Last month, Mazda and Toyota selected Huntsville, AL, as the site of a new joint-venture assembly plant. The factory will have the capacity to build 300,000 vehicles annually, with production split evenly between the two companies. Mazda intends to use the facility to produce a new crossover model for the North American market, while Toyota will use the factory to make Corollas.
The cost of the $1.6 billion factory will be divvied up equally between the two automakers. The facility is expected to create up to 4,000 jobs, and production is expected to begin by 2021.
The new factory will be Toyota’s 11th in the U.S. and its 15th in North America. It will be Mazda’s first U.S. factory since ending a joint-venture with Ford in 2012.
A dozen states, including Tennessee, Texas, South Carolina and Illinois (as if!), were competing for the factory, but Alabama ultimately won the prize.
The victory puts Alabama at the forefront of the U.S. automotive industry. The state already hosts assembly plants for Honda, Hyundai and Mercedes-Benz, and more than 150 Tier 1 and Tier 2 automotive suppliers are located in the state, as well. All totaled, there are some 57,000 automotive manufacturing jobs in Alabama. More than 1 million cars and light trucks were made in the Yellowhammer State in 2016, the fifth highest total in the nation. Exports of Alabama-made vehicles and parts totaled $9 billion in 2016, and transportation equipment is Alabama’s No. 1 export category.
Of course, a major assembly plant doesn’t come cheap. Alabama’s total incentive package to Toyota and Mazda will top $700 million after local incentives are added to what the state offered to win the factory. The Huntsville City Council approved a $320 million local incentive package for the plant, including the land, building a road to the factory, and property tax abatements worth $107 million over 20 years. The state is offering some $380 million in tax abatements, investment rebates and the construction of a worker training facility.
It wasn’t solely about money, however. Indeed, North Carolina offered a staggering $1.5 billion in incentives to attract the plant. Location was a factor. The new factory will be located just 14 miles from Toyota’s engine assembly plant in Huntsville and 150 miles from Toyota’s assembly plant in Blue Springs, MS, which makes the Corolla.
It doesn’t hurt that Alabama is also a right-to-work state, meaning that employees in unionized workplaces may not be compelled to join a union. (Hear that, Illinois?) Japanese and European auto manufacturers don’t want to run unionized plants, and the United Auto Workers is much weaker in the south.
No matter. We’re just thrilled to have a major new assembly plant here in the United States. Congratulations to Toyota, Mazda and Alabama!
