Toyota, Mazda Are Said to Select Alabama for New Car Factory

Jan. 10, 2018
The Japanese automakers have been narrowing the list of possible locations for months.

Alabama edged out North Carolina as the winner in a multistate contest for a prized Toyota Motor Corp. and Mazda Motor Corp. joint car factory worth $1.6 billion, a person familiar with the negotiations said.

The Japanese automakers have been narrowing the list of possible locations for months. Mazda and Toyota plan to announce their final choice on Wednesday in the Alabama capital of Montgomery, said the person, who asked not to be identified because the news hasn’t been publicly disclosed.

The shared factory Toyota and Mazda plan to open in 2021 is the only new auto assembly plant to be announced under President Donald Trump, who has pressured Toyota and other carmakers to make more of their vehicles in the U.S. During his November visit to Tokyo, Trump thanked executives from the two companies for their U.S. expansion plans.

It will be Toyota’s 11th assembly plant in the U.S. -- its biggest market -- and the first since 2011. The automaker already has an engine factory in Huntsville, Ala., and announced a $106 million upgrade to the facility in September.

The new factory will help the companies hedge currency risks -- and also may keep them out of the White House’s crosshairs. To make way for the new plant, Toyota in October cut its planned investment in a facility in Guanajuato, Mexico, by 30% to $700 million. Trump had threatened Toyota in a tweet a year ago while president-elect to build Corolla cars in the U.S. instead of Mexico or face a “big border tax.”

Hot Prize

Toyota spokesman Curt McAllister said the automaker has no announcement to make at this time. Mazda spokesman Jeremy Barnes declined to comment. Jerry Underwood, a spokesman for the Alabama Department of Commerce, also declined to comment.

The plant is such a highly sought-after prize that Toyota and Mazda were said to press for an incentive package worth at least $1 billion. The automakers have pledged to create as many as 4,000 jobs.

The new factory will be located in Limestone County north of Birmingham, the person said. The Birmingham Business Journal reported the selection earlier Tuesday.

North America accounted for about a quarter of Toyota’s total vehicle sales in 2017, and about 36% of revenue.

Mazda, which gets a third of its revenue from North America, currently imports all of the models it sells in the U.S. It plans to produce crossovers alongside Toyota Corolla compact cars at the joint plant.

Not Carolina

Many observers thought short-listed North Carolina had an edge over Alabama because it has no big auto assembly plants, unlike Alabama, said Kristin Dziczek, director of the industry, labor and economics group at the Center for Automotive Research in Ann Arbor, Mich. Under this line of reasoning, placing the new factory in North Carolina would have helped Toyota and Mazda win new friends in the state’s U.S. Congressional delegation and beyond.

But the winning site near Huntsville, Ala., is only about a two-hour drive from an existing Corolla plant near Tupelo, Miss. Toyota also already operates an engine factory in Huntsville.

“Logistics won out,’’ Dziczek said.

By John Lippert and Kevin Buckland

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