TUPELO, Miss. —  Toyota Motor Corp. (TM) said Tuesday it will build a $1.3 billion assembly plant in northeast Mississippi to manufacture its Highlander sport utility vehicle.

Production is set to begin by 2010 and employment is projected at 2,000. The company said it expects to build 150,000 vehicles a year.

Click here to visit FOXBusiness.com's Autos Center.

The plant will be built on a 1,700 acre site at Blue Springs, land that has been promoted for economic development.

Gov. Haley Barbour and two Toyota manufacturing executive vice presidents, Gary Convis and Ray Tanguay, announced the project in an auditorium at Tupelo High School.

"Toyota is the world's premiere auto manufacturer and our state will be the best partner the company has," Barbour said in prepared remarks.

Mississippi was chosen in a competition with Tennessee and Arkansas.

The plant will be the second car maker to locate in the state. Nissan Motor Corp. opened its assembly plant north of Jackson in 2003. The 4,000-employee plant produced about 278,000 vehicles last year.

Click here to visit FOXBusiness.com's Autos Center.