BIRMINGHAM, Alabama – For the Alabama auto industry, the needle has been moving toward rapid growth, with production gains, new and redesigned models, job growth, and additional investment.
Consider these facts:
- More than new 6,600 jobs in Alabama’s auto industry have been announced since the beginning of 2013
Alabama’s fast-growing auto sector provided the backdrop as about 500 industry professionals, political leaders, and others from throughout the region gathered in Birmingham for the annual Southern Automotive Conference. The event, hosted by the Alabama Automotive Manufacturers Association (AAMA), ran from Oct. 8-10 at the Birmingham-Jefferson Convention Complex.
The theme of the 2014 conference was “Geared for Growth,” and the focus was on how the region can improve its competitiveness in the auto manufacturing industry, which has become a powerful economic engine in the South. More than 33,000 Alabamians now work in an industry that scarcely existed in the state two decades ago.
“Automotive manufacturing is a significant employer in Alabama and in hundreds of communities across the South,” AAMA President Ron Davis said in a prepared statement. “The industry is in a state of continued growth that is very positive for our economies and quality of life. This conference contributes to that success in a big way.”
The Southern Automotive Conference examined topics such as safety strategies, autonomous vehicles, workforce training, quality initiatives, and innovation. Laurie Harbour, president of consulting firm Harbour Results Inc., led an expert discussion on the outlook for suppliers in the South.
The conference climaxed with a briefing on a study being prepared by the Ann Arbor, Michigan-based Center for Automotive Research (CAR) that examines how the region can develop collaborative approaches to better position it for auto industry expansion. Alabama Commerce Secretary Greg Canfield and Mississippi Governor Phil Bryant participated in a panel discussion on preliminary CAR findings.
Alabama Governor Robert Bentley delivered closing remarks at the conference.
DRIVING ECONOMIC GROWTH
The South has emerged as an auto-producing powerhouse only in the last generation, after Mercedes-Benz placed its first U.S. factory in Alabama, BMW launched an operation in South Carolina, and Nissan selected Tennessee. Today, the region is home to 10 assembly plants, including three in Alabama. Total auto industry employment in the Southeast has reached 265,000.
Industry growth has been strong in Alabama and throughout the region, particularly since the nation’s economic recovery began to take told in 2010. The Southeast attracted an estimated $7.5 billion in new auto industry investment between 2010 and 2012, experts say.
Since 2011, Alabama alone has attracted more than 200 auto-related projects involving $4 billion in investment and 17,000 new jobs, according to figures from the Economic Development Partnership of Alabama, an ally of the Commerce Department.
“Alabama’s auto industry has been moving from strength to strength, as the assembly plants operated by Mercedes-Benz, Honda, and Hyundai increase output and launch new or redesigned models that are strong performers in the marketplace,” Secretary Canfield said. “At the same time, Toyota’s Alabama engine plant is undergoing another expansion, and the state’s supplier network continues to grow.
“All this activity is resulting in new investment and high-paying jobs in the advanced manufacturing sector,” he added.
Alabama and other states in the region are targeting – with success – an expansion in the supply chain that serves the cluster of assembly plants in the South. Figures from the Alabama Department of Labor show that the state added 2,300 jobs at auto parts makers between August 2013 and August 2014.
An expansion of the supplier base is seen as a way to strengthen the foundation of the Southern auto industry at a time when it faces increasing competition from Mexico and other locations.
Bill Taylor, president of the EDPA and the former head of Mercedes’ Alabama operations, said the region’s maturing auto industry is a logical place for the Tier 2 and Tier 3 suppliers that produce parts that end up in vehicles produced in the South. Many of these companies are located hundreds of miles away from the suppliers they serve, making them candidates for expansion.
“With rising production volumes and greater model complexity, we have a strong argument when we go to a company and say: ‘Hey, you’re supplying Honda, Kia, Hyundai, Mercedes — and you’re in Ohio. You could do that in Alabama,” Taylor said.
Alabama’s Mercedes-Benz plant provides an example that illustrates his point.
Parent company Daimler last month announced that the capacity of the Alabama would be boosted to 300,000 vehicles, a big jump from last year’s production total of 185,000 vehicles. When the Alabama plant was announced in 1993, production was pegged at 60,000 to 70,000 M-Class SUVs a year.
Mercedes also plans to introduce a new vehicle to the Alabama plant’s production line-up in 2015, a compact SUV called the ML-Class. Earlier this year, the Mercedes facility launched mass production of the C-Class sedan, joining the M-Class, GL-Class and R-Class vehicles produced there.
In response, suppliers have had to expand the existing operations or set up a new facility in Alabama, as Bolta Werke is doing in Tuscaloosa.
“Expansions continue to drive the industry in Alabama,” Taylor said. “It’s not just expansion in brick and mortar, and in employment, it’s also in new products. Mercedes has moved from one product to five. Honda is the same story.”