It’s official: Toyota-Mazda announce Alabama factory

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(Left to right) Secretary of Commerce for the State of Alabama Greg Canfield, Mazda Motor Corp. president and Chief Executive Officer Masamichi Kogai, Alabama Gov.Kay Ivey, Toyota Motor Corp. president Akio Toyoda, Huntsville Mayor Tommy Battle, and Limestone Commission Chairman Mark Yarbrough pose for a photo after announcing the establishment of a car manufacturing plant in Alabama by Toyota and Mazda. TOYOTA WEBSITE PHOTO

Project New World.
That’s the name for Alabama’s newest automotive resident – Toyota-Mazda. It also promises a new world for Alabama’s growing auto industry.

In a news conference in Montgomery on Wednesday last week, 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 Gov. Kay Ivey of Alabama, to a standing ovation.

Ivey was joined on stage at the RSA Activity Center by Huntsville Mayor Tommy Battle, Toyota Motor Corp. president Akio Toyoda and Mazda Motor Corp. president and chief executive officer Masamichi Kogai.


Alabama Commerce Secretary Greg Canfield said that “in a single generation, Alabama has become a powerhouse in the auto industry.”

The new plant is expected to eventually produce 300,000 vehicles a year and employ 4,000. 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 new for 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.

“This is indeed a great day for Alabama and a great day for the Huntsville region,” Commerce Secretary Greg Canfield said. “These are the kinds of projects that would win you a national championship, if there was such a thing in economic development.”

Battle welcomed the two companies with “domo arigato and thank you.”

“With this announcement, our world changes overnight,” he said.

Welcomed by Mercedes-Benz
The news was also hailed in a statement from Alabama’s first auto manufacturer, Mercedes-Benz.

“We welcome the Toyota-Mazda plant – the newest addition to the automotive industry in the State of Alabama,” said Jason Hoff, president and CEO of Mercedes-Benz US International, Inc., in a statement.

“We applaud the people of the region and are pleased to see that so many other automakers recognize the same great qualities here that we did back in the mid-90s: a highly skilled and dedicated workforce, an amiable business climate, and great southern hospitality,” Hoff said.

Sen. Doug Jones also released a statement, calling the decision to locate in Huntsville “a testament to Northern Alabama’s exceptional advanced manufacturing workforce and further proof that choosing common ground over divisiveness will drive business to our state.”

“Today’s announcement is a tremendous step forward for Alabama’s growing technology sector and our ability to recruit quality businesses in the future. We must build on this momentum, and continue to focus our efforts on issues that affect hard-working Alabamians like creating good-paying jobs and providing students with the tools to attain them,” he added.

Kogai said the plant will begin production the year after Mazda celebrates its first century in business, and its first 50 years in the American market. He thanked the state for a “warm welcome.”

“We hope to work, learn and grow together with the people of Alabama and Huntsville,” Kogai said. “Toyota and Mazda will work hard together, inspire each other and become good corporate citizens of this state.”

Toyoda, grandson of the company’s founder, said he spent part of his childhood in Alabama.

“I was a Boy Scout at the time, and this was my first extended stay away from home, so I was a little nervous,” he said. “But thanks to the famous Southern hospitality, my first experience in America was a success and remains quite special to me. I’m very proud to be back in Alabama today.”

The two companies came together on the joint venture, he said, because of a love of cars and hometowns. “Every place where we operate has become our hometown,” he said. “Whenever I visit one of those hometowns, there is one thing I always say to the leaders I meet: ‘I appreciate your people.’”

Workforce a factor
Toyoda said the key factor in choosing Alabama was its workforce. “There is enough quality workforce in Huntsville based on our past experience of producing engines there for more than 15 years,” he said.

Canfield said the state first learned of the project about a year ago, but he only felt sure the plant was coming to Alabama until about four days ago. “We knew leading up days before that it was ours to lose,” he said. Getting the news, he admitted to a little dancing and a glass of champagne with his wife.

Originally, about five sites around the state were considered for the plant, he said, but the Huntsville site was the only one with the size, location and ability to quickly get up and running.

Toyota North America CEO 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-Benz’s plan 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 US 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, an industry think tank in Ann Arbor, Michigan. The state produced 9 percent of the cars made in the US, the center said.

“Alabama won a first place trophy today in being selected for that plant,” said Dave Sullivan, product analysis manager at AutoPacific Inc., an automotive research company. Sullivan said the factory itself is a huge asset for the state, but it will also cause economic ripples by bringing spinoff jobs at suppliers and service companies in the area.

US sales of small cars fell nearly 10 percent last year as buyers continued a massive shift toward SUVs and pick-up trucks. Corolla sales fell 14 percent for the year, to just under 309,000, according to Autodata Corp.

ALABAMA MEDIA GROUP (BIRMINGHAN)/TNS

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