Alabama Lures Hyundai With Incentive Package

When Hyundai Motors announced it would build a $1-billion sport utility vehicle plant in Hope Hull, many pointed to the $118-million incentive package signed by Gov. Don Siegelman last March as the motivation. The state has used its Alabama State Incentive Package program to lure multiple manufacturing firms to the region. The program offers annual corporate income tax breaks as well as property, sales and use tax abatements.

Hyundai Motors announced it would build a $1-billion sport utility vehicle plant in Hope Hull, Alabama.

        State officials estimate 2,000 new jobs will be created by the Hyundai plant, the first assembly facility built by the firm in the U.S., will produce approximately 300,000 new vehicles per year. The plant's presence is also expected to create 4,000 to 5,000 additional jobs within Alabama.
        The Hyundai announcement is the fourth major automotive manufacturer to invest in Alabama in recent years. State officials agree that the state incentive package has hit the right note, but also point to the quality and availability of Alabama's labor pool. "Alabama's greatest assets are our world-class workers who produce world-class products," notes Gov. Siegleman.
        Hyundai officials may have also been impressed with the price of labor in Alabama. According to Mercer Resource Consulting, an executive making $60,000 in Dallas would be paid nearly 6 percent less in Birmingham and almost 10 percent less in Mobile. Alabama officials are also keen on offering employers trained workers. "The state will tailor a training program to a firm's specific needs," says Camp. [See "Talent and Teamwork Help Alabama Reach Critical Mass," in the May 2002 issue of Site Selection.]
        Toyota officials received an incentive package worth about $29 million when they announced a new $220-million factory last year. Part of that package includes $13.6 million for a training program for Toyota's employees. The new facility will be built in Huntsville and will occupy a 220-acre (89-ha.) site just north of the city.
        There are motions at the state capital to amend the Alabama State Incentive Package to make it more attractive to high-tech industries. The push includes broadening the scope of the program to allow high tech industries to receive tax credits on rapidly replaced equipment as well as tax credits for research and development.
        "Most of the tax incentives available in Alabama today are geared toward manufacturing businesses and generally not helpful to technology businesses," notes Jim Rotch, chairman of the Birmingham Area Technology Task Force (BATT).
        BATT members have also proposed a job development fee, which would create a tax incentive for tech firms locating in a specific area or sites. This idea would help create "technology neighborhoods" located near banks and insurance companies, both heavy users of technology and data processing.

TOP OF PAGE