On Wednesday, Toyota and Mazda announced plans to build a giant $1.6 billion joint plant in Alabama to create jobs for about 4,000 people.
Many states competed to host the plant, but Alabama took the cake. The coveted project turns out 300,000 cars per year and produces the Toyota Corolla compact car for North America and a new small SUV from Mazda. Alabama’s governor, Kay Ivey, and others held a joint news conference to announce that the new plant will be in the Huntsville area, not far from the Tennessee line. Production will start up in 2021.
“This is indeed a great day in Alabama,” Ivey said. “Thank you for believing in the potential of our people in the great state of Alabama. Toyota and Mazda, thank you so much. Welcome to sweet home Alabama.”
To get the plant to the state, Alabama offered up an incentive package of $370 million in tax abatements and investment rebates, said Alabama Commerce Secretary Greg Canfield.
Akio Toyoda, president of Toyota Motors, said that the new facility would be a homecoming because they already have a plant in-state.
The new plant in Huntsville will be just 14 miles away from Toyota Manufacturing of Alabama, which provides four-cylinder, V-6, and V-8 engines for several Toyota models.
The decision to pick Alabama proves that many foreign-based automakers are primarily picking the south to build their plants. Southern states have been using a combination of incentive packages, low-cost labor, and a pro-business labor environment since the United Auto Workers union is stronger in the northern states.
According to the Center of Automotive Research, Alabama tied with Tennessee for a while as the fifth-largest producer in the country last year.
“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.
U.S. sales of small cars fell 10 percent last year as many buyers shifted towards buying SUVs and pickup trucks.
Toyota and Mazda said that their collaboration would respect mutual independence and equality. Toyota makes the Prius Hybrid, Camry Sedan, and Lexus Luxury Models. Toyota already provides hybrid technology to Mazda, which makes compact cars for Toyota at its Mexico plant.
The cost of the plant makes a partnership logical and boosts cost-efficiency and economies of scale.
It is always great to see when jobs are being created in the United States. Toyota and Mazda have made some good decisions regarding the plant in Alabama.