Manufacturers are having to dig a bit deeper to pay for new factories these days. It's not merely the ever-rising costs of construction — it's also the changing nature of what's being built and how it's getting built.
Automotive plants have always been expensive. But the price tags for the latest crop of North American investments would make an auto executive from the 1990s blush.
Mazda and Toyota are spending $2.3 billion to construct a vehicle assembly plant in Huntsville, Ala. Mazda's last investment in North America was a plant opened in 2013 in Salamanca, Mexico, for $500 million. General Motors is investing $2 billion just to upgrade its plant in Spring Hill, Tenn., and introduce electric vehicles. Spring Hill was one of the nation's most expensive auto projects when contractors converted a vast piece of farmland into an integrated vehicle assembly operation, engine plant and aluminum foundry. Its price tag to open in 1990: a then jaw-dropping $1.9 billion.
In addition to the upgrade, GM will spend $2.3 billion at Spring Hill just to erect an electric-vehicle battery plant next door with partner LG Energy.
Alexandra Segers, a veteran industry plant consultant who is currently working with a number of automotive site searches, said that what seems like a rapid inflation in price tags partly reflects what's being built. A decade ago, there were no EV battery plants.