For Mazda and Toyota, why the rush to Alabama?

MONTGOMERY, Ala. — With U.S. sales in decline — and who knows for how long? — is it the right time to add vehicle production capacity?

Possibly not, but for Toyota and Mazda, the situation was urgent.

The automakers last week announced they will invest $1.6 billion to build a 300,000-vehicle assembly plant near Huntsville, Ala., that will be up and running in 2021.

The partners worked out that plan — from proposal to completed deal — in just five months, according to Alabama officials who marveled at their own ability to deliver an acceptable factory location in that short time.

"Very seldom can a project of this size be put together as fast as this one," said Huntsville's somewhat breathless mayor, Tommy Battle, who helped put it together.

Among the steps: getting a $370 million state incentives package approved by the Legislature to support the project and arranging plans for Alabama to recruit and train the plant's 4,000 workers.

It helped that the pancake-flat 2,500-acre site, a former cotton field, already was available, having been looked over and rejected 10 years earlier when Volkswagen officials were searching for a place to build the plant that instead landed in Chattanooga.

It also didn't hurt that Toyota Motor Corp. President Akio Toyoda already had warm, nostalgic feelings about Alabama. While making the plant announcement last week here in the state capital, he recalled that he stayed in Alabama as a Boy Scout on his first extended trip away from home.

But why the rush?

Toyota needs more Corollas, despite a decline in sedan sales in general and Corolla sales in particular, Toyota Motor North America CEO Jim Lentz told Automotive News during an event here where the plans were announced.

Meanwhile, Mazda is hot to reboot itself in the U.S. with a new generation of designs and powertrains. The Alabama plant will be critical to that strategy.

Mazda plans to produce an all-new crossover to the tune of 150,000 vehicles a year. That would make the crossover — which the company has not identified — Mazda's best-selling product in the U.S., with a volume of more than half of its total U.S. sales in 2017.

By teaming with Toyota in Huntsville, Mazda will get its cornerstone new product built locally with a partner shouldering half the cost of the factory.

Toyota is under even more pressure as its North American manufacturing footprint evolves. The company announced nearly three years ago that it was pulling production of the compact Corolla out of its big assembly plant in Cambridge, Ontario. It intends to use that space to build more RAV4 crossovers.

Until last summer, Toyota was moving full steam on a project to build the displaced Corollas at a new plant in Guanajuato, Mexico. But then Toyota concluded it needed another product even more urgently than the Corolla — its midsize Tacoma pickup. So the Mexico project was downsized, and plans were made to convert Guanajuato for Tacoma production and build the needed Corollas somewhere in the U.S.

By locating the new plant on the west side of Huntsville, Toyota will be able to piggyback on suppliers to its other U.S. Corolla assembly plant, just 150 miles away in Blue Springs, Miss.

"We need the Corolla capacity," Lentz said. "We sold about 330,000 Corollas last year, and 50,000 in Canada. This plant, with our other Corolla plant in Mississippi, will give us capacity of 310,000. So yes, even in this soft market, we need this capacity,"

Compact car sales declined 5.8 percent in 2017. The Corolla was down 13 percent last year.

But Lentz said the segment is resilient and that demand for the Corolla — Toyota's biggest volume product globally — remains strong.

Another cause for urgency: Toyota is overhauling its vehicle architecture around the world. The Alabama-built Corolla will be the first conversion of the nameplate to the Toyota New Global Architecture, a platform that represents a global move to more advanced powertrains and lighter weight vehicles that can be manufactured more easily and updated with greater flexibility.

Toyota's earlier plan to spend $1 billion in Guanajuato to make Corollas drew criticism via tweet by President Donald Trump. But Lentz said last year's decision to move the Corolla project from Mexico to the U.S. was not a response to that pressure.

"It wasn't politics that drove the change," he said. "We're still building the plant in Mexico. But we need 100,000 Tacomas. The combination of our plants in Mexico and Texas gets us nearly 475,000 pickups, which is our forecasted need. We need more truck capacity as fast as possible."