The latest multimillion dollar expansion at a Champaign County Honda supplier will position it to remain competitive into the next decade as parts suppliers battle it out in an increasingly aggressive industry, company leaders said.
The newest expansion at KTH Parts Industries Inc. will add as many as 20 new full-time jobs, push the size of the existing facility past 1 million square feet and invest between $23 million and $34.5 million in equipment and new construction.
It will also put the company in a more competitive position through at least 2023, said Rob Hayes, senior vice president of engineering, quality and production at KTH.
This will be the third time the company has expanded in the past few years. KTH is a major parts supplier for Honda, and the company’s growth has mirrored Honda’s recent success.
Officials with IHS Automotive have said combined Honda and Acura sales hit an all-time record of more than 1.58 million vehicles sold last year, a 3 percent increase over the previous year.
“We’ve just been very fortunate to grow with Honda,” said Art Liming, executive vice president and plant manager at KTH.
But as competition increases, Hayes said it’s possible the company could eventually branch out to supply parts for other auto manufacturers as well.
“We’re positioning ourselves for the long-term,” Hayes said.
The company is seeking a 15-year, 100 percent tax abatement on the new construction, according to documents filed with the Graham Local School District and the Ohio Hi-Point Career Center. Graham school board members are expected to vote on the abatement later this month. The abatement would only cover the new investment in the plant.
Company leaders estimated the investment for new construction at about $7.7 million, not including the purchase of new equipment.
The newest expansion in the facility includes:
• $336,226 for a stamping warehouse.
• $1 million for a stamping expansion.
• $3.6 million for a weld expansion.
• $119,000 for a break-room expansion.
• $975,000 for a materials and supply expansion.
• About $1.2 million to expand the automated storage retrieval system.
• About $131,000 for pond and road improvements.
• About $307,000 for miscellaneous improvements.
KTH plays an important role in Champaign County’s economy and has been active in the community, said Marcia Bailey, economic development coordinator for the Champaign Economic Partnership.
“They’ve continued to expand and commit to our community,” Bailey said. “And each time that they’ve committed they’ve always fulfilled all the requirements.”
The expanded stamping and welding facilities are important as Honda adapts to changing demand from consumers, Liming said. Fuel prices have dropped and consumers are increasingly seeking sport utility vehicles such as the Honda CR-V.
That demand will likely continue even if gas prices spike, Liming said, as Honda and other auto manufacturers increasingly focus on improving the fuel efficiency and durability of their vehicles.
“Gas prices are down and families are wanting a little larger vehicle than in the past,” Liming said.
Much of the newest expansion could be completed as early as this fall if the abatement is approved, said Chris Millice, assistant vice president of general administration for KTH. The expansion is more complicated than past expansions because improvements will be made throughout various sections of the existing facility.
In previous expansions, much of the work was confined to a single portion of the plant.
“It took a little over a year to get this approved,” Millice said.
KTH also recently opened a new $6.7 million research facility in Plain City to design and engineer lightweight materials that are strong enough to meet safety specifications in case of a crash. And last year, KTH wrapped up a separate, $29 million investment that added 28,000 square feet to the facility.
Hiring will likely ramp up next year, Millice said. Documents filed with the school districts show the new jobs will add an additional $812,000 in payroll, and Millice credited the company’s employees for the company’s success.
“As we see the industry changing, we need to stay ahead of that curve,” Millice said.