Transportation

Mercedes-Benz Gears Alabama Plant to Produce Electric SUVs

The company's $1 billion investment in the plant and neighboring logistics center will means 600 additional jobs for the region.

by Ed Enoch, The Tuscaloosa News / September 25, 2017

(TNS) -- Mercedes-Benz on Thursday announced plans to produce electric SUV models at its Tuscaloosa County plant, a new battery plant on the site and a new logistics center nearby in Bibb County as part of a $1 billion investment that is expected to create an additional 600 jobs in the region.

"As you know Mercedes invented the car, but now we are going to reinvent mobility. That is why today it is about celebrating the past and electrifying the future," said Markus Schafer, member of the Divisional Board of Mercedes-Benz Cars, Production and Supply Chain.

The $1-billion investment was part of the Vance plant's 20th anniversary celebrations. Schafer made the announcement to the employees on Thursday standing in front of Job 1, the first M-Class SUV produced in February 1997at the plant in Vance. The celebration took place in the new body shop for the plant, which features more than 900 robots and is currently still ramping up for production.

Schafer and Mercedes-Benz U.S. International President Jason Hoff recalled how the plant grew from a 1.2 million-square-foot facility with about 1,100 employees in 1997 to its current size of 6 million square feet with more than 3,700 employees. The plant produced more than 310,000 vehicles last year.

The projects in the investment will add about 2 million square feet to the company's operation in the region. The projects will bring the company's investment in the region during the last two decades to around $6 billion.

The 600 jobs will include MBUSI positions and roles at supporting companies, Hoff said.

"It has been a great ride, but the ride isn't over. I am confident that we are only getting started," Hoff said. "I am certain as we face the next 20 years, we will exhibit the same commitment that has and continues to make us Alabama's best, building and giving nothing but the best."

The automaker plans to manufacture EQ-branded SUV models in Vance. While the main plant will likely not see an expansion of its footprint, Hoff said, it will see some modification of equipment as it prepares for the electric models.

The EQ brand, announced last year, combines the fields of connectivity, autonomous driving, sharing and electrification, which Schafer said are reshaping the automotive industry. Earlier this month, Mercedes-Benz unveiled four concept cars in Frankfurt including a fully autonomous model, an all-electric, a pre-production GLC model with hybrid battery and fuel cell technology, and a hybrid sports cars.

"We are in the midst of the biggest transformation ever," Schafer said.

Reinventing mobility is about combining the CASE (Connectivity, Autonomous driving, Sharing and Electrification) elements, he said.

"Our ambition here is to make the successful transformation to becoming No. 1 in the new world of CASE," Schafer said. "That means offering customers the most compelling components across these four areas."

The flexible production system at Mercedes-Benz U.S. International will allow the plant to build traditional internal-combustion engines and electric vehicles on the same line, Schafer said.

The plant will start with at least one electric SUV, though Schafer declined to discuss specifics about the models to be produced at Tuscaloosa or when it will launch. Mercedes-Benz is spreading EQ-model production across the globe at select plants, he said.

Mercedes goal is to electrify its entire portfolio by 2022. Production of the first EQ model will begin in Bremen, Germany, in 2019. Schafer declined to say when production of models in Tuscaloosa would begin.

The battery plant will be built near the existing passenger-car plant. It will be the company's fifth battery plant and will support MBUSI electric car production and provide battery units export. The company will break ground in the next 12-24 months, Hoff said. The battery plant will be more that 1 million square feet, Schafer said.

The global logistics center will be in Bibb County about 7 miles from the MBUSI main plant. The MBUSI plant already exports kits from an existing smaller warehouse to other plants globally for final assembly. The new center will be about 1 million square feet, expanding the company's capacity to supply parts globally, Hoff said. The Bibb County logistical site to be built on 260 acres off U.S. Highway 11, Hoff said. It is expected to begin operations by the end of 2020.

The automotive executives called the anniversary a milestone for the company and the state. The company's investment 20 years ago led to a re-invigoration of the state's manufacturing sector, Gov. Kay Ivey said.

"At the time, Mercedes was taking a risk investing in our state and our community, but I am so glad to say today that it has been a good investment for Mercedes and the state of Alabama. Because Mercedes took the first step, Alabama is now a top-five producer of cars and trucks," Ivey said.

How much the state is contributing in incentives for the projects is still being negotiated, according to Alabama Secretary of Commerce Greg Canfield.

"We are currently negotiating the project agreements. We will approach the project as we would any other project in this particular sector," he said.

The support provided by the state and local partners will be announced at a later date once the negotiations are compete, he said.

The agreements could include performance-based incentives, tax abatements and tax credits.

The vision for the future laid out Thursday will likely influence development beyond the company's footprint in Vance. The shift toward electric automobiles in the industry has also spurred conversations about future infrastructure needs as well as workforce training.

State officials are beginning to discuss how to support the infrastructure needed for electric vehicles including possible policy changes and potential legislation, Canfield said.

"We are all in the initial stages of the process," he said.

The discussion will takes place over the next few years as the electrification of the products and battery plant come online, he said.

"This may be an opportunity for Alabama to become a leader in the Southeast," Canfield said.

The emphasis on CASE in the future will influence the engineering and production of the new models, as the sector continues to shift toward computer and electrical engineering. The changes will require changes to workforce development, Hoff said.

"It is going to be significant change in a lot of areas of our business," Hoff said.

MBUSI will discuss its changing needs with Shelton State Community College and the University of Alabama, Hoff said.

©2017 The Tuscaloosa News, Ala. Distributed by Tribune Content Agency, LLC.