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Project Gateway: How Mercedes is Preparing for the Future in Alabama

In September 2015, Mercedes-Benz announced plans to invest $1.3 billion in a major expansion at its Alabama assembly plant, preparing the factory to launch production of the automaker’s next-generation sport utility vehicles, including hybrids.

The expansion adds a new 1.3 million-square-foot body shop and brings major enhancements to the plant’s SUV Assembly Shop, which expands by 140,000 square feet. The plant’s logistics and IT systems are being upgraded.

These state-of-the-art technologies and an end-to-end digitization of production processes are designed to enable highly flexible production.

Mercedes calls its plans “Project Gateway” because it sets the facility on a new path of technological advancement. The project represents the latest in a series of a half-dozen expansions at the Alabama facility, where production was launched in 1997.

“With this expansion and modernization of our plant, we will create 300 new jobs and continue the success story of Mercedes-Benz in Tuscaloosa,” said Jason Hoff, president and CEO of Mercedes-Benz U.S. International, the company’s Alabama operation.

“Our entire team is proud to reinforce the State of Alabama’s growing reputation as a leader in high-quality automotive manufacturing.”

Mercedes’ new investment comes at a time of dramatic growth for the German automaker’s manufacturing hub in Alabama. Output at the 3.7 million-square-foot plant topped 300,000 vehicles in 2015, an increase of more than 60 percent from the facility’s 2013 production level.

“With this expansion and modernization of our plant, we will create 300 new jobs and continue the success story of Mercedes-Benz in Tuscaloosa.”

Project Gateway positions the Alabama facility to build the automaker’s most advance vehicles and cements the plant’s position in its global production network. Once the expansion is complete by 2018, Mercedes’ investment in Alabama will reach $5.8 billion.

Significantly, at least 50 of the new positions in Vance will be in engineering, reflecting a priority for Alabama’s economic development team, which is taking aim at knowledge-based jobs. Annual payroll for the 300 new jobs is projected at $12.8 million.

Next-Gen Growth

The expansion project represents the latest chapter of the Mercedes story in Alabama.

The Tuscaloosa County plant launched Alabama’s auto industry when the first M-Class sport utility vehicle rolled off the assembly line in February 1997. The automaker’s Alabama workforce has surged as the plant has gone through repeated expansions. The initial Alabama employment base was targeted at 1,500.

Today, the workforce numbers around 3,500, before the additional hires tied to Project Gateway. In addition, thousands more are employed at more than 40 Alabama parts suppliers serving the factory.

Mercedes has produced more than 2 million vehicles at the facility since the Job One M-Class appeared. Models now produced in Alabama are the GLE-Class (the new name for the M-Class), the GLS-Class full-size SUV, the C-Class sedan, and the GLE Coupé, an all-new vehicle introduced in 2015.

Spillover Effect

Mercedes’ expansion plans are spurring growth in the supplier network in Alabama.

Not longer after the Mercedes announcement, global supplier Samvardhana Motherson Group said it will build a $150 million Tuscaloosa County manufacturing facility that will provide interior and exterior components for future Mercedes models made in Alabama. SMP’s project will create 650 jobs.

“The significant new investment Mercedes is making to expand its Tuscaloosa County manufacturing facility shows the company’s strong commitment to advancing automotive technology.”

Around the same time, Kamtek, which supplies Mercedes and other automakers with stamped parts, announced a $530 million expansion at its Birmingham facility that will create 350 jobs.

In 2016, Germany’s MollerTech, another Mercedes supplier, began work on a 150,000-square-foot plant that will create 222 jobs at a Bibb County location just minutes from the Daimler Alabama mothership. The investment tops $46.3 million.

“The significant new investment Mercedes is making to expand its Tuscaloosa County manufacturing facility shows the company’s strong commitment to advancing automotive technology,” said Greg Canfield, secretary of the Alabama Department of Commerce. “Over the past 20 years, Alabama has developed a productive partnership with Mercedes, and the company’s workforce has proven its capabilities through repeated expansions and model launches.

“This is a ‘Made-in-Alabama’ success story with global connections,” he added.

In exchange for its latest investment, Mercedes will receive non-educational sales and property tax abatements valued at $80 million over 20 years. In addition, AIDT, the state workforce development agency, will provide pre-employment screening and job-training services valued at $20 million over 10 years.

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