Those companies employ thousands of people and not all of those suppliers are near where the plants are which helps spread more economic development throughout the state.
A formal announcement of the decision is expected Wednesday.
According to a report from Automotive News, the Japanese automakers decided on Huntsville, Alabama as the site of their upcoming facility, after narrowing down their choices between Alabama and North Carolina.
Today's monumental announcement by President Akio Toyoda of the Toyota Corporation and President and CEO Masamichi Kogai of the Mazda Corporation is not a new commitment, but a continued commitment with proven world leaders in automotive ingenuity to the State of Alabama and our people.
"In a single generation, Alabama has become a powerhouse in the auto industry, and the Toyota-Mazda joint-venture manufacturing facility will provide another potent catalyst for sustained growth in the sector", said Greg Canfield, secretary of the Alabama Department of Commerce.
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A Toyota automaker employee moves an engine at the Toyota engine assembly line in Huntsville, Alabama November 13, 2009. It has been reported the companies sought at least $1 billion in incentives.
The announcement comes at a time that USA sales of small cars fell almost 10 per cent a year ago as buyers continued a massive shift toward SUVs and pickup trucks.
The new plant will be home to Mazda's new crossover SUVs and Toyota's Corolla compact sedans, which were originally going to be built in Mexico, drawing the ire of Trump. The plan has led to speculation that Mazda would bring its new CX-4 crossover, now built in China for that market, to North America.
President Donald Trump had criticized Toyota for taking auto production and jobs to Mexico. "A great investment in American manufacturing!"
The plant will be located near Huntsville.
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"Toyota & Mazda to build a new $1.6B plant here in the United States of America and create 4K new American jobs".
Over the last 30 years Toyota, along with German and Asian automakers, has built a second auto industry in the United States, rivaling the operations of the Detroit Three automakers in size and employment, but with newer, and fewer unionized, plants.
Alabama is one of more than 20 USA states that bid to host the plant.
The decision to pick Alabama is another example of foreign-based automakers building USA factories in the South. Sullivan said the factory itself is a huge asset for the state, but it will also cause economic ripples by bringing spinoff jobs at suppliers and service companies in the area. The state produced 9 per cent of the cars made in the USA, the centre said. It was behind MI at 19 percent; IN at 12 percent, Kentucky at 11 percent; and OH at 10 percent.
The joint venture represents a $1.6 billion investment that Mazda and Toyota plan to make with equal funding contributions. "It creates a halo effect that in turn helps attract other projects".
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Alabama started on the road to becoming an auto manufacturing hub in 1993 when Mercedes chose it as the location for a manufacturing plant after the state offered a then-eye popping $250 million incentive package.