FEATURE STORY: Accelerating In Alabama
By Jack Rogers
From the March/April 2013 issue
Like most of our friends from the Deep South, Gov. Robert Bentley speaks in a laid-back cadence that embraces a new acquaintance with neighborly warmth and welcomes a thoughtful conversation.
Folks who don’t know better might jump to the conclusion that an easy, deliberate pace also applies to the economic development strategy Gov. Bentley is implementing in Alabama. They better think again.
As Gov. Bentley detailed for us in an exclusive interview with Business Facilities, Alabama is moving full speed ahead with a dynamic growth strategy that is rapidly transforming the state into an economic powerhouse. Alabama is driving to the head of the class in jobs-rich sectors including automotive and aerospace.
Soon after Bentley took office in January 2011, he reorganized the state’s economic development structure and summarized its marching orders in one word: Accelerate.
“I believe in organization. When I came into office, Alabama was progressing, but I felt we needed more organizational structure to our economic development,” Gov. Bentley told BF. “So we created something called the Alabama Economic Development Alliance, which [executes] our strategic plan for the state—what we call Accelerate Alabama—concentrating on 11 major industries.”
“If you’re not organized, you’re not going to meet your goals quickly,” he added.
Bentley’s organization is not only meeting its goals, it’s exceeding everyone’s expectations, propelling Alabama into the top tier of the most dynamic state economies in the nation—the states that have unlimited growth potential.
The Accelerate Alabama plan aims to build on the state’s already solid foundation of manufacturing, forestry, chemicals and agriculture by targeting new growth sectors, including bioscience and information technology.
The development that literally put Alabama on the map as a major jobs producer took place two decades ago, when Mercedes-Benz decided in 1993 to locate its North American manufacturing hub in Tuscaloosa. Bentley hails Mercedes’ decision as a game-changer: the German automaker’s arrival opened the door for other industrial giants to come to Alabama. It also established the state as a front-runner in foreign direct investments and jump-started a torrent of exports from Alabama to the world.
“Had Mercedes not come to Alabama in 1993, we probably would not have had all these great international companies. When you talk to Mercedes, they will tell you that their best manufacturing plant in the world is at Tuscaloosa,” Bentley said. “Mercedes is a great cheerleader for Alabama.”
The loudest cheers since Mercedes-Benz arrived in Alabama came last year, when Airbus decided to put its first North American aircraft assembly facility in Mobile. Airbus will use the facility at the Brookley Aeroplex in Mobile to assemble its A319, A320, and A321 aircraft. The project represents a $600-million investment that will create up to 1,000 jobs when the plant reaches full capacity; building the facility will create nearly 3,200 construction-related jobs over a three-year period.
The Airbus plant is expected to anchor a huge expansion in Alabama’s already thriving aerospace sector and may move the center of gravity for this industry in the state from Huntsville—ground zero of NASA’s legendary rocket program (including the Saturn V that carried men to the moon)—down to Mobile.
A supplier network already is queuing up to put down roots in Alabama to service Airbus. A subsidiary of Labinal, Safran Engineering Services, announced in December that it will operate an engineering supporting facility in Mobile, creating up to 50 jobs. Labinal is part of the French aerospace conglomerate, Safran Group. Gov. Bentley met with Labinal officials during a visit to the Farnborough International Air Show in England last year and encouraged the company to locate in Alabama.
Gov. Bentley is moving quickly to make sure that neighboring states eagerly eyeing the aerospace bonanza in Alabama don’t gain an edge in pulling the Airbus supplier network across their borders.
After Mississippi and Florida passed tort reform measures shielding aircraft manufacturers from long-term liability complaints, Bentley quickly put forward the Alabama Commercial Aviation Business Improvement Act, a tort reform tailored to companies like Airbus that make commercial jets seating more than 100 passengers.
“We put $158 million into bringing Airbus into the state, and while the 1,000 [permanent] jobs are very important, it’s the suppliers who will keep bringing jobs to the state,” Bentley explained. “We wanted to do everything we could to make sure there is a level playing field and these suppliers come to Alabama.”
Alabama Becomes An Automotive Superpower
Mercedes-Benz’s long-term commitment to Alabama was followed by a parade of auto giants who have vaulted the state into the top five in U.S. automotive production, with 880,000 vehicles produced in 2012. Hyundai, Honda, and Toyota have major automotive production facilities in Alabama, all of which are in the process of expanding.
“When you see companies like Mercedes adding new lines [the company will produce its fifth new model in Tuscaloosa this year], when you see Hyundai put a third shift in, adding 800 new jobs, and when you see the level of automation at the plants, you know that we’re producing the high-quality vehicles here in Alabama,” Bentley told BF.
Gov. Bentley knows that world-class manufacturers need a highly skilled workforce, and he has made sure that workforce training programs are up to the task in Alabama.
“The Alabama Industrial Development Training [AIDT] program is one of the best workforce training programs for companies. They will come in and put a training facility on-site to train the workers,” said Bentley. “We have a maritime training program that includes a ship-building training site in Mobile and we’re building a training facility on-site for Airbus. We have one at the engine factory in Huntsville and at all the automotive plants.”
Earlier this year, the state signed an agreement with Mercedes-Benz that recognizes Shelton State Community College as one of the best in its field in preparing individuals for careers in manufacturing. Mercedes-Benz U.S. International, Inc. (MBUSI) and AIDT formalized a $1.6-million contract for Shelton to support MBUSI’s technical programs. The initiative will be funded through AIDT’s Workforce Development program.
“We’ve had resounding success with our Automotive Technician and Mechatronics programs over the past year,” said Markus Schaefer, president and CEO of MBUSI. “Today, more than 100 candidates have enrolled in the program, which has been recognized in Alabama, nationally and globally as a model in the arena of workforce development. Shelton State and AIDT have been critical in the success of these efforts.”
Shelton will use the largest portion of the funds ($1.2 million) to buy equipment that will be housed on campus to train students in robotics, electrical and other high-tech skills required in manufacturing. The remainder of the funds will be used to support students with tuition, fees other program expenses.
FDI, Exports Surge In AL
The migration of overseas manufacturers to Alabama goes well beyond Mercedes-Benz and Airbus. About 70 German companies have set up shop in the state, including industrial giant ThyssenKrupp, which is building a new steel plant near Mobile.
Gov. Bentley has headed trade missions to Germany three times in the past two years; Alabama Commerce Secretary Greg Canfield also is a frequent flyer to Europe seeking to draw new business to the state.
Gov. Bentley also has the Far East on his radar. He is actively courting business in Japan, South Korea and China, most recently convincing Golden Dragon Copper Tubing to set up its first U.S. operation in Alabama. Bentley pushed through special legislation to mitigate U.S. tariffs imposed on copper tubing. He also was able to get the Chinese company to put the plant in the part of the state with the highest unemployment.
“That’s up to 500 new jobs for that area. It’s going to improve the situation and we’re very excited about it,” the governor said. [On his official Twitter feed, Gov. Bentley has pledged that he will not accept a salary as governor until Alabama achieves “full employment.”]
Bentley noted that Alabama’s status as a right-to-work state meets a prerequisite of a majority of Asian companies. “European companies don’t say it as much, but there’s no doubt that Asian companies want to go to a right-to-work state,” he said.
Gov. Bentley has made increasing Alabama’s exports a top priority of the state’s long-term economic development plan, and the results have been impressive. Alabama has achieved a record $19.5 billion in exports during his tenure. The governor goes out of his way to throw his spotlight on successful Alabama exporters. He recently presented Governor’s Trade Excellence Awards to eight Alabama companies that have expanded exports this year. Bentley also meets regularly with the consulate from Canada, Alabama’s top export partner.
In addition to meeting trading partners’ concerns about issues like tariffs, the governor says expanding exports still comes down to a basic requirement:
“First, you have to make very good products, and we do that. You have to produce something that people want to buy, not only in the rest of the country but all over the world,” he said.
Regions Bank Unveils $1B Development Fund
It isn’t hard to find a consensus of economic development analysts who will tell you that the banking industry hasn’t played a very constructive role in the recovery, on either the national or state level. Though their balance sheets were stabilized by billions in federal bailout funds and an infusion of capital from the Federal Reserve, the major banks have been tightfisted about spreading that fresh cash around in the form of new job-creating loans.
The standout exception has been Regions Bank in Alabama, which recently agreed to set up a $1-billion Economic Development Loan Pool to support job-creation in the State specifically aimed at small businesses. Gov. Bentley expressed pride that it was a large bank in Alabama that stepped forward and set an example for a nation struggling to recover from the worst economic downturn since the Depression.
“The bank initiated this, and we were very excited by it because one of the [biggest] problems that states are having is the ability to acquire capital,” Bentley told BF. “This will provide capital for many of our small businesses as they try to get up and going. It already is spurring activity in Birmingham. For them to put a billion dollars here is very important, because capital is such a vital part of our ability to create jobs, especially on the small-business level.”
“I hope this will encourage a number of the other large banks to do the same thing,” the governor added.
Alabama has had to deal with more than its share of disasters during Bentley’s first term as governor—both natural and man-made.
On his 100th day in office, a monster tornado tore through Tuscaloosa, the worst natural disaster ever to hit the state. The twister caused 254 fatalities in Alabama and left miles of devastation in its wake (the Mercedes-Benz plant and the stadium that is home to the National Champion Crimson Tide college football team were spared).
“This was something that no one can prepare for, but the way you respond is very important,” Bentley said. “Things went well in Alabama not only with the initial response, but because we allowed the local leadership to do their job and we had a very good cooperative effort with FEMA and HUD. They did everything we asked them to do, and I’m thankful for it.”
Gov. Bentley created a Tornado Response Action Council to prepare for future disasters. He asked the council to produce “common-sense” recommendations, many of which already have been implemented. The governor initiated a special sales tax holiday covering household goods needed to cope with storm damage.
Bentley also has had to deal with the nation’s worst maritime oil spill, the massive BP drilling disaster in the Gulf of Mexico, which soiled Alabama’s coastal white-sand beaches. Alabama is among several Gulf Coast states that are still in the process of recovering damages from the British oil giant.
“We’ll see if we’re able to settle,” Bentley said. “We have the first beautiful white beaches you come to, so we think it damaged us more than anyone else.”