By Greg Canfield, Secretary, Alabama Department of Commerce
Alabama is coming off a year for the record books, with pivotal developments setting the stage for long-term economic growth and fueling meaningful job-creation across the state.
Consider these facts:
- Alabama’s auto industry has been hitting impressive new milestones as key players – Mercedes-Benz, Honda, Hyundai and Toyota – increase output, jobs and investment in the state.
- Airbus is producing A320 Family passenger jets at its new $600 million factory in Mobile, adding heft to Alabama’s status in aerospace.
- Technology giant Google is building an ultra-modern data center in Alabama after a worldwide search to identify the ideal site for the facility.
- Alabama registered a record level of new capital investment in 2015, with game-changing projects from companies such as Mercedes, GE Aviation and Polaris.
I believe these developments, and others, fit squarely into five significant trends that are powering broad changes in Alabama’s prime industry sectors and accelerating an evolution of the state’s economy towards technology-focused and knowledge-based jobs.
Here’s how these trends are unfolding.
Trend No. 1: Rising Investment
Under the direction of Governor Robert Bentley, Alabama’s economic development team delivered blockbuster results in 2015, with the momentum continuing into this year.
Ernst & Young, the multinational professional services firm, ranked Alabama No. 5 among the states for mobile capital investment in 2015, with a total of $5.3 billion. The firm’s “2016 U.S. Investment Monitor” ranked Alabama even higher — No. 4 — when the figure is considered as a percentage of state GDP.
That’s significant for Alabama, because Ernst & Young says its report is a “leading indicator showing where new investment spending and jobs can be expected to occur over the next several years.”
A large chunk of the new capital flowing into Alabama is coming from foreign companies. Last year, in fact, nearly half of the new capital investment originated from foreign companies.
Germany was the No. 1 source of foreign direct investment (FDI) last year, led by Mercedes’ $1.3 billion expansion at its assembly plant near Tuscaloosa. That expansion ranked among the nation’s Top 20 FDI projects in 2015, according to the “IBM Global Location Trends’’ 2016 report.
IBM’s report says Alabama and neighboring states have seen growth in FDI tied to manufacturing, citing competitive operating costs, solid logistics infrastructures, and a prime location in North America.
Trend No. 2: Automotive Powerhouse
The high-tech Alabama plants operated by Mercedes, Honda and Hyundai combined produced one million vehicles in 2015 and was the first time that milestone was reached. Toyota’s Alabama engine plant also hit a milestone: four million engines manufactured.
These are great achievements – and a reminder Alabama has become a force in the industry.
Alabama is adding even more horsepower. It’s now the fifth largest auto producing state, and employment in the sector approaches 40,000. New auto-related investment during the past five years exceeds $8 billion.
In 2015 alone, Alabama’s economic development team worked on around 100 automotive projects with more than 6,400 new and future jobs. Many of those projects involved companies in the regional auto supply chain.
Trend No. 3: Aerospace Growth
Airbus’ manufacturing operation in Alabama is still in its infancy, but the facility is already exerting a magnetic pull.
UTC Aerospace Systems is launching a $30 million expansion at its plant in Foley to assemble engine nacelle components and handle propulsion system integration for the nearby Airbus plant.
Here’s what Marc Duvall, president of UTC’s Aerostructures business, said about the project: “We chose Foley to expand because of its proven track record of performance, our desire to be near a key customer, and the tremendous cooperation we’ve had from the state, county and the city.”
In addition, Mobile Aeroplex, the home of Airbus’ facility, has seen the arrival of several aerospace suppliers and service companies, with expectations for more.
Trend No. 4: Innovation Ecosystem
Alabama’s innovation economy – particularly in bioscience – is growing in stature.
A 2016 report from Tec Partners LLC and the Biotechnology Innovation Organization, or BIO, underscored that Alabama bioscience industry is poised to add new knowledge-based jobs.
- Alabama’s bioscience employment totals 14,000 at 800 companies.
- Alabama ranks among the Top 10 states for the concentration of academic bioscience R&D expenditures.
- Alabama ranked in the Top 10 in the growth of National Institutes of Health funding in 2015, with $280 million, an increase of 11 percent.
As Alabama’s lead economic development agency, Commerce is intensifying its efforts to expand the bioscience industry and attract more brainpower jobs overall. Accelerate Alabama 2.0, an update of the state’s official economic growth plan, will include a robust strategy for accomplishing those goals.
Trend No. 5: Workforce Improvements
Though Alabama is known for its effective workforce programs, led by AIDT, the pioneering job-training agency, state leaders believed there was room for improvement. A major change concentrated many of the state’s primary workforce programs in a new division at the Commerce Department.
A key initiative being developed is Apprenticeship Alabama, which will provide a tax incentive to create intensive training programs. The Apprenticeship Tax Credit will stimulate job creation by encouraging companies statewide to invest in their own programs.
Without question, Alabama’s future economic success rests on equipping workers with the advanced skills required today and in the future. This new tool will play a critical role in achieving that goal.
Alabama’s commitment to expanding the skills of its workers is an important development that will enhance the state’s competiveness. When combined with the other trends outlined here, the state is poised for a transformation — Made in Alabama.
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