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July 2004

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Alabama: Auto Industry
Shifts Into Overdrive

    If the American South is becoming the factory for the world, then Alabama has become the
new Detroit.
Hyundai's Alabama complex is not only employing 2,000, but inciting multiple tiers of suppliers to study their own investment options. Like Hyundai and other OEMs, many of those suppliers are landing in right-to-work states to grow their business.

      The automotive manufacturing industry in Alabama continues to grow, according to a report just released by the Office for Economic Development at the University of Alabama in Huntsville. After adding 13 new plants in 2002, Alabama automotive manufacturers added 32 new plants and 785 jobs in 2003. Direct automotive employment climbed 3.5 percent to 31,197 workers. The resulting buying power of industry companies and employees created another 55,477 jobs. The combined total of 86,674 workers generated by the industry accounts for an annual payroll of US$3.3 billion, the report noted.
      Twenty of the 32 new plants were added to South Alabama. Counties that garnered auto jobs for the first time were Bullock, Coffee, Crenshaw, Elmore, Lauderdale and Lowndes.
      The strongest growth region was north-central Alabama, home to Mercedes and Honda. This region experienced a 12-percent jump in automotive employment and a 43-percent increase in plant floor space.
      The survey predicts strong job growth over the next two years, as the Hyundai plant in Montgomery comes on line and adds 2,000 jobs to local payrolls plus thousands of jobs at Alabama suppliers.
      It is no secret that many of the world's largest automakers -- Mercedes, Honda, Toyota and Hyundai -- have picked Alabama for its work force and the workplace flexibility that Alabama's right-to-work status gives employers. Alabama Gov. Bob Riley said the latest automotive survey offers encouraging signs for the future.
      "The automotive industry is already a vital part of our state's economy, and there is every indication it will provide substantially more jobs for Alabamians in the next few years."
      Suppliers should add more jobs once Honda and Hyundai complete assembly plant projects. "Many of the smaller companies are still in the start-up stage," says Greg Harris, University of Alabama-Huntsville researcher. "We expect employment at these plants will grow significantly as companies ramp up to full production."
      Even suppliers to suppliers are contributing to the automotive industry momentum. SAFA Systems LLC, for instance, has begun production in Tallassee of machinery and equipment required by tier one suppliers. About 80 people work at the facility. Georgiana and Selma, Ala., are the sites of other new supplier projects. Auto Electronic America Corp. is investing $1 million in a facility to produce carts, pallets and racks for Hyundai and its suppliers; it's the third Hyundai supplier to locate in Butler County. In Selma, Renesol Corp. is investing $9 million and hiring 120 people to produce molded automotive seating. And Tokyo-based Topre is investing $132 million in Cullman to build a 225,000-sq.-ft. (20,900-sq.-m.) building that is to be the first of four buildings at the site. The parts supplier will eventually occupy 900,000 sq. ft. (83,610 sq. m.) at the location.
      Just as important to Alabama's economic vitality is the aerospace industry, with Boeing's operations and the Marshall Space Flight Center in the Huntsville area playing leading roles. But Lockheed-Martin's Pike County plant, in Troy, is winning a slew of new defense industry contracts, keeping the 250-employee facility at full tilt for the foreseeable future. Raytheon Co., too, is getting defense industry assignments, which will bolster its Huntsville operation.


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