The State of Alabama’s Auto Industry in 2020

Key components of a new Mercedes-Benz SUV come together in Tuscaloosa County.

Any route you take leads to the same conclusion: Alabama’s automotive industry has shattered expectations and continues to develop as a vehicle- and engine-production powerhouse.

Alabama’s ride across America’s automotive landscape has accelerated beyond any expectation — from no auto manufacturing of any kind 23 years ago to annual production of more than 1.3 million vehicles and 1.8 million engines. Not long after the Mercedes-Benz plant opened in Vance in 1997, Honda, Toyota and Hyundai joined the state’s auto industry roster, manufacturing 13 million vehicles and 17 million engines thus far.

Alabama essentially has come out of nowhere to be the nation’s fifth largest auto production state in 2018. Just as impressive, Alabama is projected to be the second-largest auto production state by the end of 2022, according to Bloomberg News.

Auto manufacturing employment grew from 23,517 in January 2011 to 40,500 in September 2019, a head-turning increase of 72 percent, according to the Alabama Department of Commerce. But thanks to new mega projects now under way, those numbers are expected to jump even more.

Take, for example, the Mazda Toyota plant slated for completion in Huntsville in 2021. The $1.6 billion, 3.1 million-square-foot facility will eventually employ 4,000 people and indirectly generate an additional 24,000 jobs. Its two assembly lines will produce roughly 300,000 SUVs a year — half for Mazda and half for Toyota.

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“We’re seeing tremendous opportunities from winning the Mazda Toyota plant in the Huntsville area,” says Ron Davis, president of the Alabama Automotive Manufacturers Association. “We’re seeing new suppliers relocate or locate near Huntsville to support those operations. The number of jobs associated just with Mazda Toyota gives you an idea of the strength of our automotive industry just in North Alabama.”

Nationally, the automotive industry’s growth is flat, and both Ford and General Motors have announced significant layoffs in their workforces. After nearly a decade of solid growth, overcapacity, coupled with emerging technologies, creates a daunting challenge for America’s auto industry.

That’s to say nothing about the lingering uncertainty over the Trump administration trade policies, particularly tariffs and a revamped North American Free Trade Agreement.

Through it all, Alabama is holding up well.

“As an industry, we have to keep our eye on the ball of changing technologies,” Davis says. “There are autonomous vehicles and electric vehicles coming on the scene, and our industry in Alabama needs to have its eye on the ball when it comes to technology. I see our OEMs doing that.”

As an example, Davis cites Mercedes-Benz, which recently has committed more than $1 billion to increase its footprint in Alabama, creating 600 jobs in the process. That investment covers a new battery plant and logistics center in Bibb County and an expansion at the company’s Tuscaloosa plant to give it the capability of producing all-electric vehicles. The company has said it hopes to offer fully electric versions of everything it makes by 2022.

Hyundai announced in November a $410 million expansion at its Montgomery facility to prepare for the production of a new compact utility vehicle, creating 200 direct and 1,000 indirect jobs. “With the Mercedes-Benz battery plant and other expansions and new product launches across the state, Alabama is doing great,” Davis says.

A robust $6.5 billion in vehicle exports in 2018 placed Alabama third among the states in that category. Those exports were shipped across the world through ports in other states or by rail to Mexico and Canada.

Now, to further support the state’s auto manufacturers, the Alabama State Port Authority is part of a joint venture to build and operate a facility at the Port of Mobile that will allow vehicles to be driven directly onto ships for export.  The $61 million facility will create about 7,000 parking spaces for vehicles and is scheduled for completion in 2021, says Jimmy Lyons, director and CEO of the Alabama State Port Authority.

“Most of the auto manufacturing in Alabama is basically for the North American market — the U.S., Mexico and Canada — and we think this is a much better mousetrap for going to Mexico moving forward when we have this new terminal in place,” says Lyons. “We think there might be a good market for that.”

Lyons says he has been asked about the possibility of such a facility for a long time, but it’s only become feasible recently. The site for the facility is currently being heightened to ensure it will remain outside the flood plain. Infrastructure work should begin during the first quarter of this year.

“It’s taken a few years to get it done, but we’re getting closer to being ready to go,” Lyons says.

The State Port Authority is just one of several players working to make Alabama more attractive to the auto industry. Others are the governor’s office, the OEMs, the community college and 4-year university systems, the Department of Commerce and Alabama Industrial Development Training, says Davis.

“I see the teamwork in Alabama being top-of-the-line,” Davis says. “I think that’s why there is strong interest in doing more business in Alabama.”

Going into 2020, “The outlook is great,” says Davis. “As far as challenges go, we have to continue building a qualified pipeline of workers to support the automotive industry. We can only produce great cars and engines if we have qualified workers. So, our biggest challenge and opportunity is to make sure Alabama has the best workers in the country.”

Charlie Ingram is a freelance contributor to Business Alabama. He is based in Birmingham.

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