Akio Toyoda, Toyota Motor Corp. president, speaks during a press conference in Montgomery, Ala, on Wednesday. Photo: The Montgomery Advertiser via AP
business

Alabama incentives for Toyota-Mazda factory top $700 million

12 Comments

Alabama's total incentive package to Toyota and Mazda will top $700 million after local incentives are added to what the state offered to land the companies' new U.S. factory.

The Huntsville City Council on Thursday approved a $320 million local incentive package. That is in addition to $380 million announced by the state in tax abatements, investment rebates and the construction of a worker training facility.

Huntsville Mayor Tommy Battle said before the council vote that the joint-venture factory, which will employ about 4,000 people, will bring economic benefits to the region for generations.

"If there ever was a slam dunk deal, this is a great one," Battle said.

The city's offer to the Japanese auto manufacturers included providing the land, building a road to the factory and property tax abatements worth $107 million over 20 years

Alabama's commerce department had announced only the state's share of incentives Wednesday when company executives announced the decision to come to Alabama.

The new plant in Huntsville - already a hub for the region's budding aerospace industry - will produce 300,000 vehicles per year, a combination of the Toyota Corolla compact car and a new small crossover SUV from Mazda. Production is targeted to begin by 2021.

Multiple states had competed for the project by the Japanese auto giants.

"This is indeed a great day in Alabama," an upbeat Gov Kay Ivey said Wednesday, flanked by company executives at a news conference in the state capital, Montgomery.

Commerce Secretary Greg Canfield said Wednesday he believes the state is getting a "pretty good deal" considering the plant alone will create $5.2 billion in payroll over 20 years.

"Not only that, it's really hard to measure the positive impact that having companies create career opportunities like this and how that transforms families," Canfield said.

Toyota and Mazda will join Mercedes, Honda and Hyundai in operating factories in Alabama.

Alabama was already tied with Tennessee as the fifth-largest producer of vehicles in the U.S. 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 country, the center said.

"This project will really put Alabama at the center of the Southern automotive industry," Canfield said.

President Donald Trump congratulated the state on Twitter Wednesday evening in a post that said, "Good news: Toyota and Mazda announce giant new Huntsville, Alabama, plant which will produce over 300,000 cars and SUV's a year and employ 4000 people. Companies are coming back to the U.S. in a very big way. Congratulations Alabama!"

The decision to pick Alabama is another example of a long trend 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 started on the road to becoming an auto manufacturing hub in 1993 when Mercedes chose it as the location for a manufacturing plant after the state offered a then-eye popping $250 million incentive package.

Akio Toyoda, president of Toyota Motors, said Wednesday that the new facility is something of a homecoming since the company already has one plant in the state. The new Huntsville plant will be just 14 miles (22 kilometers) from Toyota Motor Manufacturing of Alabama, which produces four-cylinder, V-6 and V-8 engines for several Toyota models.

© Copyright 2018 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

©2018 GPlusMedia Inc.


12 Comments
Login to comment

corporate welfare

0 ( +0 / -0 )

@ozziedesigner

corporate welfare

Corporate welfare or not, this is a bad news for Mazda.

Toyota Corolla and Mazda CX-5 rolling off this factory cannot be two separate vehicles.

So whose platform is it going to be? Toyota's or Mazda's?

If Toyota's, then the CX-5 loses its driving dynamics.

If Mazda's, it will still suck because Mazda will be forced to engineer at Toyota cost level.

I don't understand why Mazda entered in this deal with Toyota.

0 ( +0 / -0 )

One reason Japanese automakers love to go there and other southern states is UAW will not bother factory automation. In Michigan, factooories had to follow UAW standard. In Alabama, etc, unskilled workers can be push button technitians. Pay rate may be same but woorkers do not have to contribute union dues and large retiremennnt funds. I think $40 hurs an hour now. Cheap maybe but better than paying half to union.

0 ( +0 / -0 )

In Mexico, Toyota and Mazda manufacture cars and trucks together as if they are one company. The practice made Trump mad at them. I got feeling both companies will operate the same way in Alabama. So, no problem. Nissan will create cars in Europe with three different companies. Just doing Japanese type successful manufacturing practice. One Japanese industry economist explained this kind of practice as Ubiquitus economy growth in his book about 30 yrs ago.

0 ( +0 / -0 )

toshiko - $40/hour?! - ha ha! Check your stats. Other problems exist as well, particularly at suppliers.

Still, it's Alabama. There aren't many other choices.

https://www.bloomberg.com/news/features/2017-03-23/inside-alabama-s-auto-jobs-boom-cheap-wages-little-training-crushed-limbs

0 ( +0 / -0 )

North Carolina was the other serious candidate for the site, which would have been huge as there's never been a major auto factory there, to my knowledge. The state has a well educated workforce, booming economy, and high standard of living. And unions wouldn't have been an issue, as it's one of the least unionized states in the country.

In the negative column, the lack of existing automotive supplier infrastructure was probably a factor. But let's be honest, the local and state governments just weren't quite as willing to open up the public coffers as Alabama, which will apparently offer just about anything to get a factory (see above).

0 ( +0 / -0 )

@laguna

Nissan in Cantong Miss., UAW came to unionize. Instead, Nissan moved out and returned to Tennessee, pay rate went up $40 one hr. Bernie Sanders came to help strike but after finding pay rate, he abandoned helping auto workers. That was a couple years ago. With these pay rates, Japanese automakers are successful in USA. But best profitable carmakers in Alabama is. Mercedes. It's products are popular in Western states where he students drive their own Japanese brand cars while papa and mama drive Mercedes.

0 ( +0 / -0 )

Subaru and new Mitsubishi are making cars in Southern Calif.

0 ( +0 / -0 )

Alabama didn't have to offer incentive. but it did. Now, there will be competition of Japanese part makers. About a dozen tire manufacturers. Alabama may have eyes on business of them.

0 ( +0 / -0 )

@Toshiko

Nissan is still in Canton, Mississippi BTW.

0 ( +0 / -0 )

@senkaku:Subaru may be looking at your area. Any Japanese companies love your area. They don't like Nevada.

0 ( +0 / -0 )

The owners name is Toyoda.

The name change.

MitsuiToyoda. Then Toyota.

Literally, rug to rich accomplishment after Japan lost war.

0 ( +0 / -0 )

Login to leave a comment

Facebook users

Use your Facebook account to login or register with JapanToday. By doing so, you will also receive an email inviting you to receive our news alerts.

Facebook Connect

Login with your JapanToday account

User registration

Articles, Offers & Useful Resources

A mix of what's trending on our other sites