Indian auto component supplier Samvardhana Motherson Group is investing $150 million in a facility in Alabama to make bumpers, interior panels and other parts for Mercedes Benz, state officials announced Aug. 20.
The investment by Noida, India-based SMG is one of two new facilities the company is building worldwide to fill what it calls its “biggest ever order” from the German car maker and its parent Daimler AG, worth $2.45 billion.
The Alabama plant also plugs what it said was a gap in its U.S. footprint.
The Indian firm first announced the investment in May but did not provide details. Alabama officials, in their announcement this week, filled a bit of that gap by saying the 700,000-square-foot SMG factory will employ 650 and supply the Mercedes Benz plant in Vance, Ala.
Construction is set to begin later this year in eastern Tuscaloosa County, the state said. Motherson had said production would start in 2018 for a range of exterior and interior parts for Mercedes.
To meet the Mercedes work, the new U.S. operation joins another new location in Hungary, under construction near the Daimler factory in Kecskemet, along with additional capacity expansions in Motherson's SMP unit in Germany, Motherson said.
SMP is the former German auto parts molder Peguform GmbH, which Motherson bought in 2011, part of a series of acquisitions that's made it one of the largest suppliers of plastic molded and assembled components to Europe's car industry.
Motherson said the Alabama investment, which will be part of SMP, will strengthen its presence in the U.S. It said the SMP operation has had a “strong footprint in Europe, Mexico, Brazil and China” but less so in the United States.
“With the establishment of the new plant in the region around Tuscaloosa, close to Daimler's assembly plant, SMP enters an important strategic growth market — the USA which had been a ‘white spot' for SMP so far,” the company said.
SMP had global sales in its most recent fiscal year of $2.5 billion, suggesting that the new $2.45 billion in Mercedes work over several years could be a significant boost.
Daimler and Mercedes represented about 5 percent of parent company SMG's global sales in its 2014-15 fiscal year, which ended March 31.
To support Daimler's global expansion, Motherson said it has invested in facilities in Germany, China, Hungary, the Czech Republic and Slovakia.
The details were announced at a news conference in Alabama by the state's governor, Robert Bentley, and other officials, who said the state is now the fourth-largest car manufacturing spot in the United States, producing 1 million vehicles a year.
Local newspapers quoted Bentley as saying the state will provide $27 million in tax breaks and worker training, with local economic development officials expected to kick in more.
SMG has 170 factories in 25 countries, with sales of $6.9 billion in its 2014-15 fiscal year. Most of that was in its publicly traded Motherson Sumi Systems Ltd. unit.