State of the Auto Industry, 2018
Akio Toyoda, left, president of Toyota Motor Corp., and Masamichi Kogai, president and CEO of Mazda Motor Corp., applaud January’s factory announcement.
As sensational as the announcement 25 years ago when Mercedes-Benz launched Alabama into automotive manufacturing was the announcement January 10 that Toyota and Mazda selected Alabama as the site for their $1.6 billion, 4,000-job joint venture assembly plant.
The new plant, expected to start operations in 2021, is planned to have an annual production capacity of approximately 300,000 units.
Alabama has already been zooming along in the fast lane of the automotive industry. The state now produces more than 1 million vehicles per year, with approximately 40,000 jobs connected to the industry through the various OEMs and suppliers. When the new plant comes on line, Alabama is expected to move from fifth place to fourth among the nation’s automaking states.
“It’s amazing if you look at where we started and our position today in the auto industry. We’ve really become a global player,” says Steve Spencer, president of the Economic Development Partnership of Alabama. “We’ve matured as a state in the industry, both in terms of the growth of the companies here and also in economic development. We’ve become more knowledgeable about the industry and the need to address the issues that are important for its growth.”
Most industry officials agree that the primary issue heading into 2018 and beyond is workforce development, which was a major topic of conversation at last October’s Southern Automotive Conference in Birmingham. Not only is there an abundance of long-time employees in the workforce who are nearing retirement age, but also there is a need for new workers who have the necessary skills for the high-tech vehicles being produced these days.
“The key thing we’re working on across the whole state is workforce development, to provide the quality workers that are needed for both the existing industries in the state and these new companies coming in,” says Ron Davis, president of the Alabama Automotive Manufacturers Association. “They’re going to be successful only if they have qualified workers. So there are initiatives across the whole state of Alabama in the area of workforce development to provide those workers. We have tremendous activity going on in that area.”
Three other topics are headline makers as the industry heads into 2018.
The creation of the new Southern Automotive Manufacturers Alliance
This new organization consists of the state automotive manufacturing organizations of Alabama, Tennessee and Mississippi, with the Georgia association as an apprentice member. Also part of the new alliance are the Southern Automotive Women’s Forum, the South Carolina Automotive Council and the Kentucky Automotive Industry Association.
The goal is for the states to work together to create new opportunities in the automotive industry throughout the Southeast region, though they still will compete with each other to land individual manufacturers and suppliers. The concept is similar to that of a professional sports league such as the NFL, where the teams cooperate for the benefit of all, yet remain rivals on the playing field.
“The states will still compete in the area of economic development, but association presidents and executive directors will work together and talk to each other as friends,” Davis says. “So we are partners who want to help the whole region grow, but there will be that competition in economic development for who gets what plants. But it’s a healthy thing, because we really do help each other to support the associations in each of the states.
“The teamwork is fantastic, because each of the presidents from the other states have their areas of expertise, their specific backgrounds and skills. For example, Rick Walker of Georgia is a patent attorney. So there are certain things that he has more knowledge about. And when we all come together, it makes collectively for a much stronger team that any one of our states alone.”
Opening of a new Autocar truck assembly plant in Birmingham
The Indiana-based company is investing $120 million to open a manufacturing plant in an existing 1 million-square-foot complex in the Birmingham suburb of Center Point. The plant is expected to create nearly 750 jobs and generate more than $645 million in annual economic impact, according to a study from the University of Alabama’s Culverhouse College of Commerce.
In addition, Autocar gives Alabama its fifth OEM assembly plant to go along with Mercedes, Honda, Hyundai and Toyota, but it will produce different types of vehicles from those three. Autocar’s focus is on heavy-duty work trucks, which will open up new markets for suppliers in the state.
“It’s a completely different product,” says Brian Hilson, president and CEO of the Birmingham Business Alliance. “They make trucks that are purchased by companies and governments, vehicles for things like public works divisions. That’s significant for both Birmingham and the state. The economic impact is going to be very strong. This is part of the natural evolution of the growth of the automotive industry in Alabama over the past 25 years.”
A Growing Supplier Base
Alabama welcomed new suppliers and supplier expansions in 2017 as well. No surprise, says Davis, since Alabama has “a proven track record of being very friendly to the automotive industry.”
German auto parts manufacturer BOCAR announced plans for a $115 million manufacturing plant, also in Huntsville, with plans to hire 300 workers. Spanish firm Grupo Antolin announced plans for a $10 million plant in Jefferson County to make doors, seats, lighting fixtures and trim. Guyoung Tech USA, based in Korea, has invested $7.5 million and will employ 130 people making seating in Montgomery. Another Korean firm, Seoyon e-Hwa Interior Systems Alabama, already operating a supply facility in Selma, will open a new plant in Montgomery to make door trim, seats, head linings. And German firm SAS Automotive Systems plans to assemble cockpit modules for Mercedes in a new plant in Tuscaloosa.
“Alabama is now one of the leading states in the country for automotive production, and we expect that to continue to grow,” Hilson says. “Every one of our Alabama-based automotive manufacturers has announced recent expansions. They’ve added capacity, they’ve generated investment, and they’ve added jobs. And the changes in the product lineups are going to dictate changes among the supplier lines and the manufacturing technologies. As we look several years down the road, I think Alabama’s role in the automotive industry is going to be significant.”
Cary Estes and Robert Fouts are freelance contributors to Business Alabama. Estes is based in Birmingham and Fouts in Montgomery.