New Toyota-Mazda plant in Huntsville

**renf** · January-12-18, 09:32 AM

The news papers reported yesterday that Toyota and Mazda
would spend about $1.6 billion to erect a new assembly plant near Huntsville. The choice of location was not described in detail but appears to involve:
*Generous tax abatements by the state of Alabama
*No history of strong labor unions in Alabama
*The recent practice of foreign firms locating assembly plants in a arc extending, roughly, from Charlotte toward New Orleans.

Does this mean that governors in the Midwest were not ready to offer substantial tax reductions to attract a new plant? Michigan adopted a substantial new tax reduction plan for firms that bring new jobs to the state last summer. Is there more to the story of the Toyota/Mazda decision?

**Richard** · January-12-18, 10:18 AM

To me the south has become the Detroit of imports brands.

A German company years back bought out a steel mill that provides to Mercedes,Toyota,Honda etc. and they have all of the smaller support manufacturers for the parts.

I have an acquaintance that has been working at a torque converter factory for over ten years building them for Toyota.

He raises his family in a decent house on 5 acres,his wife really does not have to work,property taxes are $160 a year and his salary is $18 per hour.

The only thing they were lacking in the past was tool and die workers which were being flown down from Michigan.They were trying to have several relocate or establish there for operations but were told that the pay was not worth it.

There is really only something like a $1 a year difference when you figure cost of living between the two states.Starting pay is the same.

Maybe that is just the way it will be,The big 2.5 in the north and the "import brands in the south".They are to established now to try and change their minds about locations,maybe 20 years ago but that car has left the factory.

**313WX** · January-12-18, 10:56 AM

Now this is something Detroit should have bent over backyards for, IMO.

**Cincinnati_Kid** · January-12-18, 11:41 AM

All of these plants down South are non-union. They will continue to stay away from Michigan and other Midwest states, because of that.

**Bigdd** · January-12-18, 11:50 AM

Richard hit the nail on the head.

Even if we matched or beat their tax breaks,.. Toyota still would not have come here.

Unions aside [[and we're also right to work)

Toyota has most of their parts plants down there. Engine plants, etc.

Steel comes from there.

And the cost of living is a fraction. Seriously,.. just property taxes alone are like 1/3. Home and property cost are way less also. So you can employ a labor force for a lot less,... and not have to ship the steel and components very far.

They would have been stupid to even consider Michigan. If they were even pretending to,.. it would only have been as leverage in their negotiations with Alabama.

**401don** · January-12-18, 12:00 PM

At least Chrysler is bringing Ram production back from Mexico. While not getting foreign prod'n, it seems the Mich. automakers have consolidated a greater share of domestic prod'n in Mich. vs other Midwest states since the recession.

**Wesley Mouch** · January-12-18, 12:48 PM

The imports also have no historical ties to the rust belt. So why would they decide to locate up here? They are creating their own world down there, and they can do so free of our legacy thinking.

The imports don't mind unions themselves -- most coming from unionized worlds. What they want is to be able to do so on their terms, not ours.

That said, RTW may make us a 'possible' location in the future, because it requires unions to look out for the workers, not just their own hides. As long as the imports treat workers well, I don't see a reason for them to come north.

**aj3647** · January-12-18, 01:01 PM

Originally Posted by Bigdd

And the cost of living is a fraction. Seriously,.. just property taxes alone are like 1/3. Home and property cost are way less also. So you can employ a labor force for a lot less,... and not have to ship the steel and components very far.

Chicken and the egg. Do employers pay their employees considerably less in the Deep South because the cost of living is so low, or is the cost of living so low because workers get paid a bottom-barrel wage?

Also, with all the tax breaks and grants and subsidies these plants get, just how much do they actually contribute to the local tax base in Alabama versus how much they suck up in public services?

**Richard** · January-12-18, 01:21 PM

^ I think the big difference is that they are going in with a clean slate,no legacy costs,no past infrastructure notes or bonds,civil pensions from a shrinking economy etc. so operating costs are lower.

They locate in rural parts where there is really not much in the realm of services,that is why property taxes are low there.Think putting a factory on farmland in northern Michigan.

40 years from now may be a whole different scenario.

If Henry Ford came to Detroit today would he had been successful?

They all started in Detroit under the same conditions that are advailable in the south now.

**Bigdd** · January-12-18, 02:00 PM

Originally Posted by aj3647

Chicken and the egg. Do employers pay their employees considerably less in the Deep South because the cost of living is so low, or is the cost of living so low because workers get paid a bottom-barrel wage?

The housing density is less in Alabama than here in Michigan,... so a larger home usually costs less.

And property taxes in most places are a lot less than here in Michigan. Part of that has to do with what Winter does to our roads.

As an example,.. a $500,000 home in a fancy gated community in Scottsdale, Arizona would have property taxes of $2,090 annually. The same $500k home in Southeast Michigan would have annual taxes of $9,537.

In the South,.. gas is also 40 cents a gallon cheaper usually.

Etc, etc.

**ndavies** · January-12-18, 02:26 PM

Henry Ford tried to build a huge plant in Northern Alabama in the 20s. It didn't happen since He couldn't get the deal for electricity he wanted. Maybe Alabama learned something from the failure to get the plant in the 20s.

http://www.al.com/living/index.ssf/2013/01/post_89.html

**DeLemur** · January-12-18, 02:45 PM

Originally Posted by Bigdd

The housing density is less in Alabama than here in Michigan,... so a larger home usually costs less.

And property taxes in most places are a lot less than here in Michigan. Part of that has to do with what Winter does to our roads.

As an example,.. a $500,000 home in a fancy gated community in Scottsdale, Arizona would have property taxes of $2,090 annually. The same $500k home in Southeast Michigan would have annual taxes of $9,537.

In the South,.. gas is also 40 cents a gallon cheaper usually.

Etc, etc.

Got any facts on home prices? Detroit has some of the cheapest in the country and its why its a very economical place to live despite higher taxes than some states like Alabama. Forbes put Detroit at #1 for value of your dollar with average home price 114K and salary 45K. https://www.forbes.com/pictures/el45.../#56e641bf7a3b

**313WX** · January-12-18, 02:51 PM

Originally Posted by DeLemur

Got any facts on home prices? Detroit has some of the cheapest in the country and its why its a very economical place to live despite higher taxes than some states like Alabama. Forbes put Detroit at #1 for value of your dollar with average home price 114K and salary 45K. https://www.forbes.com/pictures/el45.../#56e641bf7a3b

To add, the median home price in Michigan is only $136K

And also, while Michigan may have a high percentage rate for property taxes, the actual dollar amount is based off the volume of the home. So a home worth only $150K may only require $2,500 in taxes.

**Bham1982** · January-12-18, 03:21 PM

Homes in Alabama are much cheaper than in Michigan, and property taxes are much lower. I don't think this had anything to do with the decision, though.

Why would an Asian car company build a factory thousands of miles from its other plants and suppliers, in a higher cost, more regulatory, union-friendly environment? Makes no sense.

Also, Metro Detroit does not have particularly "cheap" home prices. You can't just take the medians. You need to compare apples-to-apples. If you compare nice neighborhoods with good schools to their equivalents in other Midwest cities, you'll see Detroit is much more expensive.

The medians and means are low because Metro Detroit has tons of crappy areas where homes are near-worthless. But a suburban colonial, in, say Bloomfield Hills, or Huntington Woods or Northville, will be much more expensive than in say Shaker Heights or Beachwood [[Cleveland). Probably around 2x the housing costs of a Cleveland, Pittsburgh or Indy.

**Bigdd** · January-12-18, 04:25 PM

Exactly Bham

Toyota line worker salaries range from $67,000 to $93,000 based on experience.

Average home purchase is 2.6x income,.. so the typical Toyota line worker would end up with a $172,000 - $242,000 home.

So we need to compare what you get for your money and what you have to pay in taxes in those price ranges.

Detroit is out for most part just because of the schools. Also,.. taxes are high, crime is high, insurance is outrageous, grocery stores are few and far between, etc, etc, etc.

So here's an example of a $200k house in Alabama. 19 Min drive from Huntsville.

2,200 sq ft, with taxes about $1,150 a year.

https://www.realtor.com/realestatean...8_M84230-20074

Here's an example of a $200k house in Royal Oak. Less than HALF the size at just $1,000 sq ft. yet taxes are $3,000 a year. [[6x as much per square foot)
https://www.realtor.com/realestatean...7_M32117-13297

There are no houses in Northville listed for sale anywhere near $200k

There's only 4 for sale in West Bloomfield.
This one is less than 3/4 the size of the one in AL,.. but taxes will be like $4,700.
https://www.realtor.com/realestatean...4_M31595-22085

Schools are poor in Sterling heights,.. but are OK in Warren.

Warren is about as close as you get to AL. 1,800 sq ft house for $200k,.. but taxes are still 5x what they are in AL. per sq. ft at $4,430 a year
https://www.realtor.com/realestateandhomes-detail/31933-Claeys-Dr_Warren_MI_48093_M33419-99190

**3WC** · January-12-18, 04:44 PM

ndavies, you raised a very interesting point about Henry Ford's [[and Thomas Edison's) interest in northern AL. I'm pretty familiar with that era and the history of the area.

Henry Ford went to AL, not to develop the automobile business, but to get into the nitrate/fertilizer business to make nitrates for military explosives and for fertilizer. As the linked story points out, he promised the people of Sheffield, Muscle Shoals and Florence [[contiguous towns) to eventually employ a million people in the area.

The townspeople went wild and Florence and Muscle shoals even started naming streets after Detroit streets; Woodward Ave. is still the main drag in those the cities.

The attraction was the Wilson dam under construction by the govt. [[It eventually became the first TVA dam.) Ford wanted to lease it to provide electricity to the nitrate plants he was trying to buy. Anyway, all the deals fell through and he went home.

Eventually, to take advantage of all the electricity the dam eventually generated, Ford Motor in the '50s did build an aluminum plant. It also built a foundry to make engine blocks. Ford built other facilities in the area.

Because of constant labor problems, capacity of the plants dropped below 40% because of work stoppages and Ford said to hell with it in '83 or thereaboubts and closed the factory putting 1000 people out of work. [[Eventually, ALCOA acquired and restarted the aluminum plants and foundry.) The other Ford plants were demolished and the land was sold to the City. Ford bough back the land when it was found to be so highly contaminated.

Anyway, Ford's experience in Alabama has not been good.

The area is currently thriving however; Books-a-Million and Southern Sash are HQ'd there. Muscle Shoals [["The Muscle Shoals Sound") recording studios are booming; Most every major recording artist and group has recorded there. Besides the technical recording facilities, the fact that the three county area has [[until recently) been absolutely dry and there were no places for the recording artists to party, they went in, recorded, and got out as soon as they could.

**Richard** · January-12-18, 05:30 PM

Nice history lesson from both,but it was never really dry the locals must not have trusted the recording artists.Lots of good shine up in thar parts.

Plenty to smoke also if one partakes in that,farmers had to survive and sometimes it was best to look the other way.

In some parts it is best sipped with the soundtrack from deliverance softly playing in the background.

I jest there are some really good people there that would give you the shirt off of their back and expect nothing in return.

A lot of people from Florida are escaping there after the Carolinas got priced out in the boom years.So their costs are going to start going up as more demand kicks in.

I have a friend that just bought a 60 acre farm up there for 55k.

**canuck** · January-12-18, 05:57 PM

Originally Posted by Wesley Mouch

The imports also have no historical ties to the rust belt. So why would they decide to locate up here? They are creating their own world down there, and they can do so free of our legacy thinking.

The imports don't mind unions themselves -- most coming from unionized worlds. What they want is to be able to do so on their terms, not ours.

That said, RTW may make us a 'possible' location in the future, because it requires unions to look out for the workers, not just their own hides. As long as the imports treat workers well, I don't see a reason for them to come north.

There are three big Toyota factories in Ontario. North/South don't mean much really. Union membership is not an issue either.

**ABetterDetroit** · January-12-18, 06:31 PM

Love him or hate him having a Governor that is essentially hiding in the closet for two and half years doesn't give Michigan a advantage in ANY of these competing with other states situations.

Yet again, we are wasting a economic expansion screwing around with dysfunctional politics.

But hey protecting one mans legacy when he couldn't have a more dead political future is what we do well...

**3WC** · January-12-18, 07:03 PM

Richard, you are correct. There's always been booze if one knows where to get it.

Some of the nicest, most expensive homes in Florence and Muscle Shoals are owned by preachers. I asked a friend who was driving me around who owned them and he said "doctors and preachers." It seems that every year when public alcohol consumption was "up for election" the bootleggers paid the preachers thousands of dollars to preach against public drinking and the counties were dry for decades. Of course there were "bottle clubs" and a lot of drinking in private homes, the liquor supplied by the bootleggers.

**iheartthed** · January-12-18, 07:23 PM

Originally Posted by Bigdd

Richard hit the nail on the head.

Even if we matched or beat their tax breaks,.. Toyota still would not have come here.

Unions aside [[and we're also right to work)

Toyota has most of their parts plants down there. Engine plants, etc.

Steel comes from there.

And the cost of living is a fraction. Seriously,.. just property taxes alone are like 1/3. Home and property cost are way less also. So you can employ a labor force for a lot less,... and not have to ship the steel and components very far.

They would have been stupid to even consider Michigan. If they were even pretending to,.. it would only have been as leverage in their negotiations with Alabama.

Low-skilled work can go anywhere that has the infrastructure to handle it. But doesn't automotive R&D work still go to Michigan? I think Toyota had their North American R&D facility in Michigan at one point.

**DeLemur** · January-12-18, 09:30 PM

Originally Posted by Bigdd

Exactly Bham

Toyota line worker salaries range from $67,000 to $93,000 based on experience.

Average home purchase is 2.6x income,.. so the typical Toyota line worker would end up with a $172,000 - $242,000 home.

So we need to compare what you get for your money and what you have to pay in taxes in those price ranges.

Detroit is out for most part just because of the schools. Also,.. taxes are high, crime is high, insurance is outrageous, grocery stores are few and far between, etc, etc, etc.

So here's an example of a $200k house in Alabama. 19 Min drive from Huntsville.

2,200 sq ft, with taxes about $1,150 a year.

https://www.realtor.com/realestatean...8_M84230-20074

Here's an example of a $200k house in Royal Oak. Less than HALF the size at just $1,000 sq ft. yet taxes are $3,000 a year. [[6x as much per square foot)
https://www.realtor.com/realestatean...7_M32117-13297

There are no houses in Northville listed for sale anywhere near $200k

There's only 4 for sale in West Bloomfield.
This one is less than 3/4 the size of the one in AL,.. but taxes will be like $4,700.
https://www.realtor.com/realestatean...4_M31595-22085

Schools are poor in Sterling heights,.. but are OK in Warren.

Warren is about as close as you get to AL. 1,800 sq ft house for $200k,.. but taxes are still 5x what they are in AL. per sq. ft at $4,430 a year
https://www.realtor.com/realestateandhomes-detail/31933-Claeys-Dr_Warren_MI_48093_M33419-99190

A little off the main topic, but Grosse Pointe schools will beat any public school in all of Alabama and especially Madison, Al. With square footage and quality considered, this is on par with your example. https://www.realtor.com/realestatean...0_M36833-92520

The home prices, school argument doesn't ring true. Metro Detroit is fairly good in that area. Much larger factors as you and others have mentioned.

**Bham1982** · January-12-18, 11:20 PM

Originally Posted by DeLemur

A little off the main topic, but Grosse Pointe schools will beat any public school in all of Alabama and especially Madison, Al.

GP has excellent schools and fairly reasonable home prices [[except on the lake), but taxes are sky-high, and the Pointes aren't all that desirable anymore.

They're isolated and next to urban wastelands. There isn't a nicer grocery store, shopping area, or restaurant center anywhere in proximity. You have to drive 30 minutes for stuff everyone else takes for granted. It's really a niche market, not likely to attract newcomers.

And there are basically no new homes in the Pointes.

**Cincinnati_Kid** · January-13-18, 07:18 AM

The area is currently thriving however; Books-a-Million and Southern Sash are HQ'd there. Muscle Shoals [["The Muscle Shoals Sound") recording studios are booming; Most every major recording artist and group has recorded there. Besides the technical recording facilities, the fact that the three county area has [[until recently) been absolutely dry and there were no places for the recording artists to party, they went in, recorded, and got out as soon as they could.

Rick Hall, the founder of Muscle Shoals music recently passed at 85.

**Cincinnati_Kid** · January-13-18, 07:20 AM

Originally Posted by Cincinnati_Kid

The area is currently thriving however; Books-a-Million and Southern Sash are HQ'd there. Muscle Shoals [["The Muscle Shoals Sound") recording studios are booming; Most every major recording artist and group has recorded there. Besides the technical recording facilities, the fact that the three county area has [[until recently) been absolutely dry and there were no places for the recording artists to party, they went in, recorded, and got out as soon as they could.

Just for the record, Rick Hall, record producer, studio owner and the founder of Muscle Shoals music recently passed at 85.