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Published on : Sep 24, 2015

As automotive sector grows rapidly worldwide, the global auto manufacturers are expanding in previously unexplored locations. Alabama is a recent example. According to the Alabama Department of Commerce, from 2012 to 2014, auto-related investments over US$3.6 billion have been made that have created 16,200 new and future jobs. However, Alabama’s spot in the automotive market is getting increasingly threatened by thriving automotive industry in Mexico. According to Greg Canfield, the secretary of the Alabama Department of Commerce, Mexico’s rise has threatened the entire automotive industry in the Southeast. According to the reports, it is estimated that Mexico will produce around 5 million vehicles annually by 2020. This would mean a 56% increase in the country’s output in 2014.

Global auto manufacturers Daimler AG and Nissan joined hands in 2014 to establish a manufacturing facility in Mexico that will have an annual production capacity of 300,000 vehicles. Once the plant becomes fully operational in 2021, it will add around 5,700 jobs including engineering, line workers, and support staff. Further, Mexican government has stated that Daimler Ag and Toyota Motor Corp. have planned to make investments worth US$22.6 billion for auto and parts plants. 

In Alabama’s auto sector, both Toyota and Daimler are major players and the state is holding its position in the global automotive industry owing to increased investment and output. The boom in the automotive sector in the state can be attributed to the success of the four major original equipment manufacturers – Honda, Toyota, Hyundai, and Mercedes-Benz. This has led to suppliers such as SMP and Kamtek expanding in Alabama to be close in the vicinity of auto assembly operations to increase efficiency. The presence of suppliers have further increased the job opportunities in the state. Though there are speculations that automated manufacturing facilities would reduce the workforce, still there would be the requirement for skilled workforce to run the automated machines. Canfield hopes that Alabama will emerge as an important player in the global automotive sector.