Careful What You Wish For?
What do Alabama’s four major cities see as their target markets for economic development? How choosy are they?
Photo by Robert Fouts
Last fall, U.K.-based Oxford Pharmaceuticals announced plans to build a $29 million, 120,000-square-foot manufacturing facility at Birmingham’s Jefferson Metropolitan Lakeshore Industrial Park by 2016, creating up to 200 jobs over the next decade.
The announcement came three years after the Alabama Economic Development Alliance rolled out “Accelerate Alabama,” a strategic plan to recruit national and international companies in 11 specific industries, including bioscience.
“Alabama hasn’t always done a great job of marketing our bioscience, life sciences and research sectors,” says Alabama Secretary of Commerce Greg Canfield. “Accelerate Alabama has now given us the platform on which to do that.”
Last October, a team of economic developers, trade experts and bioscience firms from Alabama toured several bioscience and life science firms in Belgium and The Netherlands.
Among the other sectors identified by Accelerate Alabama as key targets are automotive, information technology, distribution, metal manufacturing, chemicals, advanced manufacturing and aerospace.
In the aerospace sector, last July also saw announcement by GKN Aerospace that it will open a new composite design engineering center at its advanced composite structures plant in Tallassee and that GE Aviation would open a 3-D printing facility in Auburn.
At the same time, Science and Engineering Services Inc., which provides engineering and technology support for aviation and government clients, announced it will spend more than $70 million to expand its manufacturing operations in Huntsville.
“Advanced manufacturing requires the highest degree of technological advancement, automation, research and design,” says Canfield. “So this gives us the opportunity to grow knowledge-based jobs in Alabama in a way we never have before.”
But wooing national and global companies takes a coordinated effort by state and local government leaders, chambers of commerce, local agencies, utilities and many others, says Montgomery attorney Warren Matthews, a partner with Burr & Forman LLP, who advises companies on recruitment decisions. He says that to compete with other states, municipalities and states have to offer companies incentives, such as free or reduced priced land, grants and tax abatements.
“States can provide cash grants to reimburse a company for capital investments or other expenses like training expenses,” Matthews says.
AIDT, for example, tailors training programs to fit a company’s specific needs, he says.
But, just as companies are choosy about where they relocate, many economic developers in Alabama say they take great care in deciding which industries to go after.
“We’re not spending a lot of time seeking sectors that pay below a minimum wage,” Canfield says. “Accelerate Alabama is helping us focus on growth opportunities.”
Last December, the Montgomery Area Chamber of Commerce held its annual “Success Starts Here” news conference to recognize 19 new and expanding industries. Collectively the companies made close to $92 million in capital investments and created 280 new jobs in Montgomery’s metro area in 2014, says Ellen McNair, vice president of economic development for the Montgomery Area Chamber of Commerce.
The honorees included Hyundai Motor Manufacturing Alabama, with a $40 million expansion, Dow Corning, with more than $8 million in investment, and AEP Industries Inc., which invested more than $9 million that year.
“The way we see this is that those expansions, by putting capital investments in new buildings, new equipment, that secures those 5,500 jobs,” says McNair. “So it’s pretty significant.”
That same month, the Chamber announced that the Montgomery Coca-Cola Bottling Co., a division of Coca-Cola Bottling Co. United, planned to invest $35 million in Montgomery to retrofit an 850,000-square-foot building it recently purchased on Westport Boulevard in Montgomery and plans to finish the project in the spring of this year.
“Together, these 19 represent about 5,500 current jobs,” McNair says.
Economic developers are currently targeting industries like information technology, data centers, cyber security and other related companies, including those that could provide services to Maxwell Air Force Base in Montgomery, she says.
“We also have a huge automotive sector here in Montgomery, with Hyundai and the suppliers,” McNair says. “So this is a sector that we work on a daily basis.”
One company is the Japan-based auto parts supplier Denso. In 2014 it opened its first Alabama warehouse in Montgomery for $2.2 million.
McNair, however, declined to say which industries the Chamber would pass on.
“We don’t look sector by sector,” she says, “but project by project.”
Last February, firearms manufacturer Remington Outdoor Co. made known its intention to expand its operations to Huntsville, which company officials say will add about 2,000 jobs in the state and a capital investment of up to $110 million. Remington officials say they will use the new facility to manufacture some current products and to conduct research and development.
Then in July, the Columbia, Maryland-based Science and Engineering Services (SES) Inc. committed to a $70 million expansion of its manufacturing operations in Huntsville.
In a metropolitan area where industries like aerospace and defense are thriving, economic developers for the Huntsville and the Madison County region want to beef up the manufacturing sector, says Lucia Cape, vice president of economic development for the Chamber of Commerce of Huntsville/Madison County.
“It really exemplifies the work that we’re doing right now in recruiting advanced manufacturing,” says Cape. “Aerospace and defense are about half of our economy, but manufacturing has been and continues to be a focus.”
The Chamber continues to pursue life sciences companies to grow the Cummings Research Park, Huntsville’s biotech campus, which includes the park’s anchor, HudsonAlpha Institute, she says. They also are working to lure online gaming companies to the area. One of the first successes happened in 2013, when the online gaming information company Curse left San Francisco to relocate in Huntsville.
Cape says that having a highly educated and creative local workforce with skill sets that include software development, engineering and computer programming helps their efforts to recruit high-tech companies.
“We want to make sure that we’re recruiting industries that would add to the type of skill sets that we want to grow,” she says.
While it used to be known as a steel town, today economic developers in the Birmingham metro area are busy recruiting industries in medical and biotechnology, information technology, research and development, distribution and logistics, says Rick Davis, the Birmingham Business Alliance’s senior vice president of economic development.
“Birmingham’s legacy is metal and steel,” Davis says. “We’ll continue to work on those because they’re very important to us, but the new things we’re looking at are in the life sciences sector, which includes pharmaceutical manufacturing, medical device work and the health care delivery sector. You work to your strengths, and those are our strengths.”
Besides the Oxford Pharmaceuticals announcement, another Birmingham area success story is German-based Evonik Corp. Last May, the company announced plans to open an innovation center in Birmingham to research and develop medical devices.
And last October, the Ohio-based Steris Corp., which specializes in infection prevention, decontamination and surgical and critical care technologies, announced that it was relocating its headquarters to Birmingham.
Distribution logistics companies and suppliers for the Mercedes and Honda manufacturers in Vance and Lincoln are also important target industries for Birmingham’s economic developers, Davis says.
But whether a company could potentially impact the environment is one of several factors that can influence economic developers’ decision to pursue certain companies, Davis says.
“When we’re selling Birmingham,” he says, “anything that would have a negative impact on that is something we would have to consider as we go about our jobs to recruit companies here.”
Mobile and the surrounding metropolitan area has a diverse industrial base that includes oil and gas, aerospace, aviation, chemicals and maritime, says Troy Wayman, vice president for economic development for the Mobile Area Chamber of Commerce.
“Not many places have the deep water access that gives us the opportunity to pursue shipbuilders and other maritime projects,” Wayman says.
But while Mobile’s economic developers continue to go after maritime-related companies, they also are working to bring more aviation and aerospace companies to the area, Wayman says.
In 2012, Airbus selected Mobile as the place to build a $600 million assembly plant for its A320 Jetliner by 2016. Later that year, the French engineering firm Labinal announced that it would open an office at the Brookley Aeroplex as an Airbus supplier.
Wayman says economic developers also want to bring more information technology and bioscience firms to the area.
“We don’t have the assets that Birmingham has, with their research capabilities at UAB, or the assets that Huntsville has, but we do have a growing [bioscience] sector, and through some great companies like Swift Biotechnology and our Mitchell Cancer Institute, we have some opportunity at that high-level research and development area.”
Wayman says that in selecting which companies to pursue, worker pay and the impact on the environment are important considerations.
“We want to continue to grow and create jobs and opportunities, but we have to do that in a very conscious and strategic manner, so that the two can coexist.”
Gail Allyn Short is a freelance writer for Business Alabama. She lives in Birmingham.