The Year That Was 2012
A recap of the largest business items to make the news in 2012
Forecasts in Hindsight
Last January, Business Alabama asked a dozen experts to predict how Alabama’s economy would fare in 2012.
Boeing Vacates Midwest // Vulcan Blindsided // New Day at AEA
Boeing, which beat out rival EADS for an Air Force tanker contract, announced that it was losing money on the contract and that it was pulling the work away from Wichita, where officials had lobbied hard on Boeing’s behalf. If EADS had won the contract, planes would have been built in Mobile. Mobile’s last laugh came in July.
Also in February: Regions sold its Morgan Keegan investment group for $1.18 billion; Henry Mabry was elected president of the Alabama Education Association, Christian Dohr took the helm of ThyssenKrupp Steel USA and Vulcan Materials was blindsided by a hostile takeover bid from a rival it had been courting for merger.
Boeing Dream Machine // Alabama Ag by the Numbers
Boeing made Alabama headlines in March, including Huntsville International Airport on the debut tour for the new 787 Dreamliner, as a tribute to Boeing’s workforce in the Rocket City.
Agriculture reports ranked Alabama second in the nation for catfish sales, third for peanuts and broiler chickens, fifth for pecans, 10th for cotton and in the running for eggs, peaches and cattle inventory.
$5.8 Billion Drop From BP Bucket // Bingo Gang Skates // Wiregrass Wallop
BP reached a settlement with victims of its massive 2010 oil spill. Despite the $5.8 billion price tag, shares of BP rose 2 percent when the settlement was announced.
Also in April, a jury exonerated all defendants in the state’s bingo and vote buying trial.
While all eyes were on BP and bingo, aircraft modification, repair and overhaul (MRO) company Pemco pulled out of Dothan, leaving a big gap in the Wiregrass economy.
Cuts and Fees (Taxes Not) // Commerce over Development // Big Trucks over Railcars
May was Alabama’s budget month, as legislators handled dwindling income by raising user fees instead of taxes and cutting the general fund budget some 20 percent.
After achieving unprecedented success in wooing new industry to Alabama, the Alabama Development Office took on a new name, now calling itself the Alabama Department of Commerce.
Good news for the Shoals — and a relief for Retirement Systems of Alabama — May brought news that Navistar had leased the enormous plant created to build railroad cars, with plans to build a brand-new vehicle, the LoadStar. Production is slated to begin in 2013.
Hyundai Booms // Walter Puffs // TK Takes a Powder
Automotive news drew economic cheers in June, as Hyundai announced plans to add 877 employees for a third shift at its Montgomery plant.
Walter Energy announced plans for a 61 percent increase in its Alabama coal production.
ThyssenKrupp made it official that its mills in Alabama and Brazil are up for sale. They’ll constitute a big-ticket item, however, since construction in Alabama alone topped $5 billion.
Mobile Flies High // State of the Art for Children // Jail Card for Ex-Gov.
After years of disappointment over hopes to build Air Force refueling tankers and almost as many years of quiet, careful negotiations, Mobile and state officials celebrated like skyrockets, when Airbus made it official that its first North American assembly line will be located at Mobile’s Brookley Aeroplex. The $600 million, seven-building complex should start airplane construction in 2015 with the first plane off the line in 2016. Airbus says it plans for 1,000 employees.
Birmingham celebrated a new hospital, the $400 million Benjamin Russell Hospital for Children at Children’s of Alabama.
After several years of working toward release from criminal charges, including garnering support from more than 100 former state attorneys general, former Gov. Don Siegelman learned that the U.S. Supreme Court would not hear his case — a blow sending him directly back to prison.
Bama Border Patrol Clipped // Affordable Care Bolstered
Two major pieces of legislation — Alabama’s immigration law and the federal health care law — were back in Alabama news in August. The state’s immigration law took a hit as the U.S. Supreme Court struck down some provisions of a similar act in Arizona, but in general, Gov. Robert Bentley said he was pleased that the court recognized “the important role of states in enforcing immigration laws.”
Bentley was less pleased with the Supreme Court’s decision upholding most provisions of the Affordable Care Act, dubbed “Obamacare.” While Bentley called the law “the single worst piece of legislation to come out of Congress” and Attorney General Luther Strange pledged to try to overturn it, hospitals — especially those providing indigent care — applauded the ruling. “This ruling will give additional Americans and Jefferson County residents access to high quality, affordable health care,” said officials with Birmingham’s Cooper Green Mercy Hospital.
Feds Allege Wall Street Fraud // Air/Auto Gains, Weak Steel
Back in 2009, federal regulators shut down Colonial BancGroup. In September 2012, they filed suit — in Alabama and New York — against eight major international investment banks, charging that they defrauded Colonial. The suits allege that 31 mortgage-backed securities were sold to Colonial in violation of both the Alabama Securities Act and the U.S. Securities Act of 1933 — that they lied about credit quality of the security-backing loans, including loan-to-value ratios, and lied about the number of mortgages that were not primary residences.
September economic development indicators were a mix of promise and disappointment. While ThyssenKrupp, once the economic developers’ darling, announced plans to layoff 10 percent of its workforce, Alabama automakers saw production jump 19 percent in the first six months of the year over the same period in the previous year, and all of the state’s big three began hiring workers to meet the growing demand. And all across the state, economy watchers began to salivate at the prospects for Airbus and Airbus-related industry.
DOJ Gets Tough with BP // Med Schools Multiply
BP hit the headlines again in October as the U.S. Department of Justice filed new claims, accusing the oil company of “gross negligence and willful misconduct” with regard to the Deepwater Horizon explosion and oil spill in 2010. If BP is found guilty, fines would be quadrupled, exposing the company to a potential liability of $21 billion.
Meanwhile, Auburn and Dothan await opening of the state’s two newest medical schools. Dothan’s Alabama College of Osteopathic Medicine is slated to open in the fall of this year, while Auburn’s branch campus of the Edward Via College of Osteopathic Medicine expects its first students in 2015.
TK Reapplies for Buyers // Alabama Power Gets Alternative
Bidders queued up to make offers for ThyssenKrupp’s steel mills in Alabama and Brazil. The exact names and numbers were never made public, but business analysts mentioned names like U.S. Steel and Nucor, along with German, South American, Japanese, Chinese and Korean firms. Before the month was out, ThyssenKrupp was back to the bidders, asking for bigger bids.
Alabama Power set the pace for Southeastern utilities, signing 20-year agreements to purchases 404 megawatts of electricity from Midwestern wind farms.
Airbus Suppliers Already Circling // Early Retirement No Easy Out
Airbus plans continued to reverberate along the coast as the commercial airplane maker posted ads for its first employee, a human resources specialist. Not long after, in early December, Safran Engineering Services, a subsidiary of the French firm Labinal, became the first Airbus supplier to pick an Alabama location, announcing plans for a $2 million engineering center at Brookley Aeroplex.
Still hoping to balance the state books, Gov. Robert Bentley urged adoption of an early retirement plan for state workers. He described the plan as a money saver for taxpayers now and in the future and said it would lead to “less costly, more efficient state government.” David Bronner, CEO of the Retirement Systems of Alabama, urged caution, however, saying that such a plan could turn into another unfunded liability for RSA and be used to justify an attack on public employee benefits.