Auto Industry Locations: Driving Success For Supply & Demand

In response to market forces, companies across the auto industry are seeking sites that support their production, supply chain, and other demands.

By Nora Caley
From the November/December 2022 Issue

The automotive industry is booming as consumers shop for new high-tech, amenity-filled, environmentally-friendly vehicles. From electric vehicles (EVs) to road trip-ready vans, manufacturers are developing exciting new vehicles that help people get to work or get out and explore. Even rising interest rates and fluctuating gas prices have not put the brakes on demand. Manufacturers are making sure they supply consumers with the wheels of their dreams, and automotive companies with crucial parts.

According to IBISWorld, U.S. automobile manufacturing is a $100.9 billion industry in 2022, with 2.6% growth compared to the previous year. That’s good news after average annual declines of 2.3% each of the previous years since 2017. Separately, in October the National Automobile Dealers Association (NADA), in its analysis of U.S. auto sales and the economy, noted that the sales market is improving, and forecast full year 2022 new light-vehicle sales to total 13.8 million units.

auto industry
(Photo: Adobe Stock)

That calls for supplies and materials, and manufacturers are building facilities in regions across the U.S, Canada, and beyond. Automotive assembly is more high-tech and innovative than ever, and companies are looking for locations that provide a skilled workforce. Also, even though steel and rubber are key materials, the unprecedented growth of the EV market has skyrocketed demand for elements such as lithium and nickel for batteries. The supply of these also influences businesses’ decisions on where to locate a manufacturing plant.

The Center for Automotive Research noted that the auto industry historically has contributed 3% to 3.5% to the U.S. Gross Domestic Product (GDP), and directly employs more than 1.7 million people. The jobs include designing, engineering, manufacturing, and supplying parts and components to assemble, sell and service new motor vehicles. Here are some regions that are attracting businesses focused on automotive supply and raw materials.

Alabama: An Electrifying Next Chapter

By now it’s clear that the global auto industry views electric vehicles as the future, prompting automakers to craft strategic plans­—powered by massive investments—to position themselves for a revolutionary shift that’s approaching at top speed. In Alabama, which has become a top auto-producing state over the past 25 years, the industry is making major moves to capitalize on the EV revolution.

It’s starting with Mercedes-Benz, which launched Alabama’s auto industry in 1997 when the first M-Class rolled down the sparkling new assembly line at the automaker’s Tuscaloosa County factory. Today, Mercedes is steering Alabama into the future once again, as a $1 billion investment to prepare for EV production in the state begins to bear fruit.

Alabama automotive
Mazda Toyota Manufacturing is ramping up production at its $2.3 billion Alabama joint venture assembly plant, where workers are building the Toyota Corolla Cross and the Mazda CX-50. (Photo: Alabama Dept. of Commerce)

In August 2022, just months after opening a sprawling battery assembly plant in Alabama, the German automaker celebrated the production launch of its luxury EQS sport utility vehicle at its assembly complex. Another EV, the EQE sport utility, will also be built there.

With electrification shaking up the auto industry, this represents an important milestone for Mercedes and for Alabama’s auto industry. More milestones are approaching. Hyundai’s Alabama assembly plant is getting ready to build its first EVs, the electrified Genesis GV70 and a plug-in hybrid electric Santa Fe SUV. In preparation, Hyundai is investing $300 million and creating 200 new jobs at its Montgomery factory.

These developments, as well as activity in the EV supply chain, signal that Alabama’s auto sector is fully concentrating on tomorrow.