Alabama incentives for Toyota-Mazda factory top $700M

MONTGOMERY, Alabama (AP) – Alabama’s total incentive package to Toyota and Mazda will top US$700 million after local incentives are added to what the state offered to land the companies’ new US factory.

The Huntsville City Council on Thursday approved a $320 million local incentive package. That is in addition to $380 million announced by the state in tax abatements, investment rebates and the construction of a worker training facility.

Huntsville Mayor Tommy Battle said before the council vote that the joint-venture factory, which will employ about 4,000 people, will bring economic benefits to the region for generations.

“If there ever was a slam dunk deal, this is a great one,” Battle said.

The city’s offer to the Japanese auto manufacturers included providing the land, building a road to the factory and property tax abatements worth $107 million over 20 years.

Alabama’s commerce department had announced only the state’s share of incentives on Wednesday when company executives announced the decision to come to Alabama.

The new plant in Huntsville – already a hub for the region’s budding aerospace industry – will produce 300,000 vehicles per year, a combination of the Toyota Corolla compact car and a new small crossover SUV from Mazda. Production is targetted to begin by 2021.

Masamichi Kogai (ABOVE), Mazda Motor Corp president and CEO; and Akio Toyoda (BELOW), Toyota Motor Corp president, speaking during a press conference in Montgomery, Alabama on Wednesday. – PHOTOS: AP

Multiple states had competed for the project by the Japanese auto giants.

“This is indeed a great day in Alabama,” an upbeat Gov Kay Ivey said on Wednesday, flanked by company executives at a news conference in the state capital, Montgomery. Commerce Secretary Greg Canfield said on Wednesday he believes the state is getting a “pretty good deal” considering the plant alone will create $5.2 billion in payroll over 20 years.

“Not only that, it’s really hard to measure the positive impact that having companies create career opportunities like this and how that transforms families,” Canfield said.

Toyota and Mazda will join Mercedes, Honda and Hyundai in operating factories in Alabama.

Alabama was already tied with Tennessee as the fifth-largest producer of vehicles in the US last year, according to the Center for Automotive Research, an industry think tank in Ann Arbor, Michigan. The state produced nine per cent of the cars made in the country, the centre said.

“This project will really put Alabama at the centre of the Southern automotive industry,” Canfield said.

The decision to pick Alabama is another example of a long trend of foreign-based automakers building US factories in the South. To entice manufacturers, Southern states have used a combination of lucrative incentive packages, low-cost labour and a pro-business labour environment since the United Auto Workers union is stronger in Northern states.