Alabama workers built 1.6M engines in 2018
Alabama’s auto workers built nearly 1.6 million engines last year, as the state industry continues to carve out a place in global markets with innovative, high-performance parts, systems and finished vehicles. Last year also saw major new developments in engine manufacturing among the state’s key players, and more advanced infrastructure is on the way in the coming year. Hyundai expects to complete a key addition to its engine operations in Montgomery during the first half of 2019, while Honda continues to reap the benefits of a cutting-edge Alabama engine line installed several years ago. Toyota’s Huntsville engine plant also maintained its role as a critical component of the automaker’s global supply chain. Additionally, Navistar builds truck engines in Huntsville. “Alabama’s skilled auto workers have become adept at not only producing high-quality, in-demand vehicles, but also the engines that power those models and others,” said Greg Canfield, secretary of the Alabama Department of Commerce. “We look forward to their continued success as these companies invest even more resources and add new technology to their operations here.” Hyundai expansion Hyundai Motor Manufacturing Alabama produced 597,313 engines in 2018, and the Montgomery facility is in the midst of transforming those manufacturing operations. Last year, Hyundai announced a $388 million plan to construct a plant dedicated to manufacturing engine heads and enhance existing operations to support production of new models of Sonata and Elantra sedans. The investment will create 50 jobs. Preparations are under way for the next-generation Theta III engine, which requires new technologies and components as part of its assembly process. So far, the new engine head manufacturing building shell and concrete is complete, electrical work is underway and equipment for the building has begun to arrive. The project is on track to be complete by May, said Hyundai spokesman Robert Burns. In addition, the old equipment has been removed from the existing engine shop that is being updated, and contractors are prepping the interior of the building for new equipment. Hyundai’s Alabama engine operations support vehicle production in Montgomery and at the Kia plant in West Point, Georgia. Meanwhile, Honda Manufacturing of Alabama last year produced 356,439 engines that power the SUVs, minivans and pickups built at the Talladega County factory. Just a few years ago, Honda Alabama opened a sophisticated new engine line that represented a breakthrough in Honda’s North American engine assembly operations. The highly automated line was yet another indication of the global automaker’s confidence in the Alabama workforce, which has achieved an unprecedented schedule of new model launches and redesigns in recent years. In Huntsville, Toyota Motor Manufacturing Alabama produced about 630,000 engines that power one-third of the Toyota vehicles built in the U.S. The factory builds about 2,600 engines per day, or five times as many engines since production started there in 2003. Toyota milestones Two keys milestones for Toyota Alabama last year included its 6 millionth engine, built in August 2018. And the following month, the facility launched a new advanced 4-cylinder engine line to produce next-generation engines as part of the Toyota New Global Architecture Program. TNGA will improve the performance of all vehicles, including increased fuel efficiency, more responsive handling and a more stable and comfortable feel while driving. It also provides a more flexible production environment that allows the company to better respond to changing market demands. Toyota Alabama’s $106 million investment in the TNGA project increased total plant investment to nearly $1 billion. “I could not be prouder to reach this milestone,” Toyota Alabama President David Fernandes said at the time. “Launching our new TNGA engine is a true testament to our highly skilled workforce. They are leading Toyota Alabama into the future of advanced engine production.” Republished with permission from Alabama Newscenter
Alabama business roundup: Headlines from across the state
Here’s a roundup of some of the top weekend business headlines from across the state: AL.com: Japanese auto investment climbs in the U.S., including Alabama Total investments by Japanese automakers in their U.S. operations reached nearly $43 billion last year, according to new data from the Japan Automobile Manufacturers Association. That’s up from $40.6 billion in 2013. Direct employment at the automakers also grew to 91,122, up from 82,816 the previous year. “These figures demonstrate the ongoing commitment of Japanese automakers to the U.S. auto market and they signal a new day in Japanese brand auto manufacturing in America,” Ron Bookbinder, General Director of JAMA USA, said in a prepared statement. In Alabama, Japan’s Honda and Toyota each have a major manufacturing presence, and they have been part of the growth. Honda’s $2 billion, 4,000-worker auto assembly plant in Talladega County recently kicked off production of the redesigned 2016 Pilot SUV and officially opened a $71 million, highly-automated engine assembly line. During the past three years, the plant has announced new investments of more than $508 million for projects to improve flexibility, enhance quality and increase production. It also has added more than 450 jobs. As for Toyota, the automaker’s Huntsville engine plant last year marked an $80 million expansion project and the production of its 3 millionth engine. It is the only Toyota plant worldwide to produce four-cylinder, V-6 and V-8 engines under one roof. Birmingham Business Journal: Report: Walter Energy bankruptcy talks accelerate Walter Energy Inc.’s negotiations with creditors are accelerating and could trigger a bankruptcy filing by July 15, according to a report. Bloomberg is reporting that the Birmingham-based coal company and its senior creditors are in negotiations that could result in the company being handed over to lenders. The company has declined to comment on the report. Lenders are offering to back a loan to fund the company’s operations during bankruptcy and are asking for union support of the plan in exchange for financing the loan, according to the report. Walter (NYSE: WLT) has been in bankruptcy negotiations for the last three months, as the metallurgical coal market has taken a severe downturn. Related: Coal War: Alabama mining sector rocked by shifting market According to the report, Walter’s senior lenders also want the company to file for bankruptcy by July 15, which is the end date for the grace period on a $19 million interest payment due to junior bondholders. Walter’s fortunes have declined dramatically in recent years. Its stock, which once traded at more than $100 per share, now hovers around 20 cents per share. The company has also notified hundreds of employees of potential layoffs if the coal market doesn’t turn around. Birmingham Business Journal: Coal War, Part V: Could natural gas spell trouble for coal in Alabama? *Editor’s Note: This is the fifth and final installment of the BBJ’s five-part online series investigating the state of Alabama’s coal industry and its future.* Energy swapping is occurring at utilities around the country, and Alabama Power Co. is no exception. The Birmingham-based subsidiary of Southern Co. was recently ordered by the Environmental Protection Agency to expedite its efforts to cut coal-fired emissions. The company will achieve this by permanently closing three coal-fired units in Alabama, in addition to swapping four others to natural gas. Despite the cuts, Alabama is one of the leading states for electricity output – generating more in April 2015 than Mississippi and Kentucky combined, according to data from the Energy Information Administration. The new regulations, however, favor Alabama Power swapping its energy usage from coal to natural gas, which could mean changes in rates and employment down the road. It’s a trend that could also affect Birmingham’s coal industry, which is already reeling from a number of other market factors. Natural gas vs. coal in Alabama Michael Sznajderman, a spokesman for Alabama Power, told the BBJ that the company expects to see the trend of replacing coal use with natural gas to increase in the future. “We are switching some coal units to natural gas … Renewables may also play a big role in our fuel mix in coming years,” he said. Sznajderman said the company historically purchases 25 percent of the coal used from Alabama producers. At the end of the first quarter of 2015, coal accounted for 47 percent of the sources of generation for all of Alabama Power’s production – down from 54 percent in 2014, Sznajderman said. This comes out to roughly 11.75 percent of Alabama Power’s total energy use coming from coal mined in Alabama, where thermal coal is secondary to the more expensive and abundant metallurgical coal – which has taken a major hit due to the downturn in the steel market. Thermal coal accounts for just 9 percent of coal exports from the state. “We support having a diversity of fuel sources,” Sznajderman said. “Having that ability to move from one fuel source to another gives us important flexibility to keep our rates affordable amid fluctuating fuel prices and changing regulations.” In the market While natural gas may seem like a burgeoning threat to coal production in Alabama, production and withdrawal of natural gas in Alabama has decreased sharply since peak withdrawals from Alabama gas wells in 1996. Coal production in Alabama hit its peak in the same decade, topping out in 1990 at 29 million tons of capacity, before embarking on its recent decline. American exports of natural gas – some of which comes from Alabama – has seen a steady rise in price since peak production, while natural gas imports have followed the opposite trend, according to data from the U.S. Energy Information Administration. Jason Hayes, associate director of the American Coal Council in Washington D.C., told the Birmingham Business Journal the motive behind energy swapping is simple to understand – bottom line efficiency. “What we are seeing is fuel switching, so natural gas prices are staying low, and the swapping is basically the utility industry saying ‘If we can produce the most electricity for the least amount of money, then
