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Toyota, Mazda to build $1.6 billion plant in Alabama - sources


By and Bernie Woodall

(Reuters) - will be the site of a new $1.6 billion Motor Corp <7203.T> and Motor Corp <7261.T> auto plant, a victory for who had prodded manufacturers to build new U.S. facilities and threatened tariffs on foreign production, sources said on Tuesday.

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 has a large engine and an existing network of automotive suppliers.

A formal announcement by company and state officials is expected on Wednesday in Montgomery, sources briefed on the matter said.

The new --in a state Trump won by 28 points in 2016 -- could be a political boost to the Republican president, who has urged automakers to build plants in the and add jobs. The companies said they expect the to open in 2021.

Trump tweeted in March he wanted "new plants to be built here for cars sold here." The did not immediately comment on Tuesday.

The announcement also comes at a time of declining U.S. auto industry sales, so it could exacerbate overcapacity and add pressure to cut prices. U.S. new vehicle sales fell 2 percent in 2017, after hitting an all-time record high in 2016, and are expected to fall further in 2018.

Details of an anticipated tax and incentive package for the investment were not yet known. It has been reported the companies sought at least $1 billion in incentives.

A declined to comment, except to say an announcement was expected soon. A also declined to comment.

In recent months, the companies had narrowed their choices down to sites in and

said the leading site under consideration was in northern Alabama's Limestone County, near Toyota's large engine in In September announced a $106 million for the

A Chamber of Commerce of website for the "Mega Site" touts the fact it has been "certified as development-ready." The commerce chamber, local and state officials declined to comment on Tuesday on plans for the

A year ago, President-elect Trump criticized and threatened hefty tariffs against the Japanese automaker if it built its sedan for the U.S. market in

"Motor said will build a new in Baja, Mexico, to build cars for U.S. NO WAY! Build in U.S. or pay big border tax," Trump posted on in early 2017.

and announced 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. plans to build new crossover SUVs at the

Trump praised the joint venture announcement, saying in August on Twitter: "& to build a new $1.6B here in the U.S.A. and create 4K new American jobs. A great investment in American manufacturing!"

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.

has 10 U.S. plants in eight states in an arc running from through Kentucky, Indiana, Alabama, and and announced a capital alliance in August and are exploring joint development of technologies for the basic structure of competitive electric vehicles.

Over the last 30 years Toyota, along with German and Asian automakers, has built a second auto industry in the United States, rivalling the operations of the Three automakers in size and employment, but with newer, and fewer unionized, plants.

States covet auto assembly plants because they typically pay above-average wages and spin off jobs at suppliers and service companies. states have the advantage of good transportation infrastructure, business-friendly regulators and generally anti-union politicians.

The Department of Commerce shows 150 of the large automotive suppliers operate in the state, providing the logistical strength that Kristin Dziczek, a at the in Michigan, said helped land the

Dziczek said that in 2017 was tied for fifth among U.S. states in auto production, at 9 percent with It was behind at 19 percent; at 12 percent, at 11 percent; and at 10 percent.

"The impact of an auto assembly extends beyond its immediate economic impact, and that's why states offer robust incentives," said Dennis Cuneo, a and former "It creates a halo effect that in turn helps attract other projects."

spent an estimated $250 million to woo to put an auto in Tuscaloosa two decades ago.

(Reporting by in Washington and in Fort Lauderdale, Florida; Additional reporting by in Detroit; Editing by Sandra Maler)

(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: Wed, January 10 2018. 05:46 IST