Toyota Motor and Mazda Motor stated on Thursday they will spend $2.3 billion in a new joint venture factory located in Alabama, $830 million more than announced in their original plan in 2018.
Production is expected to start building up to 150,000 future Mazda crossover vehicles and 150,000 Toyota sport utility vehicles annually by 2021. The Japanese automakers are expected to get $97 million in extra tax incentives for the added investment, a person knowledgeable about the matter said.
The automakers have faced hurdles as they continued construction work during the coronavirus crisis on the plant, which will now cost about 50% higher than first estimated.
The companies said the higher investment accommodates production line improvements “made to improve manufacturing processes”.
The plant continues to target up to 4,000 new jobs and has hired about 600 workers until now.
“Mazda and Toyota’s increased commitment to the development of this manufacturing plant reiterates their belief in the future of manufacturing in America and the potential for the state of Alabama to be an economic leader in the wake of unprecedented economic change,” said Key Ivey, Alabama Governor.
The companies stated the plant’s roofing, siding, floor slabs, ductwork, fire protection, and electrical work is 75% to 100% finished.
State and local governments in Alabama earlier provided over $700 million in tax incentives.
In September, President Donald Trump and Japanese Prime Minister Shinzo Abe signed a limited trade deal that slashed tariffs on U.S. farm goods, Japanese machine tools, and other products but delayed the question of auto imports for talks in the future.
Trump threatened hikes but did not raise present auto tariffs of 2.5% on passenger vehicles and 25% on pickup trucks.
Japan exported 1.7 million vehicles in 2019 to the United States, comprising about 10% of U.S. vehicle sales.