Alabama’s auto manufacturing industry adding investment, jobs and vehicles after record year

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MONTGOMERY, Alabama – The Alabama auto manufacturing industry has been running at full throttle, but it’s poised to gain additional velocity as new investment pours into the state. Manufacturing plants are expanding, new suppliers are establishing operations and the industry’s workforce is growing across the state.

The expansion activity means that Alabama, already a Top 5 auto-producing state, will become an even more important center of auto manufacturing in the United States.

All three automakers with assembly operations in Alabama set production records in 2012, combining for an annual tally exceeding 880,000. That record almost certainly will be eclipsed this year, thanks to the expansion projects. The Mercedes-Benz plant in Vance, for instance, is in the midst of a $2.4 billion expansion, which is drawing new suppliers into its orbit and further extending Alabama’s auto manufacturing infrastructure.

“It speaks volumes to the industry that Mercedes is comfortable enough in Alabama to make another substantial investment here,” said Greg Canfield, secretary of the Alabama Department of Commerce.

Mercedes is not the only auto manufacturer in Alabama that’s expanding capacity. Honda and Hyundai are also adding jobs and taking steps to boost output at their assembly lines. Toyota last year announced an $80 million expansion at its Huntsville engine plant that will create 125 jobs, pushing the total workforce there to 1,200.

New Alabama-made models are on the way, adding to the eight vehicles now produced in the state. The Honda plant in Lincoln will roll out its first Acura in 2013, the redesigned MDX sport utility unveiled as a prototype at the North American International Auto Show in Detroit in January. The expansion project in Vance will allow Mercedes to add two models to its Made-in-Alabama line-up, beginning in 2014, when its manufacturing plant will produce a sedan, the C-Class, for the first time.

The big story, though, is jobs. Hyundai added 877 workers when it moved to add a third-shift at its Montgomery plant, boosting its 2012 output by 20,000 vehicles in just a few months. Thanks to its expansion project, Mercedes is hiring 1,400 new workers, most of them this year. Honda has recently pumped another $390 million into its Alabama operation, adding 300 jobs.

Alabama’s auto industry workforce will continue to grow in 2013 even as the overall industry in the United States shrinks, according to a projection by Economic Modeling Specialists Inc. The firm projects that employment in Alabama’s auto industry will expand 2 percent this year, while total U.S. auto industry employment will contract 4 percent.

Investment continues to pour into Alabama’s auto sector. In 2012 alone, announced investment tied to auto projects across the state approached $1.1 billion, according to the Economic Development Partnership of Alabama, a private group that aids recruitment efforts. Those projects will create about 5,475 jobs at the assembly plants and at suppliers, the EDPA says.

Many of those new jobs will be at suppliers, which have been flocking to the state. Recent announcements include plans by DAS North America to make car seat components at a 240-worker, $50 million plant in Montgomery and a $115 million, 200-job expansion by Rehau, which makes bumper assemblies for Mercedes in Cullman. German auto supplier Rausch & Pausch LP (RAPA) said in December that it will establish an $18 million factory and North American headquarters in Auburn, creating 105 jobs.

Canfield said state economic developers believe supplier activity in the Southeast region will remain high in coming years, with many of the parts-makers landing in Alabama.

“That is where we are going to see the most growth potential in the next five years,” Canfield said.

Some of this supplier growth will radiate from auto assembly plants not located in Alabama. Suppliers that work with German automakers are logical targets. Volkswagen has a plant in Chattanooga, while BMW operates a manufacturing facility in South Carolina. Add Mercedes to the mix, and there’s an overwhelming business case to justify a factory in the region.

“There is a triangle being formed with these plants, and we believe we can take advantage of it to attract new suppliers,” Canfield said. “Alabama is ideally situated in the center of the Southeastern automotive corridor.”

Canfield believes Alabama could one day be home to another auto assembly plant. After all, the state has a growing supplier infrastructure, well-regarded workforce training programs, an extensive transportation network and a track record of teaming successfully with top manufacturers.

“We believe there is a possibility that will happen, and we are planning for it in case it does,” Canfield said.