Alabama Adopts Incentives That Will Add Wealth To Its Communities

Last year, in what is billed by Alabama's economic development officials as benchmark legislation, the state's Legislature approved and Gov. Bob Riley signed Act 2009-722, which expands existing incentive programming offered to new and expanding businesses. The revamped economic development incentives, which traditionally have focused on manufacturing operations, now include corporate headquarters, R&D facilities, financial services and green employers.

As the state's economic development officials look to market Alabama as a place to do business, they are adapting to the changes in the economy. The Alabama Development Office (ADO), while still working to recruit manufacturing industries to the state, has a “renewed focus on growth from within the state, where 80 percent of new job creation occurs,” points out Neal Wade, director, ADO, in “Marketing Alabama in the 21st Century,” which appears in the 2010 Alabama Economic Development Guide.

The new incentives tie into the ADO's shift: “Our focus now should be on growth from within and knowledge-based growth, bringing the types of jobs that add wealth to the communities rather than just create jobs.”

Industries And Innovation

In addition to Alabama's thriving aerospace and automotive clusters, which consist of several international companies, Alabama's biotech industry is emerging as a major cluster in the state with 90 biotech companies.

The cluster is centered in Birmingham, which is home to the Southern Research Institute and its 600 employees. The institute has developed six FDA-approved drugs and has four drugs going through clinical trials.

Huntsville is home to the HudsonAlpha Institute, a $130 million biotech campus.

In terms of sources of research funding, in 2007, the National Institutes of Health awarded Alabama's seven research universities $234 million; 70 percent of which was dedicated to life sciences research.

Moving to Alabama's aerospace industry and related activities, in 2008, the U.S. Department of Defense awarded $8.5 billion in prime contracts to Alabama companies. Alabama's aerospace cluster features 330 companies, 200 are located in the Huntsville region. Huntsville is home to the Redstone Arsenal and the Cummings Research Park and its 285 companies.

The Redstone Arsenal features 70 federal agencies, including the Marshall Space f

Flight Center, the Army's Aviation and Missile Command, and the Army's Space and Missile Defense Command. Auburn University will open a research center in Huntsville in July in order to partner with federal agencies and industry on homeland security activities, as well as space exploration.

In May, the Madison County Commission approved a special tax district for the proposed Redstone Gateway office park, which is expected to be a $1 billion development. What's more, the Huntsville City Council has approved a TIF district to support developments at the proposed business park.

Auburn University's intent is to match scientists in defense, aerospace, advanced manufacturing, life sciences, biotechnology and information technology with government agencies.

Another higher education announcement comes from Huntsville's University of Alabama campus in regard to a new research and engineering center. The state of Alabama will invest $8 million in the Center for System Studies, which will conduct research into complex engineering systems such as smart power grids, space launch vehicles, aviation systems and missile defense.

In regard to the Alabama aerospace cluster, Mobile has emerged as a region of strength and home to operations for the Airbus North American Engineering Center, among other companies.

International players also are found in Alabama's auto cluster, which is home to assembly plants for Mercedes-Benz, Honda and Hyundai as well as an engine plant for Toyota. Since 2000, more than $7 billion has been invested in Alabama by automakers. The state's track record in the auto industry continues to attract cutting-edge firms. In Baldwin County Hybrid Kinetic (HK) Motors intends to locate to a 3,000-acre site near Bay Minette.

HK Motors is currently raising funds to support its estimated $3.4 billion facility, which aims to produce 300,000 vehicles annually by 2013.

International auto suppliers continue to invest in Alabama as well. In the spring, Plasman Corp., part of A.P. Plasman Corp. of Windsor, Ontario, announced it will open its first U.S. manufacturing facility in Fort Payne. The company, which supplies Nissan, Toyota, Honda and General Motors, plans to conduct plastic-injection molding, painting and assembly of exterior parts and tool repair.

Also in the spring, Pyongsan America, Inc. announced it would expand its operations in Auburn's Technology Park North, as well as leased a second facility. The company is a supplier of air conditioning and heater core pipe assemblies for autos. Officials say they will invest $5 million in the expansion, creating 100 new jobs in the next two years.

In regard to the one of the largest manufacturing projects in the state, ThyssenKrupp AG's $5 billion steel complex in Calvert, located near the Mobile-Washington county lines, will begin processing steel in the fall. Initially, the raw product will be made in Europe. Company officials have stated the stainless steel unit could start production in the Calvert melt shop by 2013.

The ThyssenKrupp complex will also process carbon steel.

In May, ThyssenKrupp announced it had completed its water treatment facilities, which can handled 14.4 million gallons of water per day in processing, as well as treating 5.8 million gallons of wastewater.

Talent And Education

Alabama's higher education system and workforce training efforts are actively preparing a world-class research base and workforce. One example is the University of Alabama at Birmingham, which in 2009 had a record year for grants and other awards bringing in an extra $50 million to hit the $485 million mark, thanks in part to federal stimulus dollars from the American Recovery and Reinvestment Act. The university expects to receive more than $81 million from the stimulus funds to support research, infrastructure and other activities.

In regard to workforce training efforts, the Alabama Industrial Development Training (AIDT) program is the first state-level training program in the world to be certified in compliance with ISO 9001:2000.

The AIDT is charged with providing job specific industrial training, assisting companies with activities ranging from recruiting, screening and training for new hires. The AIDT works closely with the ADO to recruit companies. Because it deals with workforce development, the organization also has relationships with the state's two-year colleges, the K-12 system, and even universities. “In some cases they seek our assistance and knowledge in what is going on at the plant level so they can develop programs so people are prepared for these jobs,” says Ed Castile, director, AIDT.

Castile says the state has been forward looking when it comes to remaining at the top level of industry recruitment, identifying skills that are lacking in its industry clusters and doing things that are radically different.

One new initiative is centered on industrial maintenance technology and robotics technology. A new robotics technology park is under development near Huntsville. It will feature three facilities, including an R&D component. “This initiative is a direct answer to a company specific request in this region,” Castile notes.

Another initiative is directed toward the maritime industry in the Gulf of Mexico region. A maritime training facility is going up near the water, east of Mobile on a causeway in order to train people for entry level, intermediate and upper level shipbuilding activities. The facility is expected to open in August.

“In a third effort, not something we are doing necessarily, but it is similar, involves aerospace and aircraft maintenance technology,” Castile says. “We have a new facility at the Alabama Aviation College.”

Castile says these three facilities will offer ongoing assistance. “Our main objective is to create a workforce they can be successful with.”

Assets

Taxes in Alabama are some of the lowest in the United States. Its tax incentive programs for new and expanding industry, research and development, financial institutions, and alternative energy projects, offer sales and property tax abatements, as well as capital income tax credits.

When it comes to lending opportunities, Birmingham is home to Alacom Finance, one of the Southeast's lending providers of economic development money through the SBA 504 Loan Program, with approvals exceeding $163 million. Bank financing has generated an additional $400 million in funding for small business growth. In fact, Diane Roehrig, president of Alacom Finance, has influenced much of the federal legislation affecting small business lending enacted since 1984.

In addition to financial resources, Alabama is enhancing its physical infrastructure assets to keep up with the demands of the global marketplace. The Port of Mobile, located 32 miles from open waters in the Gulf of Mexico, is in a constant state of development. It is managed by the Alabama State Port Authority, which recently signed a memorandum of understanding with the Panama Canal Authority to joint market the “All-Water Route” from Asia to the U.S. East and Gulf coasts via the Panama Canal. The canal's expansion will double its capacity and allow more traffic and the passage of longer and wider ships. In order to capture the increase in traffic, the Alabama State Port Authority has completed a $300 million container terminal in partnership with APM Terminals North America. Work has also begun on a new turning basin in the lower harbor that will allow vessels in excess of 900 feet in length to access deeper draft terminals. Construction has also begun on an intermodal rail facility to capitalize on the port's five Class I railroads.

In a recent effort, the port authority has voted to move forward with a project to increase rail access to the McDuffie Coal Terminal at the Port of Mobile. The improvements could increase rail capacity by 50 percent. A recent expansion bumped up the coal terminal's total capacity to 30 million tons; it handled only 18.5 million tons in fiscal year 2008.

Lifestyle

The cost of housing in Alabama is low, with average sale prices for homes some 28 percent less than the national average. During the first quarter of 2009, the median sales price for a home in Alabama was $120,571, while the U.S. average was $169,400.
Alabama has one of the lowest property taxes in the United States.

Written and compiled by Rachel Duran.

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