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Toyota, Mazda announce $1.6 billion plant for Huntsville, Alabama

Reuters  |  MONTGOMERY, Ala. 

By David Shepardson

MONTGOMERY, Ala. (Reuters) - Motor Corp and Motor Corp said on Wednesday they will build a $1.6 billion joint assembly in that will employ up to 4,000 workers, a boost for Donald Trump, who wants automakers to expand U. S. production.

and joined in at an event to announce the decision.

"Welcome to sweet home Alabama," Ivey said to the two executives, after saying the anticipated 4,000 workers at the to be built in would earn an average of $50,000 a year.

The will produce 300,000 vehicles a year and should open on a 2,500-acre former cotton field in 2021, about 14 miles from Toyota's engine in

Trump tweeted Wednesday night that the announcement was "Good news" for the U. S. economy.

"Companies are coming back to the U. S. in a very big way. Congratulations Alabama!" he wrote.

plans to build cars at the plant, while will build crossover SUVs.

will provide tax incentives. Officials said the state tax incentives were worth $370 million, but they did not disclose how much the local incentives were worth.

But with U. S. auto industry sales declining, the new could exacerbate overcapacity and add pressure to cut prices. U.

S. new vehicle sales fell 2 percent in 2017, after hitting a record high in 2016, and are expected to fall further in 2018.

said the will "provide jobs for decades to come for and It vaults to the top as an industry leader in producing the next generation of cars that will power our nation."

Among U. S. states, is already the fifth largest of cars and light trucks. The state has more than 150 major auto suppliers and 57,000

Two decades ago, spent an estimated $250 million to woo to put an auto in Tuscaloosa, sparking the birth of auto production in the state.

In September, Daimler said it would invest $1 billion to expand its to start building electric sport-utility vehicles there from about 2020.

is also home to assembly plants operated by and A assembly operates near the border in

and said they still need approvals and authorization by antitrust agencies for the new joint venture. They announced a capital alliance in August and plan to jointly develop technology for electric vehicles.

Trump tweeted in March that he wanted "new plants to be built here for cars sold here." Many automakers have announced expansions of facilities or new jobs but no other new U. S. auto plants have been announced.

A year ago, shortly before his inauguration, Trump criticized and threatened hefty tariffs against the Japanese automaker if it built its sedan for the U. S. market in

In announcing plans for a new in August, said it would shift production of Corollas from to the new venture rather than in Guanajuato and would build pickups in instead.

North America chief executive said in an interview on Wednesday that pressure from Trump was not a factor in the decision to build the "These plants are going to live 30, 50 years plus and we have to make good business decisions," he said.

Lentz said it makes sense to build Corollas because needs the volume even in a declining He called the $800 million investment a "bargain" to get the additional volume.

hopes to break ground this spring after initially getting more than 100 proposed sites from 22 states.

In October, said it would scale back investment in a planned in 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.

Over the last 30 years and other automakers from and other parts of have built a second auto industry in the Its size and employment rivals operations of the Three automakers, but with newer plants and fewer unionized workers.

U. S. states covet auto assembly plants because they typically pay above-average wages and spin off jobs at suppliers and service companies. Southern states have been home to the majority of new auto production by German and Asian automakers. These states generally have good transportation infrastructure, business-friendly regulators and anti-union politicians.

(Reporting by David Shepardson; Additional reporting by Bernie Woodall; Editing by David Gregorio, and Edwina Gibbs)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Thu, January 11 2018. 11:21 IST