Alabama Sees Factory Investments Stall in Midst of Trump Trade Threats

(Bloomberg) -- The state of Alabama is seeing delays in big manufacturing investments in light of President Donald Trump's bellicose trade policies and is urging a more conciliatory approach.

“We've seen a couple of projects that we've been actively working where their timeline has slipped,” Greg Canfield, the state's secretary of commerce, said in an interview. “The longer this drags out, the more danger there is that we'll see a real drag on our economy. We're going to see Alabama lose jobs, and that's not acceptable.”

For the past two decades, Canfield's state has been a standout when it comes to luring car factories. Alabama gave more than $100 million in incentives to Daimler AG to attract its first assembly plant, which started making Mercedes-Benz vehicles in 1997. Now it has 57,000 autoworkers building about a million cars and light trucks a year. It's the third-largest state for U.S. auto exports, and landed one of last year's biggest industrial prizes: the $1.6 billion factory Toyota Motor Corp. and Mazda Motor Corp. chose to build in Huntsville.

Alabama is the fifth-lowest state in manufacturing costs including labor, land, and taxes, according to Boyd Co., a site-selection consultancy in Princeton, New Jersey. South Carolina is the low-cost leader.

‘Not Fighting'

Canfield, who declined to name the companies that have put their investment plans on hold, said that if Trump goes ahead with the substantial tariffs he's threatened on imported cars and auto parts, it would raise the price of every U.S. vehicle, since they all contain components from overseas.

The levies would act as a tax that would suppress demand and could expose Alabama exports to retaliatory tariffs implemented by other countries. It would also leave executives guessing about which trade rules would govern their automotive investments, he said.

“Uncertainty equates to risk, and risk is a very chilling factor when it comes to investing your money. You either invest it somewhere else or you hold on to it until the situation becomes more certain,” Canfield, a Republican, said by phone last week.

“I want to make it clear we're not fighting President Trump on this. We're trying to raise awareness and educate the administration -- the U.S. Department of Commerce in particular -- and urge a more measured approach.”

To contact the reporter on this story: John Lippert in Chicago at jlippert@bloomberg.net

To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, Jamie Butters

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