DETROIT – Japanese automakers Toyota and Mazda have picked Alabama as the site of a new $1.6 billion (¥179.2 billion) joint-venture auto manufacturing plant, a person briefed on the decision said Tuesday.
The plant will employ about 4,000 people and will be built in the Huntsville area in Limestone County, said the person, who asked to remain anonymous because the location hasn’t been officially announced.
Alabama officials said they expect Gov. Kay Ivey to make an announcement on a major economic development on Wednesday in Montgomery, but they would not give any details.
Alabama and North Carolina apparently were finalists for the huge factory, which is expected to begin operating in 2021. It will be able to build 300,000 vehicles per year and will produce the Toyota Corolla compact car for North America and a new small SUV from Mazda, the companies have said.
Toyota and Mazda are forming a capital alliance and splitting the cost of the plant equally.
After reassessing the market, Toyota Motor Corp. changed its plan to make Corollas at a plant in Guanajuato, Mexico, currently under construction, and instead will produce Tacoma pickups there, Toyota has said.
President Donald Trump had criticized Toyota for taking auto production and jobs to Mexico. With the investment, both automakers hope to prove their good American corporate citizenship and appease the Trump administration’s concerns about jobs moving overseas.
But during the summer, Toyota President Akio Toyoda denied that Trump’s views influenced his decision.
“We have been reviewing the best production strategy for our business,” he told reporters in Tokyo at the time.
Toyota and Mazda Motor Corp. also plan to work together on various advanced auto technology, such as electric vehicles, safety features and connected cars, as well as products they could supply each other, the firms have said.
It’s difficult to predict auto sales in three years, but at present Toyota may not need the factory for Corolla production.
U.S. sales of small cars fell nearly 10 percent last year as buyers continued a massive shift toward SUVs and pickup trucks. Corolla sales fell 14 percent for the year, to just under 309,000, according to Autodata Corp.
Still, Toyota and Mazda have said their collaboration will respect mutual independence and equality. Toyota, which makes the Prius hybrid, Camry sedan and Lexus luxury models, already provides hybrid technology to Mazda, which makes compact cars for Toyota at its Mexico plant.
The sheer cost of the plant also makes a partnership logical, as it boosts cost-efficiency and economies of scale. Working together on green and other auto technology also makes sense as the segment becomes increasingly competitive due to concerns about climate change, the environment and safety.