By the Business Facilities Staff
From the January/February 2015 issue
BF: What were the key factors that convinced Polaris Industries to put its new $127-million manufacturing facility in Huntsville?
GC: Huntsville was an ideal fit for Polaris on several levels. Polaris has a strong culture of engineering and manufacturing excellence. Huntsville is a center for technology and innovation—it’s where the Saturn V rocket and the Lunar Rover were developed. Huntsville can deliver a skilled workforce for advanced manufacturing, and it offers a strong logistics network for transporting products. Those factors were important to Polaris. The bottom line is that Huntsville was attractive to Polaris for many of the same reasons the city appealed to Remington. Alabama offers a business-friendly environment, a top-rated workforce training program in AIDT and a support system of local and state officials that helps companies find success.
BF: Alabama is in the process of overhauling its economic development incentives. What can we expect to see in the new Accelerate Alabama Jobs Incentives Package?
GC: The Accelerate Alabama Jobs Incentive Package is a way to update our incentives platform and enhance Alabama’s competitive position. What we were hearing from some prospects was that our capital credit incentive was neither effective nor attractive. In addition, we wanted a new and more sustainable approach that incentivized job creation and lessened our dependence on borrowing. The package consists of six bills that are still being formulated. We have sought input from key Alabama lawmakers and continue to work with them to hammer out a final package. As it stands now, the centerpiece bill would provide structured credits for job creation and investment. There are also bills that aim to stimulate investment in rural counties, encourage companies to hire Alabama military veterans, spur small business growth, and position Alabama as a center for research and development.
BF: Why would cash rebates of 3 percent of a company’s gross payroll be a more effective incentive than traditional tax credits? How does this “pay-as-you-go” approach work?
GC: The Accelerate Alabama Jobs Act, the centerpiece of the package, would provide qualified companies an annual cash rebate of up to 3 percent of the previous year’s gross payroll for the creation of direct jobs. The amounts would be paid as a refund of taxes for utility services. The rebate period would end after 10 years. We call this a “pay-as-you-go” incentive because new revenues are flowing into the state from construction activity, sales and property taxes, withholding, and so on, before the incentive is paid out. This approach will allow us to reduce our reliance on debt to fund packages. That makes it a more sustainable model for us.
BF: Alabama pioneered on-site workforce training with AIDT’s program at the Mercedes-Benz plant in Tuscaloosa. Is the state considering augmenting or expanding its workforce training program?
GC: Workforce development remains a strength for Alabama’s economic development efforts, but we are looking to make improvements. AIDT continues to expand its workforce development services and add new centers. Last year, it opened a training facility at Mobile Aeroplex that will prepare Alabamians for careers at Airbus’ nearby A320 family assembly line. AIDT also recently opened training centers in Birmingham and Montgomery, complementing an existing network of locations that equip workers for jobs in auto factories, shipyards and other workplaces.
In addition, Gov. Bentley formed the Alabama Workforce Council in 2014 to conduct a top-to-bottom analysis and make recommendations on how we can better utilize our resources to ensure Alabamians have the education and skills they need for the jobs of tomorrow. This effort, which brought together Alabama’s business and education communities, will help to create the pipeline of workers the state needs to fully realize its economic potential.
BF: Last year, you led a trade mission to Peru, which resulted in a Memorandum of Understanding between Peru and Alabama that was recently signed by Gov. Bentley. Which industries in Alabama will benefit most by increased trade with Peru?
GC: Peru has one of the fastest growing economies in South America, and we think it holds promise for Alabama companies. Peru has been a solid market for Alabama-made motor vehicles, which account for nearly half of the state’s exports to the South American country. During 2014, Alabama exports of primary metals, chemicals and machinery to Peru surged.
With the memorandum signed by Gov. Bentley setting the stage for increased trade with Peru, we believe Alabama’s key exporters will benefit. These include the makers of transportation, agricultural and construction equipment; fertilizers; agro-chemicals; plastics; and medical devices. Alabama producers of agricultural products such as poultry and livestock should also see gains.
BF: Has Airbus’ new assembly facility in Mobile resulted in aerospace suppliers planning new facilities or expansions in the region?
GC: Alabama’s economic development team continues to take steps to advance Alabama as an ideal location for Airbus suppliers. This is a long-term strategy. The $600-million Airbus facility is still under construction at Mobile Aeroplex, and the first customer delivery is scheduled to take place next year. As Airbus ramps up production in Alabama to meet a large backlog of orders, we expect to see increasing levels of supplier activity. We think that activity will result in projects that end up in Alabama.
BF: Alabama’s film industry is rapidly expanding. Will the overall economic impact of motion picture production in Alabama top $1 billion in 2015?
GC: It might take us a while for Alabama’s film industry to get to $1 billion in economic impact, but it is definitely growing. Key segments of “Selma” were shot in Alabama, and three major action movies were filmed in Mobile in 2014. The industry has come a long way since 2009, when Alabama Legislators first approved incentives for productions in the state. Since then, AIDT has set up a program called Empact Alabama that trains production workers, and we have tweaked our incentives to make sure more of the money remains in the state.
Between 2000 and 2010, only 14 productions filmed in Alabama. Since 2011, $129 million has been spent in Alabama on projects. In 2013 alone, we had 75 projects film in the state, generating $56 million in spending and creating an estimated 4,000 jobs. That was a sharp increase over previous years, and we think the trend is going to continue. Alabama is ready for its close-up.