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ADECA announces automotive survey

The Alabama Department of Economic and Community Affairs (ADECA) has just completed a statewide survey of Alabama’s automotive industry, and I thought its contents were interesting enough to be our column topic for the week. This study is the first comprehensive report on this important and growing sector of our economy.

Our first exposure to a major automobile manufacturer was in the early 90’s when we bid for, and successfully landed the Mercedes plant near Tuscaloosa. The Guy Hunt administration actually began initial contacts with Mercedes, but because he left office before his term was concluded, the actual advent of the automotive company was during the Jim Folsom Jr. administration.

I was in Birmingham for the launching of the Mercedes symbol at an Alabama-Auburn football game. The Mercedes sign was erected directly above the scoreboard. Not only was this an interesting sight, but it showed the enthusiasm which Alabamians had for this first automotive plant.

Since that time, we have acquired Honda and Hyundai. We almost landed Nissan but they selected Mississippi at the last minute as a place to locate their plant.

In addition to the principal plants, the study found that 130 companies in Alabama have operations that are dedicated mainly to automobile manufacturing. These plants are usually referred to as suppliers or satellite companies.

Other key findings of the study are as follows:

1. Alabama automotive companies purchased at least $2.3 billion in parts/components from other automotive manufacturers. Of these purchases, 47 percent were made in Alabama.

2. Auto industry workers paid $101 million in state income taxes last year and $46 million in sales taxes.

3. Forty-six percent of the Alabama companies are Tier 1 suppliers, or companies that supply directly to a vehicle manufacturer, 32 percent are Tier 2 suppliers and 15 percent are Tier 3 or Tier 4 suppliers.

4. There are 26,954 direct automotive jobs in Alabama. Thirty-nine percent of these are in vehicle and parts assembly, 31 percent in automotive rubber and plastics, 13 percent in automotive electronics, and the remaining 17 percent in a wide range of categories that include stamping, metal castings, fabricated metals, kit assembly and packaging, and auto manufacturing machinery.

5. Thirty-three percent of automotive manufacturers have fewer than 50 employees, 23 percent have 101-250 employees, 20 percent have 51-100 employees, 12 percent have more than 500 employees, and 11 percent have 251-500 employees.

6. The northern region of the state has the greatest concentration of companies and jobs, with 55 plants employing 12,613 workers. The north/central region has 39 plants and 9,518 jobs. In the south/central region, 16 plants employ 2,916 workers, and in the south region there are six plants and 2,533 workers. With the coming of Hyundai, these numbers will naturally increase in the south/central and south regions of the state.

I think the key statistic in all of this is the $1.3 billion payroll and employment opportunities for 27,000 Alabamians. At this point it is not possible to know how many Tier 1-4 suppliers will be attracted to Alabama by the Hyundai operation, but past experience suggests it will be significant.

When I was a child, the only place I thought of when the word &uot;automobile&uot; was mentioned was Detroit, Mich. To say the least, we have come a long way in America in diversifying the location of theses type of companies. I thought this information would be of interest because it is such a hot topic of discussion these days.

Until next time, remember &uot;I’ll go with you or I’ll go for you&uot; to help you solve any problem related to state government. Call on me when you feel I can be of service.

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