While the United Auto Workers union is stirring up debate at a Nissan plant next door in Mississippi, Alabama’s auto industry is rolling like their beloved college football team. Last year the state added over 3,800 jobs and $900 million in capital investment from nearly 70 automotive manufacturing plant investments. New projects announced in 2017 will take that number over $1 billion.
Examples of this investment include Hyundai’s $52 million assembly plant expansion for launching production of the Santa Fe Sport SUV. Mercedes-Benz and Honda have also expanded their operations and Toyota recently brought production for one of their most significant engine lines to the area.
Vehicle manufacturers aren’t the only ones getting into the act. Last year automotive seating and materials manufacturer Lear brought 535 new jobs to Tuscaloosa with their expansion. Similarly, Mercedes part manufacturer MollerTech USA opened a new $46 million, 200-job facility in Bibb County and Eissman Automotive, another interior part supplier, added 200 jobs to their operation in St. Clair County. Additionally, the Truck & Wheel Group is building its first U.S. parts plant, a $30-million, 70-position facility, in Tuscaloosa County.
Driving much of this growth has been Mercedes, and more specifically, the expansion of their SUV production over the last 20 years. The first M-Class rolled down the automaker’s Alabama assembly line on February 14, 1997.
Honda has also announced expansion plans, in the form of an $85 million project to improve manufacturing flexibility, strengthen logistics efficiency, and prepare for future technologies. Additional expansion plans from suppliers will bring in another 350 jobs with over $60 million being spent to either expand or initiate automotive-related production in the state.
Insights
Just as brick-and-mortar retail depends on an anchor to bring in consumers that will then find their ways to other stores and restaurants, a manufacturing ecosystem benefits from large manufacturing entities with diverse supply chains. In Alabama, this started with Mercedes-Benz, which brought in suppliers like MollerTech and Lear.
Once those companies set up shop, it made sense for other OEMs like Honda and Toyota to move in as well. Alabama, like its sister-states Mississippi and South Carolina, has also been aggressive in providing brown and green-space incentives, as well as tax breaks to these companies in exchange for job and investment guarantees. One potential wrench awaiting placement in this finely tuned machine is the introduction of unions, and the higher wage and benefit demands they have historically demanded.