Alabama auto industry getting jump started with new life

The Alabama auto industry is jump starting itself with millions of dollars in investments and, subsequently, hundreds of new job openings.

BIRMINGHAM, Alabama -- Alabama's auto industry is jump-starting itself out of a painful slump, with at least $821 million in new investment and more than 2,000 new jobs announced since early 2009.

Back then, the automakers were in the throes of a global downturn, but they continued to pour money into their state operations and plans accelerated as the industry rebound took hold last year.

The projects vary, from an expanded body shop at the Mercedes-Benz factory in Vance to an expanded engine plant at the Hyundai factory in Montgomery.

Honda's Lincoln factory and the Toyota engine plant in Huntsville also are revamping assembly lines to make way for new products.

"As the auto industry has rebounded, Alabama's automakers have been well positioned with products that met consumer demand," said Steve Sewell, executive vice president of the Economic Development Partnership of Alabama and an officer with the Alabama Automotive Manufacturers Association.

"The industry's really helping to lead the way out of the recession for our state," he added. "We're getting a real bump in manufacturing from the growth in automotive."

But there's no denying the industry downturn hurt the state's auto operations. Automakers slashed output, and in some cases, that meant eliminating temporary jobs, offering buyouts and early retirements to the permanent work force and not filling positions following natural attrition.

The companies aren't as forthcoming with the numbers of jobs lost in a down cycle as they are when adding jobs in an upswing. But the slump shrank work forces at state factories, according to the history of their announced work forces.

For instance, Mercedes used to say it employed about 4,000 people in Vance, and these days, the


plant's permanent work force is pegged at about 2,800.

Hyundai, which at one point had 3,300 Montgomery workers, now puts that number at 2,645.

And Honda, which regularly cited a 4,500-member work force in Lincoln before the downturn, now calls it 4,000-plus.

Complicating the issue is that some companies include their temporary work force in their total work force numbers, while others do not, citing proprietary concerns.

Alabama's auto worker rolls should continue to swell, however, as Mercedes has said it expects to hire about 1,000 workers when it brings production of the C-Class sedan to Vance in time for a 2014 launch. No timetable has been announced for those hires.

The new jobs announced by the four automakers would boost their combined Alabama work force by nearly 20 percent over coming years.

While the global auto industry has rebounded from the downturn that stretched from mid-2008 throughout 2009, slow economic recovery and rising gas prices are dragging down sales of some models in the U.S. market.

Nonetheless, a new study by consulting firm A.T. Kearney forecasts 13.2 million in U.S. new vehicle sales this year, up from 11.6 million last year. The study goes on to predict about 16 million in annual auto sales -- a pre-recession level -- by 2013.

The wild card, however, is the March 11 earthquake and tsunami in Japan, which damaged supplier operations and created a parts shortage among Japanese automakers. In Alabama, Honda and Toyota have drastically cut output at their factories, like the companies' other facilities in North America.

The cutbacks could make the companies' products vulnerable, the study says, if customers cannot get a desired vehicle right away and are lured by competitors.

Here's a look at the announced capital investments and new jobs among Alabama's automakers since early 2009:

Hyundai: Last week, the Korean automaker announced plans to expand its engine plant in a $173 million project that will create 214 jobs. The work will bring to Alabama production of the Nu engine, which powers the Elantra compact sedan and is currently imported from South Korea.

Both vehicles built in Montgomery -- the Elantra and the Sonata sedan -- have helped Hyundai set sales and production records, as their fuel efficiency and affordable price tags resonate with cost-conscious shoppers.

In 2010, the company invested $20 million in its Alabama operations, including improvements in paint, stamping, welding and general assembly processes, spokesman Robert Burns said.

Honda: The company has announced back-to-back expansions for its Alabama operations this spring.

The reason behind the first one -- a $94 million project that will create 20 jobs -- was not revealed. But sales of the Lincoln factory's flagship vehicles, the Odyssey minivan and Pilot SUV, have been rebounding since the downturn.

The project will increase production capacity and improve the flexibility of vehicle and engine manufacturing, Honda said.

The second project, worth $97 million and another 20 jobs, is being done to prepare for the Acura MDX sport utility. Honda is moving production of the SUV to Lincoln from a Canada factory to free up space there.

Mercedes-Benz: The German automaker in early 2009 announced plans to expand the body shop at its Vance factory, a project that is helping to launch the redesigned M-Class SUV this summer, along with other future products.

The $290 million investment includes improvements for paint and assembly operations.

Later that year, Mercedes also said it would bring production of its popular C-Class sedan to Vance, along with 1,000 new jobs. The move is seen as a stabilizing factor for the facility, which now produces solely SUVs and crossovers.

As the company unveiled the body shop expansion last summer, officials also announced plans to hire up to 500 temporary workers to help keep pace with rising vehicle demand.

The factory ended up hiring 600 temporary workers, Mercedes said earlier this year.

Toyota: In the summer of 2009, the company announced plans to bring production of four-cylinder engines to Huntsville, adding to the existing lineup of V-6 and V-8 models.

The $147 million project is creating 240 jobs, and the plant is about halfway through that hiring process, spokeswoman Tina Gess said. The current work force numbers 944 people, and that should grow to nearly 1,100.

Four-cylinder engine production is expected to begin early this fall