The great Alabama automobile success story
Published 10:43 pm Monday, December 7, 2009
A significant milestone was reached in Montgomery recently. In a plant just south of town, Hyundai rolled out the one-millionth vehicle it has built in Alabama. The plant builds popular SUVs and sedans, and after a slowdown last year, the major factory is back up to capacity.
The amazing success of Hyundai in Alabama is not a stand-alone story; the automotive industry in our state is now one of the most significant economic engines for Alabama’s economy. It was not long ago that Alabama did not have an auto industry. While we had some plants that made components, not one automobile was built in the state.
That all changed in 1993 with Gov. Jim Folsom and the founding of car manufacturing in Alabama.
It was that year that Folsom convinced Mercedes-Benz to build its first North American plant in Vance, Alabama. Through a lot of hard work, his administration assembled a coordinated plan involving state and local governments that convinced one of the world’s leading car companies to invest in Alabama.
At the time, Folsom received criticism from some folks about the incentives used to lure Mercedes. As it turned out, it was the most effective investment the state could ever make for economic development.
Before the first M-Class rolled off Mercedes’ production line in 1997, Alabama had never produced a passenger vehicle. In 2006, Alabama built its two-millionth automobile, and within a few more years, we will have doubled that production total. It is an amazing story.
Several years ago, the first Honda plant opened in Lincoln. Honda invested more than $1 billion into that facility, and now it employs more than 4,500 workers assembling the popular Odyssey minivan, Pilot SUV, Ridgeline pickup truck and Honda V-6 sedan.
Madison County received two major engine plants, the Navistar diesel facility in 1999 and the Toyota engine plant in 2001 that produces more than 1 million engines a year. Then in 2002, the Hyundai plant landed in Montgomery. The company has invested more than $1 billion in the state, and it now employs more than 3,000 people.
Since the Mercedes groundbreaking in Vance, the automotive industry has invested over $7 billion in Alabama and created more than 35,000 new jobs. Motor vehicles were Alabama’s top export last year valued at $5 billion, which represents 31 percent of the state’s total exports. Alabama’s automotive industry now is 17.5 percent of the state’s manufacturing gross domestic product.
Amazingly, from dead last in 1993, Alabama now ranks 5th in the country for car and light truck production. We build more cars and light trucks than just a handful of other states, a remarkable record of achievement.
In 2007, state officials say Alabama’s auto industry accounted for 48,457 direct jobs and 85,769 indirect jobs, with a total payroll of $5.2 billion. There are more than 100 automotive suppliers in Alabama that serve Honda, Hyundai, or Mercedes.
Recently, Alabama missed out on some major new plants in the South, including one for Kia, a subsidiary of Hyundai. That plant went to Georgia. However, the plant itself was built near the Alabama line, and many of the Alabama-based suppliers already with Hyundai will also work with Kia.
The amazing success of the Alabama auto industry is a good example of what state government can do to help foster economic development, and what can happen with the right leadership from the governor’s office and the support of the Legislature.