Thu | Jan 17, 2019

Toyota-Mazda plant planned for Alabama

Published:Thursday | January 11, 2018 | 12:00 AM
In this August 4, 2017 file photo, Toyota Motor Corp President Akio Toyoda (left), and Mazda Motor Corp President Masamichi Kogai shake hands after a press conference in Tokyo.

Japanese automakers Toyota and Mazda on Wednesday announced plans to build a huge US$1.6 billion joint-venture auto plant in Alabama that will eventually employ about 4,000 people.

Several states had competed for the coveted project, which will be able to turn out 300,000 vehicles per year and will produce the Toyota Corolla compact car for North America and a new small SUV from Mazda.

Akio Toyoda, president of Toyota Motors, said the announcement is something of a homecoming for the company. The site for the new plant will be in Huntsville and located just 14 miles (22 kilometres) from Toyota Motor Manufacturing of Alabama, which produces four-cylinder, V-6 and V-8 engines for several Toyota models.

Production is expected to begin by 2021.

The decision to pick Alabama is another example of foreign-based automakers building United States factories in the south.

To entice manufacturers, southern states have used a combination of lucrative incentive packages, low-cost labour and a pro-business labour 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 per cent of the cars made in the US, the centre 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 spin-off jobs at suppliers and service companies in the area.

US sales of small cars fell nearly 10 per cent last year as buyers continued a massive shift towards SUVs and pickup trucks. Corolla sales fell 14 per cent for the year, to just under 309,000, according to Autodata Corp.

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.