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, sources familiar with the matter told CNBC.
The plant, which will employ up to 4,000 people and produce about 300,000 vehicles a year, will be located in Huntsville, Alabama, and is a boon for the state, where Toyota has a large engine plant and an existing network of automotive suppliers.
A formal announcement by company and state officials is expected on Wednesday in Montgomery, Reuters reported.
Alabama and North Carolina apparently were finalists for the huge factory, which is expected to begin operating in 2021. It will produce the Toyota Corolla compact car for North America and a new small SUV from Mazda, the companies have said, The Japan Times reported.
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, The Japan Times reported.
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.
Trump praised the joint venture announcement, saying in August on Twitter: “Toyota & Mazda to build a new $1.6B plant here in the U.S.A. and create 4K new American jobs. A great investment in American manufacturing!”
In October, Toyota said it would scale back investment in a planned plant in Mexico by 30 percent to $700 million and cut planned annual capacity in half to 100,000 vehicles as it shuffles its production plans to meet market demands, Reuters reported.
Toyota has 10 U.S. plants in eight states in an arc running from West Virginia through Kentucky, Indiana, Alabama, Mississippi and Texas. Toyota and Mazda announced a capital alliance in August and are exploring joint development of technologies for the basic structure of competitive electric vehicles, the news agency reported.
States covet auto assembly plants because they typically pay above-average wages and spin-off jobs at suppliers and service companies. Southern U.S. states have the advantage of good transportation infrastructure, business-friendly regulators and generally anti-union politicians.