Toyota-Mazda Announce Alabama Factory

AL.com reports that the newest automotive resident in Alabama’s growing auto industry is Toyota-Mazda. State officials announced the coming of a $1.6 billion joint venture between the two auto companies.  “It is my honor to announce that Toyota and Mazda have chosen Alabama as home of their new production plant,” said Govenor Kay Ivey. The new plant is expected to eventually produce 300,000 vehicles a year and employ 4,000 people. Average salary will be $50,000 for workers. The two companies will split the cost of the factory, as they will split production.

Mazda will produce a crossover model that is new to North America, and Toyota will produce the Corolla. The site will be located in a portion of Huntsville in Limestone County, not far from Toyota’s existing engine plant. Originally, about five sites around the state were considered for the plant, but the Huntsville site was the only one with the size, location and ability to quickly get up and running. Toyota North America chief executive officer James Lentz said the site also has “great access to rail and highway systems,” as well as proximity to suppliers. “Quality of the labor force to me is probably the most important part,” he said. “And quality of life. This is a great community to live in, work and raise families.”

The cumulative payroll of the plant is estimated at $5.2 billion over 20 years, resulting in $1.29 billion is gross revenue over that time. Subtract the incentives and that leaves $951 million. But all parties expect more supply companies to locate nearby as a result, as well as existing suppliers to ramp up production to meet demand. In addition, Toyota-Mazda represents the first auto company to commit to manufacturing vehicles in Alabama since Hyundai announced in 2002. Since the beginning of last year, companies have announced about $3.2 billion in investments toward Alabama’s auto industry. That includes Mercedes’ plans to build an electric battery plant in Tuscaloosa and Honda’s expansion of its Lincoln factory. And Alabama is already among the top three states for vehicle exports.

The decision to pick Alabama is another example of foreign-based automakers building U.S. factories in the South. To entice manufacturers, Southern states have used a combination of lucrative incentive packages, low-cost labor and a pro-business labor environment since the United Auto Workers union is stronger in Northern states. Alabama was tied with Tennessee as the fifth-largest producer of vehicles in the country last year, according to the Center for Automotive Research (Ann Arbor, MI), an industry think tank. The state produced 9 percent of the cars made in the U.S., the center said.

U.S. sales of small cars fell nearly 10 percent last year as buyers continued a massive shift toward SUVs and pickup trucks. Corolla sales fell 14 percent for the year, to just under 309,000, according to Autodata Corp. Still, Toyota and Mazda have said their collaboration will respect mutual independence and equality. Toyota, which makes the Prius hybrid, Camry sedan and Lexus luxury models, already provides hybrid technology to Mazda, which makes compact cars for Toyota at its Mexico plant.

This is an excerpt of an article originally published by AL.com on January 11, 2018.