Alabama’s auto sector is charging forward, with record-setting production and new expansion activity that’s adding more muscle to the state’s prominent position in a global industry.
Just this week, a new analysis showed that Honda’s Alabama assembly plant had an economic impact totaling $6.8 billion in 2014. A similar study this year focusing on Hyundai’s Alabama assembly operation also outlined that facility’s substantial financial impact.
Meanwhile, Mercedes-Benz is launching a $1.3 billion expansion at its Alabama plant to prepare for the production of next-generation sport utilities, while supplier growth across the state has been strong throughout 2015.
Made In Alabama caught up with Greg Canfield, secretary of the Alabama Department of Commerce, to discuss developments in the state’s auto sector and how the Alabama economic development team plans to keep the momentum moving forward in 2016.
Q: Honda’s economic impact on Alabama has been massive, as demonstrated by the new analysis from the College of Business and Economic Research at the University of Alabama. What else has Honda meant for the state?
A: The news on Honda is not surprising — the plant’s financial impact in just 2014 was incredible. If we step away from automotive the auto sector for a moment, since Honda announced its intention to locate in the state in 1999, we have seen — because of their entry into Alabama — the state attract close to $5 billion in capital investment from Japanese companies.
Q: What’s next for Alabama’s economic development efforts in the automotive sector?
A: We have done a great job of growing the OEM base and growing the Tier 1 base that supports them. What we need to focus on now is growing that Tier 2, Tier 3 and Tier 4 supply chain. That’s where we have a lot of extra capacity, and we really need to do that to continue to underpin the support for the OEMs already in the state.
Q: Does research, development and engineering jobs within automotive remain a priority for Commerce and its economic development allies?
A: We’re really focused on R&D in the state of Alabama. We are making an effort to grow automotive R&D because we believe that the thought-based aspects of creating and envisioning the products that are going to be manufactured here is going to be very important. We want to have that research, development, design and product testing done right here in our state. We’re going to build them here — let’s imagine them here. (Read about REHAU’s new technical center in Cullman.)
Q: What has Alabama done to facilitate the rapid growth of the auto sector?
A: Alabama possesses a lot of factors that support the automotive sector and work as a magnet to attract the industry to the state. It starts with an available, trainable workforce that’s flexible in its ability to take on new responsibilities and new technologies. A second aspect is that we are a state with a Right to Work mentality, and that has helped us bring in foreign direct investment from the OEMs that located here.
Another factor is we have a great business climate. That means a low tax structure and a favorable regulatory environment. It also means we have an environment that’s supportive of business. At the end of the day, it means that we’ve created a place where automotive manufacturers can do business. I think there’s no better testament to that than the fact that all four OEMs located in Alabama have seen multiple expansions. They’re growing here.
Tuscaloosa campus.
Q: How is Commerce helping ensure the growth continues?
A: One of the key things that Commerce can do to ensure Alabama auto sector growth is through the realignment of workforce development in Alabama, particularly with the non-academic side. Our public school system and the community college system are working in partnership with our universities to produce that kind of academic support we need. But we’ve got to do a better job — and this will be Commerce’s focus — of bringing in non-academic programs and structures. With one ear to the private sector and one foot in state government, we can act as liaison to determine the private sector’s needs and the types of skills that our workforce needs to be successful in the future.
