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Nissan Planning to Expand North American Capacity

Another U.S. plant a possibility; maker may also add Infiniti production.

by on Jun.29, 2011

With the Juke and a number of other new products coming to the U.S., Nissan needs to expand North American production capacity.

This story has been updated to include details on Nissan’s individual U.S. and Mexican plants and more on its plans for Infiniti.

Anticipating significant growth in both North and South America Nissan is working up plans that will call for the expansion of its current production base in the U.S. and Mexico, a senior official confirms, hinting that the maker may also resume production of Infiniti models in North America.

Nissan earlier this week unveiled a new 6-year plan, dubbed Power 88, that projects a 50% increase in global sales, with much of that expected to come from China, India and other emerging markets, but the U.S. and other parts of the Americas are central to what global marketing chief Simon Sproule acknowledges is an “aggressive” plan.

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“What’s clear is if we look at our aspirations for growth in the U.S. and the role the (two Nissan) Mexican plants play for our growth in North and South America we’re going to have to have more capacity,” said Sproule, who was interviewed during a segment TheDetroitBureau.com hosted on Detroit NPR affiliate WDET-FM.

Currently, Nissan operates four assembly plants in the so-called NAFTA region, two in the U.S., two in in Mexico, as well as two American engine and component facilities.  With Nissan the fastest-growing of Japan’s Big Three makers those plants are straining to keep up with demand.  Last week, Nissan CEO Carlos Ghosn indicated the maker’s U.S. sales should top 1 million in the current fiscal year, a 7.7% increase over the prior year, which ended March 31.

Nissan’s original U.S. plant, in Smyrna, Tennessee, is pushing the limits of its 550,000 unit capacity, the newer Canton, Mississippi plant up to the walls rolling out 400,000 vehicles.  The Aguascalientes plant has seen steady increases and is now at 350,000 units capacity, the Cuernavaca assembly line at 261,000.  All told, that is barely meeting current demand in the Americas, and the situation is likely to get worse if Nissan’s new plan proves workable.

The maker plans to roll out a new product every six weeks over the course of the Power 88 program, with a large share of those offerings intended for the U.S.  The compact Roguecrossover is one of many products Nissan wants to shoehorn into its North American operations

What’s unclear is how the carmaker will cope with the need to expand. “Whether that means new facilities or growth in current facilities, that’s something we’re working on right now,” said Sproule.

Also under debate is whether to shift production of an Infiniti product to the U.S. or Mexico.  Nissan’s upscale brand has long been an also-ran in the luxury market but is gaining momentum with an expanded line-up.  At least three more models are on tap, including the JX, which will be unveiled in August, and a luxury battery car to compliment the more mainstream Nissan Leaf.

Traditionally, Nissan has assembled Infiniti products in Japan, with the exception of the big QX56 luxury sport-ute which was briefly produced in Canton, Mississippi before being shifted back to Japan.  While Sproule would not confirm plans to produce the JX or some other Infiniti in North America, he acknowledged there are advantages to “building cars where you sell them.”  But with Infiniti planning to roughly double its global footprint, to “more than 70 markets,” the chief marketing officer cautioned there are a number of possible options under consideration.

Like its Japanese rivals, Nissan was hard hit by the March 11 earthquake and tsunami that devastated Japan, but most analysts believe it has been able to restore its production network quicker than rivals Toyota and Honda.  Nonetheless, CEO Carlos Ghosn has said the maker will likely have to continue shifting its production base out of the home market.  Among other things, it will add a new assembly plant in Brazil under the Power 88 plan.

The situation in Japan remains unstable, acknowledged Sproule, “And it’s tough in the summer months, when it’s hot and humid and energy demand is at its peak.”  To help reduce demand on Japan’s weakened grid, the Japanese auto industry will shift to a new work week pattern starting this coming weekend, noted Sproule.  Nissan and its rivals will begin their week on Saturday and wrap up on Wednesday to help spread out energy demands.

“We’re seeing an enormous amount of teamwork,” Nissan’s CMO explained, “which is how Japan operates as a country.”

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