No Wonder! - Alabama Gives Hyundai $253 Million Incentive

April 5, 2002 BLOOMBERG NEWS reported that Hyundai Motor Co., will receive $252.8 million in public and private incentives from Alabama to build its first U.S. factory, Governor Don Siegelman said.

The package includes $236.6 million in state and local funds, as well as $18.2 million in private money for preparation of the plant site near Montgomery, Siegelman said in a release. The state estimates it's paying $117,317 for each new job created at the plant, which is to open in 2005.

The Seoul-based company on Monday selected Alabama for the $1 billion factory over a competing site in Kentucky. The plant, which is expected to employ 2,000 workers and have capacity to make 300,000 vehicles annually, should also create as many as 5,000 related jobs.

Hyundai joins a growing list of automakers that have moved into Alabama in the past decade. DaimlerChrysler AG's Mercedes-Benz unit, which makes luxury sport-utilities in Tuscaloosa, is expanding the plant it opened in 1997, raising total investment in the state to $1 billion and eventually employing 4,000. Honda Motor Co. opened a light truck plant in Lincoln last year and Toyota Motor Corp. is building an engine plant in Huntsville.

"Alabama has aggressively courted auto plants because they felt they were being left behind by southern states like Tennessee and South Carolina," said Sean McAlinden, an analyst at the Center for Automotive Research in Ann Arbor, Michigan. "With Mercedes, Honda, Toyota and now Hyundai, they've become a mirror of the global auto industry."

The automaker said it plans to build two new models at the Alabama plant. One will be a sedan, now under development, bigger than the company's Sonata and the other will be a sport-utility smaller than the current Santa Fe model.

"The success of manufacturers like Honda, Toyota and BMW with their U.S. plants has encouraged state governments to make these deals," said Douglas Woodward, a professor at the University of South Carolina's Moore Business School. "Incentives ultimately make a difference in which state gets a plant, and they usually pay off for the state."

The Alabama package includes $55 million to purchase the land for the plant and site preparation, $29 million in transportation improvements, $61.8 million for worker training, and $76.7 million in tax abatements.

The state should recoup its investment by 2011, Siegelman said.