenant was auto lighting supplier Guide Corp. before it went out of business in 2007 when fierce global competition, high legacy costs and a lack of funding to develop capital-intensive modern lighting systems..

V-Vehicle released a statement to the press that stated “VVC will produce a high-quality, environmentally friendly and fuel-efficient car for the U.S. market. The goal of the company is to provide the American buyer greater product value and a superior automotive experience.”

VVC says it will have a production vehicle in 15 months. If true, this a very short time frame, and would suggest that VVC has an existing vehicle in mind. It’s not much of a leap to suggest that an existing vehicle would be converted to run on natural gas. T Boone Pickens is an active and highly visible advocate of natural gas, paying for television commercials, magazine ads, etc, and has given many interviews in which he expounded on the virtues of natural gas. In countries outside the US, many vehicles run on natural gas and the governments support that alternative energy fuel with tax breaks.

Whatever the case, it will be interesting to see how this pans out. Almost all of the people in charge have no experience in the auto industry, but they have extremely high hopes for the company.There is no pricing or performance data available on the planned vehicle at this point, nor is there word on styling, size, etc.

Here is the official press release:

06/17/2009 New American Car Company Will Make History in Louisiana
V-Vehicle Company selects Monroe, La., to begin assembling new automobiles and create 1,400 jobs

Today, Gov. Bobby Jindal and Louisiana Economic Development Secretary Stephen Moret joined executives from V-Vehicle Company, or VVC, Kleiner Perkins Caufield & Byers, or KPCB, partners, local businessmen and local officials to publicly announce that VVC, a new American car company headquartered in San Diego, will begin assembling cars in Monroe, La. The project will create over 1,400 direct jobs at an average annual salary of nearly $40,000, plus benefits, as well as a capital investment of at least $248 million.

Participants at the announcement included Gov. Jindal; LED Secretary Stephen Moret; VVC Founder and CEO Frank Varasano; VVC Vice President Horst Metz; VVC Director of Design Tom Matano; KPCB Managing Partner and VVC board member John Doerr; KPCB Managing Partner and VVC board Chairman Ray Lane; Guideco Properties LLC Owner James Davison; U.S. Rep. Rodney Alexander; Monroe Mayor Jamie Mayo; West Monroe Mayor David Norris; Ouachita Police Jury President Shane Smiley; and Ouachita Economic Development Land Corp. President Ben Peters.

Gov. Jindal said, “What we are here to officially announce today is not a typical economic development project. Most business recruitment projects for the state involve large, long-established companies building another plant similar to one they already have – similar to facilities that other companies in their industry already have. Those are great projects and we appreciate the jobs they provide, but today’s announcement is different.

“Today, we are here to announce that through quick, aggressive action to pursue a transformative opportunity, we have a chance here in Louisiana to re-energize the entire U.S. auto industry. Indeed, this project also has the potential to transform the entire Monroe area, and this project could be a game changer for the economy of Northeast Louisiana.

“Some might argue that we should only invest in companies that want to build the same factory they already have here in our state, but every once in a while, we are presented with an opportunity to throw long – to move the ball down the field in a major way with a single transformational project.

“This is that kind of project we are here to announce today, and for that reason we were willing to pursue an extraordinarily aggressive approach to not only invest in a major economic expansion for the people of Northeast Louisiana, but also a transformational project for the U.S. automotive industry.

“By deciding to help re-energize and reinvent the American auto industry in Louisiana, V-Vehicle is helping create a brighter future for Northeast Louisiana, our entire state, and we hope soon, our entire country.”

“The thing that excites me the most about V-Vehicle Company is that it is a holistic change,” said Lane. “We’re thinking about, from beginning to end, how to reconstruct a car company. The V-Vehicle Company has the opportunity to change the automotive business in the United States.”

“I am delighted to see our vision for a new American car company coming to life here in Monroe, La.,” said Varasano. “We’ve designed and engineered this car from start to finish to give the U.S. consumer a quality car with great value made right here in America.”
VVC will produce a high quality, environmentally friendly and fuel-efficient car for the U.S. market. The goal of the company is to provide the American car buyer greater product value and a superior automotive experience.

Matano, whose Mazda Miata design was recently recognized by BusinessWeek as the most iconic car of the last 25 years said that “this car will be another icon of American industry. Miata was recognized as the iconic car of the last 25 years; this will be the iconic car of the next 25. Not many designers have the opportunity to work on such a project, so I’m really excited that I have an opportunity to do another one.”

VVC will assemble the cars at the former Guide Corp. plant in Ouachita Parish, which has been closed for years. The 425,000-square-foot plant currently occupies 189 acres of land; this project will increase the size of the facility to approximately 750,000 square feet.
“The Monroe facility was chosen because it has the ideal infrastructure for this type of industry, combined with the strong work ethic of the people of North Louisiana,” said Davison, who owns the facility.

Economic Impact

An economic-impact analysis by LSU suggests that the VVC facility will provide an injection of over $19.6 billion in new state economic output from 2010 to 2024.

LSU estimates that the 1,400 direct, new on-site jobs will create 1,800 indirect jobs for a total of 3,200 new jobs in Louisiana. Accordingly, VVC will become one of Louisiana’s top 30 economic-driver firms based on direct and indirect job impact.

LED engaged A.T. Kearney Inc., a leading global management consulting firm with a large automotive industry practice, to assess the market and economic viability of VVC’s planned operations in Monroe. A.T. Kearney concluded that VVC has a compelling business model, an impressive leadership team, a strong supplier base and financial projections for the Guide facility that are reasonable and achievable.

Incentives

State and local officials assembled a customized incentive package to help secure the project. If all performance requirements are met, VVC will receive a state incentive package worth approximately $67 million, which will fund improvements to and expansion of the facility. In addition, Louisiana FastStartTM will provide, at no cost to the company, customized workforce recruitment, screening and training for VVC and its on-site suppliers. LSU estimates that VVC and its on-site suppliers will generate more than $131 million in new state tax revenue over the first 15 years of the project.

“VVC has the potential to re-energize the American auto industry, and they are going to accomplish that starting from a manufacturing base in Louisiana,” said Moret. “This announcement, backed by some of our country’s most visionary and successful businessmen, will have a lasting impact on Northeast Louisiana and our state for many years to come. And it sends a clear message that Louisiana is a new frontier for business opportunity.”

The city of Monroe, Ouachita Parish, city of West Monroe, Ouachita Economic Development Land Corp. and I-20 Economic Development Corp., collectively, have committed $15 million to the project for improvements to and expansion of the Guide facility. LSU estimates that VVC and its on-site suppliers will generate $36 million in new local tax revenues over the first 15 years of the project.

“I want to thank the governor and Louisiana Economic Development for their hard work in bringing this project to Northeast Louisiana,” said Norris. “Being selected for an investment of this magnitude says something very positive about our community and our state.”
“Both the state of Louisiana and the local Ouachita Parish community have seized upon a wonderful opportunity, which would not have been possible without the superb cooperation of all parties involved,” said Peters.

The U.S. Commerce Department’s Economic Development Administration is expected to contribute up to $5 million for rail and infrastructure improvements. VVC also has applied for engineering and manufacturing loans under the Advanced Technology Vehicle Manufacturing Loan Program, a $25 billion loan program established by Congress in 2007 and administered by the U.S. Department of Energy to spur innovation in automobile technology.

Site Selection Competition

Starting in August 2008, KPMG carried out the site selection process for VVC. According to VVC, Louisiana was selected after KPMG and the company evaluated approximately 400 potential sites in 10 different states. Critical site selection criteria included quality of the labor pool, availability of customized workforce training programs, characteristics of available sites and facilities, business taxes, electricity costs and financial incentives.

Varasano noted that, “In the end, there were several states that met our criteria and had very large incentive packages. In fact, Louisiana did not have the largest incentive package. It was the people from Louisiana – not just the leaders that we had met, that we were working with – and the conviction that because of incentives like the Louisiana FastStart program, we could identify and train people that will ultimately determine a large part of our success. It was the conviction that Louisiana could provide this workforce that sealed the deal.”

To strengthen Monroe’s competitive position, state leaders expect to use new and enhanced economic development programs recently funded by Gov. Jindal and the Legislature. First, Louisiana FastStart, a new turnkey workforce solution for new or expanding companies, engendered confidence that qualified employees can be recruited and trained quickly enough to meet VVC’s aggressive launch schedule. Second, recent increases to the Mega Project Development Fund enabled the state to provide a competitive incentive offer.

Investors

Private sector investors include the Silicon Valley venture capital firm KPCB, T. Boone Pickens and James Davison, among others.

KPCB has invested in entrepreneurs and new companies that have gone on to redefine and revolutionize their industries. The venture capital firm has provided pre-initial public offering funding to leading Internet companies, pharmaceutical manufacturers, digital media companies, software developers, electronics manufacturers and data storage providers, such as Google, Amazon.com, Genentech, Electronic Arts, Intel, Compaq and Sun Microsystems.
Referencing other KPCB investments, Doerr said, “These companies that we’ve been privileged to work with and to help grow – the Genentechs, the Compaqs, the Sun Microsystems, the Amazons, the Googles, the Intuits with Quicken – they’ve all created tens of thousands, and in some cases hundreds of thousands, of jobs. I think that V-Vehicle Company has all the potential that any of those companies have.”

T. Boone Pickens is a successful businessman who has invested in the energy industry since founding Mesa Petroleum in 1956. Recently, he has invested in a proposal to reinvent U.S. energy resources by promoting oil alternatives, such as natural gas, wind power and solar energy.

Ruston, La., businessman James Davison is the owner of the former Guide Corp. plant.

Background

Visit OpportunityLouisiana.com to watch a brief video highlighting the vision behind VVC.

COPYRIGHT Autosavant – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

Share This Post On

9 Comments

  1. Let’s not forget that T. Boone Pickens is the infamous neo-con activist who financed the “swiftboat” smear campaign in 2004 presidential election. Does he really believe that the sort of green-minded liberal professionals who are typically early adopters of new technology would buy a car financed by him? Talk about wishful thinking. If, by some miracle, this car makes it to production, you can bet it will be “swiftboated” in most every progressive blog.

  2. Well, politics aside, I’d like to see an LPG production car. Actually what I’d like to is an LPG-EV hybrid.

    Had a fraternity brother from Monroe when I was in college, and he and his family were the nicest people in the world. I’m glad to see that area get some jobs back.

    Maybe the factory will produce EV’s, Hybrids and LPG cars. Who can what they plan for that platform?

  3. I thought that Pickens is the crazy left-wing liberal. Since he is not and what is even better – he is a neo-con – I’m first in the line to test drive and if I like it – to buy V-car. And besides all other guys are from Silicon Valley and Tom Matano lives in SF and works at Art Academy where my son graduated recently. Probably I saw him couple of times at Art Academy events because his face looks familiar to me. So most of involved are our local SF bay area guys. I fully support the team, they know how to run profitable business.

  4. Disappointed to learn about T.Boone’s politics, but I admire his media support for alternative energy projects. I’m eager to see what Matano, the ‘father of the Miata,’ has on his drawing board. Environmentally, it sounds very cool. I lived in New Orleans for two years and had friends from northern Louisiana. It’s a great state. I hope they can pull this off.

  5. ILO, you are a neo-con, and your son is in art school in San Francisco?

    Isn’t that consorting with the enemy?

    I’d love to see an LPG car that’s good looking and sells in sizable numbers.

  6. Chris K: Pickens being in it wont effect sales at all

    ILO: Pickens is not crazy left wing liberal, he is the crazy right wing neocon

    The relese is short on car details. If they puy yhe money up for th factory, they must have the car drwn up already, price, specs, etcc. So where is tha info?

  7. Beat-Nick: I totally agree with you. I would prefer to radically increase nuclear power station construction in this country and advent of electric cars. This is what eventially will happen: most of energy will be generated by nuclear power and all cars will become purely electric. Electricity is the most transformable form of energy. While uraniun lasts we will be able to make break-through in solar panel technology. If cars are electrified the method of energy generation can be changed as often as you like and it will not require change in car design or refill infrastructure. Therefore after we switch to electric cars speed of progress in auto industry may follow Moore’s law. We need to get rid of lawyers and demagogues in Congress and White house though if we want to have energy policy based on science and engineering instead of politics.

    I thought Pickens is a crazy liberal because his talk is full of nonsense. I hope guys from Silicon valley cut his BS and just use his money. Or may be Pickens is lying and in essense he is a man of reason (as most of neo-cons)?

  8. If it was in New Orleans, I’d go there and get a job. Making cars and living in New Orleans sounds like a pretty good combo.

  9. I doubt I agree with him on much, but I do agree with ILO on this.

    EV platform is the way to go.

Submit a Comment

Your email address will not be published.