Automakers Toyota (NYSE: TM) and Mazda has announced plans to start a $1.6 billion joint production at Alabama that will begin operating by 2021. About 4,000 employees will start working at the Huntsville area in Limestone County to build 300,000 vehicles per year and will produce the Toyota Corolla compact car for North America and a new small SUV from Mazda.
The two automakers are forming a capital alliance and splitting the cost for the plant equally. Already, the Huntsville area has a Toyota engine factory with about 1,500 workers. This move to the South follows lower employee wages and to avoid the United Auto Workers union that is much stronger in the Northern states. Toyota and Mazda also have plans to work on various advanced auto technology that include electric vehicles, safety features, connected cars, and products that could supply each other.
Last year, U.S. small cars sales dropped almost 10% as buyers continued to shift trends towards SUVs and pickup trucks. Toyota Corolla sales fell 14% with production under 309,000 vehicles. Currently, the company already provides hybrid technology to Mazda, making compact cars for Toyota at the plant located in Mexico. These two automakers will work together on green and other auto technology to help lower concerns over global warming, the environment, and safety.