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Smith Electric Vehicles plans to build as many as 20 regional assembly plants throughout the country, moving away from its original plans to centralize its manufacturing operations.
CEO Bryan Hansel said the company, an affiliate of U.K.-based The Tanfield Group Plc, plans to pick the location of its second plant by the end of April and two more locations by the end of June. The first plant is in Kansas City, which was originally supposed to be the sole manufacturing base for the company.
Hansel said Smith Electric still plans to centralize its marketing, purchasing, engineering, and other corporate functions in Kansas City.
At least one new plant will be in California, where delivery-fleet customers face pressure to cut emissions—and can receive $20,000 state vouchers toward the cost of an electric vehicle.
Smith Electric reevaluated its strategy in the fourth quarter and decided to move to localized assembly of its trucks in a bid to boost awareness and broaden the customer base, he said. By having local plants capable of servicing the trucks, Hansel said, Smith Electric can expand sales beyond large customers, which have in-house maintenance operations, to smaller users, such as landscapers.
Greater local visibility also could persuade more companies to pay the roughly $100,000 more for an electric vehicle—though such vehicles supposedly are cheaper to maintain.
“I think we’re starting to crack the code on what it’s going to take to genuinely get these things into a mainstream environment,” he said. “Right now, electric vehicles are still a novelty. How do you move it from novelty to mainstream is really the challenge, and we think this is a cornerstone to that.”
The regional blueprint could be seen as another sign that manufacturing seems to be on the rebound across the country. According to recent data, manufacturing orders are up and inventories are down.
Hansel said Smith Electric can use smaller plants to follow sales because it assembles its vehicles instead of building them from scratch. The regional plants will average about 30 workers each.
“If we put three facilities in in a year or 10, it’s all going to be driven by how the market is adopting,” he said. “We’re not committed to a fixed overhead and hoping the market shows up.”
Smith Electric has started in its own backyard. In March 2009, the company said it would build an 80,000-square-foot plant and 8,600 square feet of office space at a largely vacant American Airlines overhaul base. The plant attracted $3 million in incentives and generated hopes of Kansas City becoming a hub for the burgeoning electric-vehicle industry.
In October 2009, the company began assembling the Smith Newton, a delivery truck with a 16,000-pound payload capacity and a single-charge range of 100 miles. Smith Electric was to begin assembling a battery-powered version of Ford Motor’s Transit Connect van this year, but that deal fell through.
Earlier this month, the General Services Administration approved the Newton for purchase by federal agencies. The Obama administration is requiring agencies to reduce fleet-vehicle petroleum use by 30 percent by 2020.
Hansel declined to say how many Newtons have sold, but said sales didn’t influence the change in strategy.
“We’ve seen more demand than we anticipated,” he said, adding that production and hiring have been slower than expected as the company fine-tuned its assembly process and worked to switch its supply chain from a European-focused one to one based on domestic suppliers. He said he still thinks Smith Electric will have 120 employees by year’s end and possibly get to 200 in the near future.
David Twiddy is a staff writer for the Kansas City Business Journal.
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