Alabama’s Resilient Auto Industry is Ready for 2021

COVID-19 slowed, but didn't stop, the state's automakers.

Works in progress are the lifeblood of Alabama’s automotive economy.

Last spring, as the COVID-19 pandemic spread worldwide, automakers in the United States faced disruptions to their supply chain and slumping sales as stay-at-home orders, business shutdowns and job layoffs hurled many Americans into financial peril.

Amid the pandemic, automakers and many of their suppliers in Alabama and nationwide shut down their own operations for several weeks to establish new protocols and to sanitize and reconfigure their facilities to keep their teams from getting sick once they returned to work.

“It was a Herculean task and tremendous effort on the automakers’ part to put procedures in place and get the necessary personal protective equipment and determine how they could restart production in a way that would ensure the health and safety of their employees,” says Steve Sewell, executive vice president of the Economic Development Partnership of Alabama (EDPA) and treasurer of the Alabama Automotive Manufacturers Association (AAMA).

Works in progress at Toyota.

To help Alabama’s auto industry keep its workers safe, an AAMA executive roundtable met to discuss and share best practices for reopening the automotive plants.  

“There was no competition between the OEMs,” says AAMA President Ron Davis. “It was one team coming together as a team to help each other.” 

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As of the end of 2020, the pandemic’s full impact on Alabama automotive production was still being determined, says Sewell, as the OEMs calculate their final production numbers.

 “But the pandemic certainly will have some impact because COVID affected every industry, either because of the direct impact on companies’ abilities to produce and operate at full production or on the economy in general,” he says. But despite COVID’s impact, Sewell says he is pleased at the Alabama auto industry’s apparent strength and resilience during a crisis-filled year. 

Alabama has ranked fifth in the nation for auto production, with automakers Honda, Hyundai and Mercedes-Benz together assembling close to 1 million vehicles in 2019, according to the Alabama Department of Commerce. In addition,
the Commerce department reported that Hyundai, Honda and Toyota produced around 1.5 million engines that year.

Moreover, Sewell says the number of automotive jobs in the state for 2020 was 43,797. This includes jobs in motor vehicle manufacturing, motor vehicle parts manufacturing and motor vehicle body and trailer manufacturing. 

“Ironically, though 2020 was a challenging year for the industry, we came out of the year really well positioned for the future,” says Sewell. “You had companies that continued with their expansion projects even during the pandemic.”

In Montgomery, for example, Hyundai Motor Manufacturing Alabama (HMMA) LLC continued with its $410 million expansion and added both the Santa Cruz and Tucson SUV to its line up, for a total of five models.

HMMA’s expansion adds 200 new direct jobs and about 1,000 indirect jobs. 

To the north in Tuscaloosa County, Mercedes-Benz U.S. International (MBUSI) continued its plans to build at least one electric vehicle in each of its model series starting in 2022. The company also announced a new storage and sequencing facility for Vance, and began making the luxury Maybach GLS 600.

“So we’re going to move to 14 vehicles that are produced by automakers in Alabama,” says Sewell. “That’s extremely significant and good news for Alabama in terms of stability of our industry to have the product mix that we do.” 

In addition, according to press reports back in October, MBUSI plans to build a new $53.5 million, 500,000-square-foot facility that will supply parts to Mercedes-Benz electric vehicles. The center will create around 370 new jobs. 

In Huntsville, the Toyota Motor Corp. and Mazda Motor Corp. continued construction on their jointly owned, $2.31 billion manufacturing plant. The plant is scheduled to open in 2021 and produce up to 300,000 vehicles annually.

Even before the plant opened, Mazda Toyota Manufacturing announced an additional $830 million investment in technology and training.

Meanwhile, Toyota’s Alabama engine plant in Huntsville also persisted with its own $288 million expansion that is set for completion in 2021. The company says that the plant’s expansion effort will increase its annual engine capacity by 34% to 900,000 and total employment to 1,800.

In Lincoln, Honda Manufacturing of Alabama (HMA) continued producing the Passport and Pilot SUVs, Ridgeline light trucks and Odyssey minivans in 2020.  

“Honda is the largest employer among the automakers in Alabama,” Sewell says.

A 2019 EDPA-commissioned study, conducted by the University of Alabama’s Center for Business and Economic Research, found that HMA and its suppliers in Alabama had a $12 billion annual economic impact, creating some 45,000 jobs.

Among the automotive suppliers, he says some of the major news included Dura Automotive Systems’ announcement of a $59 million project in Colbert County to produce battery trays for electric vehicles. The move will create around 280 new jobs. 

“So that’s an example of the growth that’s coming related to where the industry is going, to new technologies, and what we’re going to see in the coming years, Sewell says.

Another supplier, International Automotive Components Group North America, said in the fall that it would invest $34.3 million to expand the Cottondale factory where it makes door panels and overhead systems and spend another $21.6 million toward its existing Anniston manufacturing facility that makes various interior components for vehicles. 

And Mobis U.S. Alabama LLC, a Hyundai supplier that has a facility in Montgomery, is preparing to build a $15.8 million plant near Birmingham in McCalla.

Even during challenging times, expansions continued and new projects announced, Sewell says.

One of the most anticipated developments in Alabama will be the new automobile terminal at the Port of Mobile. 

Made possible through an agreement between the Alabama State Port Authority and the finished vehicle logistics service
provider AutoMOBILE International Terminal (AIT), the roll on/roll off facility will be a gateway for finished passenger vehicles, says Finn Roden, AIT’s chief commercial officer. The facility will allow Alabama automakers to ship from the Port of Mobile. 

AIT is overseeing the terminal’s construction collaboratively with the Port. It is a joint partnership between Terminal Zarate, headquartered in Buenos Aires, and Neltume Ports, a company based in Santiago, Chile. The Port Authority values the project at $60 million. 

Once open, the facility can handle up to 175,000 units a year.

Sewell says he is more optimistic than ever about the future of auto manufacturing in Alabama because of the global OEMs in the state, the health of those companies, their product lines and their future plans.

“With the expansions that they’ve all made in recent years and with the product lines here, it all suggests a high level of confidence in Alabama, a long-term commitment to the state, and it demonstrates that we’ll continue to be a top automotive state in the United States and a top location globally for automotive production,” he says.

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