Flotte's Notes on Alabama Economics

Alabama

Flotte’s Notes on

Alabama’s

Economy

· The 2003 total gross state product was $132 billion. The GSP per capita in 2005 was $33,000.

o The per capita income for the state was $26,505 in 2003, which ranked 44th in the United States. Alabama had a total personal income (TPI) of $109,387,677,000 which ranked 24th in the United States and accounted for 1.3% of the national total. The 2001 TPI reflected an increase of 3.7% from 2000 compared to the national change of 3.3%.

o In 2000, the median household income was $33,105 compared to the national average of $42,148.

o At $52,700, median family income in the Birmingham MSA ranked third in Alabama for FY2002, while Mobile’s $45,100 ranked eighth among the state’s 11 metro areas.

o For the period 1999 to 2001, the average poverty rate was 15% which placed it 44th. In 1969, 25.4% of Alabamians lived below federal poverty levels.

o Although Alabama's prosperity has increased in recent decades, the state still lags in wage rates and per capita income.

· Cotton dominated Alabama's economy from the mid-19th century to the 1870s, when large-scale industrialization began. The coal, iron, and steel industries were the first to develop, followed by other resource industries such as textiles, clothing, paper, and wood products.

· In the second half of the 20^th century Alabama saw declining investment in resource industries and manufacturing owned by large corporations outside the state.

o Between 1974 and 1983, manufacturing grew at little more than half the rate of all state goods and services. Industries such as primary metals, once the backbone of Alabama's economy, were clearly losing importance.

o The 1980–82 recession hit the state economy harder than the nation as a whole: 39,000 jobs were lost in manufacturing, and real output in manufacturing fell by 10%.

o Manufacturing job losses were most severe in non-metropolitan counties, and in the textile and apparel industries which is concentrated in Florence and counties to the south.

o The Fairfield steel works, about 10 miles west of Birmingham, employed more than 45,000 at its peak production during World War II. But the steelmaking complex, founded in 1886 by the Tennessee Coal, Iron and Railroad Co. and acquired by U.S. Steel in 1909, went through a painful decline in the latter half of the 20th century.

· Recovery began in mid-1980s, and in the economic expansion during the 1990s. Alabama job growth averaged close to 2% a year.

· Between 1999 and 2003, the state lost more than 48,000 jobs due to plant closures and layoffs.

o Firms that had been part of a central part of the state's economy, such as apparel makers Russell Athletic and Vanity Fair, led the way in shifting production overseas. In 1998 and 1999, for example, Russell closed no fewer than seven Alabama plants. In 1999, Goodyear Tire and Rubber Company also closed their landmark facility in Gadsden, throwing more than 1,300 employees out of work.

o The loss of manufacturing jobs hit Alabama hard because the state remained more dependent on manufacturing than many others; in 2000, 19.3 percent of Alabama's jobs were in manufacturing, compared to 14.2 percent for the nation as a whole. Between 2000 and 2002, Alabama lost 12.5 percent of its manufacturing jobs, while the nation in general saw 9.5 percent of these positions disappear.

· The transportation industry continues to grow, with a Hyundai plant in Montgomery and a Mercedes Benz facility in Vance.

· Alabama’s exports expanded from $3.9 billion in 1993 to $10.79 billion in 2005, a 276% increase.

o The top exports were vehicles (representing 25% of all Alabama exports), industrial machinery (8%), chemical (7.4%), optical and medical instruments (7.1%) and mineral fuels (5.7%).

o Canada was Alabama’s leading trading partner in 2005, with exports totaling $2.2 billion, followed by Germany ($1.6 billion), Mexico ($912 million), Japan ($680 million) and China ($466 million).

· The largest industries in 2001 were services, 25% of earnings; state and local government, 14%; and durable goods manufacturing, 10%.

· Birmingham is the financial capital of Alabama, while Mobile lags the state average in finance, insurance, and real estate (FIRE) jobs.

· Birmingham is home to Alabama’s four largest banks in terms of assets, while Mobile’s largest bank ranked 31st on assets at year-end 2000. Mobile is thus an important market for Birmingham financial institutions.

· Primary iron and steel, fabricated metal products, printing and publishing, and stone and clay products, these are dominant industries in the Birmingham MSA.

· The heaviest concentration of large firms in the Mobile area is in chemicals and fiber manufacturing, while Birmingham has no large manufacturers in this sector. Mobile is also more heavily weighted in lumber and wood products industries and in transportation equipment, where an emphasis on shipbuilding goes along with its coastal location.

· The top three counties in Alabama in terms of estimated total visitors in 2000 were Baldwin with over 3.5 million, Jefferson with over 2.7 million, and Mobile with just under 2.5 million. Travel-related industries directly employed about 30,800 in the Mobile MSA in 2000 and 20,000 in the Birmingham metro area. Travel-related total earnings (both direct and indirect) amounted to almost $837 million in Mobile and over $544 million in Birmingham in 2000.

· Alabama has 22 million acres of forest land, of which 18 million acres are private (2004).

Agriculture

· There was considerable diversity in Alabama's earliest agriculture. By the mid-19th century, however, cotton had taken over, and production of other crops dropped so much that corn and other staples were often imported. In 1860, cotton was grown in every county, and one-crop agriculture had already worn out much of Alabama's farmland.

· Diversification began early in the 20th century, a trend accelerated by the destructive effects of the boll weevil on cotton growing. In 2002, only 590,000 acres were planted in cotton, compared to 3,500,000 acres in 1930. Although known as "The Cotton State", Alabama ranks between eight and ten in national cotton production, according to various reports, with Texas, Georgia and Mississippi comprising the top three

· As of 2002 there were some 47,000 farms in Alabama, occupying approximately 8.9 million acres, or roughly 30% of the state's land area.

· Soybeans and livestock are raised in the Black Belt; peanuts in the southeast; vegetables, livestock, and timber in the southwest; and cotton and soybeans in the Tennessee River Valley.

· Alabama ranked 23rd among the 50 states in farm marketing in 2001, with $3.5 billion, of which only $705 million came from crops.

Forestry

· Forestry is Alabama's No. 1 industry and timber is the dominant crop harvested in 34 of Alabama's 67 counties. In 2002, forestry and related industries employed 170,000 Alabamians, generating annual compensations of $4.2 billion. Ten percent of Alabama's total work force is directly or indirectly employed by the forest industry, which generates approximately $13 billion for Alabama each year.

o Hunting and fishing generate $60 million annually in taxes, license fees, hunting rights and sales of equipment and supplies.

· Families and individuals -- not the government or timber companies -- own 78 percent of Alabama's forests.

· Forestland in Alabama is predominantly pine, covering 22,987,000 acres, 3% of the nation's total. Nearly all of that was classified as commercial timberland, and 21,696,000 of it privately owned. Four national forests covered a gross acreage of 1,288,000 acres.

· Production of softwood and hardwood lumber totaled 2.55 billion board feet in 2002 (sixth in the US).

· Pine production is at an all-time high, having more than doubled in Alabama in the past 20 years. Productivity also leaped, and today the industry needs fewer workers to get the job done. The number of Alabama timber workers declined about 14 percent from 1980 to 2000.

· Tax rates on timberland in Mississippi and Georgia are 2 to 3 times higher than those in Alabama. Alabama timber producers provide about 2 percent of the statewide property tax.

· Most of International Paper's timberland in the South including 116,422 acres in Alabama's Black Belt is leased out for hunting.

· Timber operations which are now largely self-regulated through an agreement between ADEM and the Alabama Forestry Commission. Loggers are expected to voluntarily comply with what's known as best management practices, procedures designed to protect the environment, shielding streambeds from erosion, for example.

· Alabama has a program in place, called TREASURE Forest, to recognize and certify sustainable forestry management on private lands. This program has already certified over 1.57 million acres.

· The timer industry is represented by the Alabama Forestry Association.

Animal Husbandry

· The principal livestock-raising regions of Alabama are the far north, the southwest, and the Black Belt, where the lime soil provides excellent pasturage.

· In 2001 Alabama produced an estimated 493 million lb of cattle and calves, valued at $362 million, and an estimated 65 million lb of hogs, valued at $28 million

· Alabama is a leading producer of chickens, broilers, and eggs. In broiler production, the state was surpassed only by Georgia and Arkansas in 2001

Fishing

· Alabama's commercial fish catch was worth $46,985,000, in 1998.

· The principal fishing port is Bayou La Batre, which brought in worth $36,400,000, 11th-highest by value in the nation.

· Catfish farming is of growing importance. As of January 1999, there were 246 catfish farms (down from 370 in 1990). Fish farms distributed 1.7 million bass and 159,000 catfish to Alabama waters in 1998.

Mining

· In 2001, Alabama's nonfuel mineral industry mined and processed an estimated $938 million of mineral commodities (about 2.5% of the US total)

· In 2001 Alabama produced 4 million metric tons of portland cement valued at $344 million, 2 billion metric tons of clay worth $28 million, 58 million metric tons of construction sand and gravel valued at $58 million, and 50 million metric tons of crushed stone worth $318 million. Portland cement, crushed stone, lime, and construction sand and gravel accounted for 94% of the total nonfuel mineral value in 2001.

· The state ranked 16th nationally in total mineral production, and remained 2nd in kaolin, 3rd in lime, common clays, and bentonite, and 4th in iron oxide pigments. Alabama was also among the top five masonry-producing states.

Industry

· Alabama's industrial boom, which began in the 1870s with the exploitation of the coal and iron fields in the north, quickly transformed Birmingham into the leading industrial city in the South, producing pig iron more cheaply than its American and English competitors.

· An important stimulus to manufacturing in the north was the development of ports and power plants along the Tennessee River.

· Although Birmingham remains highly dependent on steel, the state's industry has diversified considerably since World War II (1939–45).

· By the late 1970s, the older smokestack industries were clearly in decline, but Birmingham received a boost in 1984 when US Steel announced it would spend $1.3 billion to make its Fairfield plant the newest fully integrated steel mill in the nation.

· In 1997, Mercedes Benz began manufacturing its sport utility vehicle at a new facility in Vance.

· As of 1999, the principal employers among industry groups were food and kindred products, textile mill products, apparel and other textile products, primary metal industries, industrial machinery and equipment, electronic equipment, and transportation equipment.

· Electrical machinery, computer equipment, and transportation equipment in Alabama are typically exported to Canada, Mexico, and Germany. The value of manufacturing shipments in 1997 equaled $69.7 billion, with a 31.9% growth from 1992.

· Alabama was found directly in the middle of states ranked by growth in manufacturing. Mineral industries grew at a much slower rate (5.9%), on par with the US as a whole. Construction, on the other hand, grew at a rate of 65.4% from 1992 to 1997, to $12.6 billion of business done during 1997.

· The largest industries in 1998 were services, 23% of earnings; state and local government, 12%; and durable goods manufacturing, 12%.

Transportation

Railroads

· The first rail line in the state—the Tuscumbia Railroad, chartered in 1830—made its first run, 44 mi around the Muscle Shoals from Tuscumbia to Decatur, in 1834.

· By 1852, however, Alabama had only 165 mi of track, less than most other southern states. Further development awaited the end of the Civil War.

· Birmingham, as planned by John T. Milner, chief engineer of the South and North Railroad, was founded in 1871 as a railroad intersection in the midst of Alabama's booming mining country; it subsequently became the state's main rail center, followed by Mobile.

· As of the end of 2000, Alabama had 3,687 total rail mi of track. There were five class I railroads operating in the state, accounting for 3,149 rail mi.

· Coal is the major commodity sent by rail—29% of all rail tonnage originating from and 49% of all rail tonnage terminating within the state was coal in 1998.

· An Amtrak passenger rail connected Birmingham, Anniston, and Tuscaloosa with Washington and New Orleans. Other passenger service included a route connecting Montgomery and Mobile with Birmingham and New Orleans.

Roads

· In settlement days the principal roads into Alabama were the Federal Road, formerly a Creek horse path, from Georgia and South Carolina; and the Natchez Trace, bought by the federal government (1801) from the Choctaw and Chickasaw, leading from Kentucky and Tennessee.

· Throughout most of the 19th century, road building was in the hands of private companies. Only after the establishment of a state highway department in 1911 and the securing of federal aid for rural road building in 1916 did Alabama begin to develop modern road systems.

· As of 2000 there were 94,311 mi of public streets, roads, and highways. In the same year, the state had 1,961,806 registered automobiles, 1,989,567 trucks, and 8,766 buses. There were 3,521,444 licensed drivers in 2000.

· Most of the major interstate highways in Alabama intersect at Birmingham: I-65, running from the north to Montgomery and Mobile; and I-59 from the northeast and I-20 from the east, which, after merging at Birmingham, run southwestward to Tuscaloosa and into Mississippi. Route I-85 connects Montgomery with Atlanta; and I-10 connects Mobile with New Orleans and Tallahassee, Florida.

Waterways

· The coming of the steamboat to Alabama waters, beginning in 1818, stimulated settlement in the Black Belt; however, the high price of shipping cotton by water contributed to the eventual displacement of the steamboat by the railroad.

· Thanks to the Tennessee Valley Authority, the Tennessee River has been transformed since the 1930s into a year-round navigable waterway, with three locks and dams in Alabama.

· The 234-mi, $2-billion Tennessee-Tombigbee (Tenn-Tom) Waterway, which opened in 1985, provided a new barge route, partly through Alabama, from the Midwest to the Gulf of Mexico, for which the US Army Corps of Engineers cut a 39-mi canal and built 10 locks and dams.

o The artificial waterway provides a connecting link between the Tennessee and Tombigbee rivers. The waterway begins at Pickwick Lake on the Tennessee River, then flows southward through northeast Mississippi and west Alabama, finally connecting with the established Warrior-Tombigbee navigation system at Demopolis, Alabama.

o The divide cut is a 29 mile artificial canal that makes the connection to the Tennessee River. It connects Pickwick Lake on the Tennessee to Bay Springs Lake at Mississippi Highway 30.

o This was not only the largest civilian engineering project in the US during the early 1980s but also by far the largest earth-moving project in US history, displacing more earth than was moved to build the Panama Canal.

o After 12 years of construction, the waterway and its seventeen public ports and terminals opened to commercial traffic in January 1985.

o In addition to the original 110,000 acres of land acquired for the construction and operation of the project, another 88,000 acres have been purchased and managed by the two state conservation agencies for wildlife habitat preservation and mixed use including hunting and parks.

· The Alabama-Coosa and Black Warrior-Tombigbee systems also have been made navigable by locks and dams: river barges carry bulk cargoes.

· There are 1,270 mi of navigable inland water and 50 mi of Gulf coast.

· The only deepwater port is Mobile, with a large ocean-going trade; total tonnage in 2000 was 54.2 million tons. The Alabama State Docks also operates a system of 10 inland docks; and there are several privately run inland docks.

Airports

· In 2000, Alabama had 102 public-use airports, of which six were for commercial service with 2,500 or more passengers enplaned. Mobile, on the Gulf of Mexico, is Alabama's only international port. The largest and busiest facility is Birmingham International Airport.

Energy

· Half of energy capacity and production come from private sources (the Alabama Power Company and Alabama Electric Cooperative), with most of the remainder attributable to the Tennessee Valley Authority, which also owned three of the state's five nuclear reactors, three at Brown's Ferry and two at the Joseph M. Farley plant.

· Significant petroleum finds in southern Alabama date from the early 1950s. The 2002 output was 24,000 barrels per day; proved reserves as of 2001 totaled 42 million barrels.

· During 2002, marketed gas production was 356 billion cu ft of natural gas; proved reserves in 2001 totaled 3,915 billion cu ft.

· Coal production, which began in the 19th century, was 19,324,000 tons in 2000, of which all was bituminous and about 75% was surface mined. Coal reserves in 2001 totaled 352 million tons.

· In 2000 Alabama's total per capita energy consumption was 443 million Btu, ranking it ninth among the states.

Corporations

· A total of 37 NASDAQ companies are headquartered in Alabama, and six companies incorporated in Alabama are listed on the NYSE; including Medical Assurance, Inc., Alabama Power Co., Minolta-QMS, Inc., Russell Corp., Energen Corp., and Colonial Properties Trust.

McWane Inc.

· McWane Inc. is a major manufacturer of cast-iron pipes employing 5,000 workers and headquartered in Birmingham. It is a private conglomerate owned by one of Alabama's wealthiest families. Their operating revenues are estimated to be worth between US$1.5 and $2 billion a year.

· J.R. McWane founded the Birmingham company that bears his family name in 1921. Today, McWane Inc., a major manufacturer of water and sewer pipes, regularly makes Fortune magazine's list of the 500 largest privately owned companies in the U.S. Its iron foundries stretch across 10 U.S. states and Canada, and the firm has estimated annual revenues approaching $2 billion.

· McWane was one of the nation's most persistent violators of workplace safety and environmental laws, was the target of a federal criminal investigation. The company was the subject of articles by The New York Times and a documentary on the PBS television program "Frontline." They described how McWane had recorded more than 4,600 injuries since 1995 while also illegally polluting the air and water in several states where it owns foundries.

· The American Cast Iron Pipe Company, known as ACIPCO, which has been in Birmingham even longer than McWane. John Eagan, who started his company in 1905, willed it to his workers when he died in 1924. The president of the company quit -- his name was J.R. McWane. He crossed town to start his own pipe company

Commerce

· The leading types of retail businesses by number of establishments were eating and drinking places (5,900), food stores (3,200), and miscellaneous retail (4,500).

· Alcoholic beverages, except for beer, are sold in ABC (Alcoholic Beverage Control) stores, run by the state.

· Prohibition is by local option; 26 of the 67 counties were dry in 1994, but some dry counties had wet cities.

· Exporters located in Alabama exported $6.4 billion in merchandise during 1998

Banking

· As of 2002, Alabama's 121 insured banks had assets of $19.57 billion.

Insurance

Legal System

Judicial System

· The Supreme Court of Alabama consists of a chief justice and eight associate justices, all elected for staggered six-year terms.

o It issues opinions on constitutional issues, and hears cases appealed from the lower courts.

· The court of civil appeals has exclusive appellate jurisdiction in all suits involving sums up to $10,000; its three judges are elected for six-year terms, and the one who has served the longest is the presiding judge.

· The five judges of the court of criminal appeals are also elected for six-year terms; they choose the presiding judge by majority vote.

· Circuit courts, which encompassed 131 judgeships in 1999, have exclusive original jurisdiction over civil actions involving sums of more than $5,000, and over criminal prosecutions involving felony offenses. They also have original jurisdiction, concurrent with the district courts, in all civil matters exceeding $500. They have appellate jurisdiction over most cases from district and municipal courts.

· A new system of district courts replaced county and juvenile courts as of 1977, staffed by judges who serve six-year terms.

· Municipal court judges are appointed by the municipality.

Penal System

· As of June 2001, 27,286 prisoners were held in 31 state and federal prisons in Alabama. Alabama had an incarceration rate of 592 per 100,000 population.

· In 1976, US District Court Judge Frank M. Johnson, Jr., ruled that conditions in Alabama prisons inflicted "cruel and unusual punishment" upon inmates, spurring the process of prison reform.

· Alabama had an FBI Crime Index rate in 2001 of 4,319.4 crimes per 100,000 population, including a total of 19,582 violent crimes and 173,253 property crimes in that year.

· Alabama has a death penalty and has executed 162 persons since 1930. There were 27 executions in the state between 1977 and 2003. In 2003, there were 193 persons under sentence of death.

· An Alabama case that became internationally notorious was that of the nine "Scottsboro boys," eight of whom were sentenced to death and one to life imprisonment in 1931 for the alleged rape of two white girls, one of whom later recanted her charges. After multiple appeals and reversals, five indictments were subsequently dropped; of the four remaining defendants, all sentenced to lengthy jail terms, three were paroled and one escaped to Michigan, which refused extradition.

Tort Reform

· In 2006 Alabama made The American Tort Reform Association's fourth annual "Judicial Hellholes" list, for the first time since 2002

· For the past three years, the U.S. Chamber of Commerce has listed the state as one of the worst three in the nation for fairness in civil courtrooms

· Trial lawyers continue to charge a contingency fee of 40 percent or more, and also make their clients pay court costs of 10 percent to 30 percent

· Alabama has a history of the nation's largest verdicts, holding that distinction in both 2003 and 2004.

o In 2003, a Montgomery trial court awarded the state $11.9 billion in a case involving a royalty dispute with ExxonMobil over drilling operations in Mobile Bay. The verdict was larger than the rest of the top 100 verdicts in the nation combined.

o In 2004, a Macon County jury, following a three-day trial and just one hour of deliberation, awarded $1.6 billion to an individual plaintiff who had lost $3,000 after an insurance agent continued to pocket her monthly payments on a lapsed insurance policy. The verdict included $20 million in compensatory damages.

o In the PCB lawsuits in Anniston against Solutia, Montgomery trial lawyer Jere Beasley settled the case. As part of the settlement, his clients received $7,725. The Beasley firm received $34 million.

Armed Forces

· The US Department of Defense had 11,354 active military personnel in Alabama in 2002.

· The major installation in terms of expenditures was the US Army's Redstone Arsenal at Huntsville. Redstone is the center of the Army's missile and rocket programs and contains the George C. Marshall Space Flight Center of the National Aeronautics and Space Administration, which directs all private contractors for the space program. Among the spacecraft developed there were the Redstone rocket, which launched the first US astronaut; Explorer I, the first US earth-orbiting satellite; and the Saturn rocket, which boosted the Apollo missions to the moon.

· Other installations include Ft. Rucker (near Enterprise); the Anniston Army Depot; Maxwell Air Force Base (Montgomery), site of the US Air University, Air War Colleges, and national headquarters for the Civil Air Patrol; and Gunter Air Force Base (also in Montgomery).

· During 2001, Alabama firms received defense contract awards totaling over $3.4 billion.

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