Flotte's Notes on Mobile, Alabama Economics

· Through the 1980s, the central business district became a ghost town. In the 1990s, the Mississippi casinos further eroded its economy. – Jeff Amy, PR, 10/28/07

· Mobile County's economy fell steadily between 2000 and mid-2004, due to the collapse of paper mill and manufacturing jobs and a national recession.

o Mobile's economy grew only 6.8 percent between 2001 and 2005.

o One private firm ranked Mobile's growth from 1994 to 2004 as 273rd out of 361 U.S. metro areas. – Jeff Amy, PR, 10/28/07

· The post-Katrina boom represented a remarkable turnaround for Mobile.

o The population of Mobile County surged by about 10,000 in the three months following Katrina, according to Semoon Chang; the county, meanwhile, gained some 4,700 new jobs. More than 2,200 new homes were built.

o Before Hurricane Katrina, rising industrial vacancy rates were a serious concern. After Katrina, these dropped to near zero.

o Mobile's housing market began to slow in 2006, and more than half of the 10,000 people who moved to the county following Katrina subsequently left.

· Mobile County had a total economy of $11.2 billion in 2005 (U.S. Bureau of Economic Analysis)

o Global Insight, a private firm based near Boston, estimated for the U.S. Conference of Mayors that Mobile's economy was worth $12.9 billion in 2005. – Jeff Amy, PR, 10/28/07

o Huntsville's metro area, which has slightly fewer people than Mobile County, had an economy one-third larger in 2005 predominantly due to higher wages

· Don Epley with the University of South Alabama Center for Real Estate Studies (CRES) computes the CRES indexes to show the change in gross metropolitan product for Mobile and Baldwin counties. Epley constructs his forecast by multiplying the number of jobs in the counties by personal income received. All of Epley's measures are figured in 2005 dollars.

o Mobile County's economy grew 2.1% in 2006 and 1.6% in 2007 according to the CRES Index. This is compared to a US GDP growth of 2.2% in 2007

o CRES figures indicate that Mobile’s total economy grew to $11.68 billion by the end of 2007.

o CRES projected that Mobile County would grow by 1.4 percent in the first quarter of 2008

· Mobile County had capital investment totaling $245 million in 2006 with nearly 1,200 new jobs with an average salary approaching $50,000, according to the Chamber of Commerce.

· Mobile was ranked 221^st in economic strength among metropolitan statistical areas in 2007, according to a report by POLICOM of Palm City, Fla. The Birmingham-Hoover region had the highest ranking in Alabama at fifth, with Montgomery ranked 36th, Huntsville at 97th and Tuscaloosa coming in at 119th.

· Mobile County will have the fastest growing economy over the next five years among all 363 American metropolitan areas as measured by gross metropolitan product (GMP), growing 34.31 percent from 2007 through 2012 according to a forecast by Moody's Economy.com which was published Forbes Magazine. – PR 2/1/08

· Moodyseconomy.com, said Mobile is a bright spot nationally and regionally for several reasons including the strength of the shipbuilding sector and natural gas exploration and drilling.

· Forbes Magazine ranked Mobile 118 of 150 communities as the best place for business. Inc. Magazine ranked Mobile 44 of 90 cites as an ideal location for business. Mobile was eighth on Foreign Direct Investment magazine’s "Top Ten Small Cities of the Future" in 2006 (Huntsville placed second.)

· Southern Light, LLC and Hargrove & Associates, Inc. returned Mobile to the Inc. Magazine 500 fastest growing private companies list for the first time since 2001, when local promotional products manufacturer Crown Products was included.

· Mobile County, according to figures released last year by the U.S. Bureau of Economic Analysis, had a total economy of $11.2 billion in 2005, the most recent year available. Those government figures show that

Mobile County Employment

· Employment Base: Services - 27%; Wholesale & Retail Trade - 27%; Government - 15%; Manufacturing - 12%; Construction & Mining - 8%; Transportation & Public Utilities - 6%; Finance, Insurance & Real Estate - 4%.

· The average wage in Mobile County in 2007 was $34,380

· Local leaders like Bay Haas, executive director of the Mobile Airport Authority, have expressed worry over having a qualified work force for anticipated aerospace jobs. Bender has reported that it must often look outside the country to find qualified welders.

Bill Pfister, Austal's vice president of government programs, said his company is hopeful that Alabama Industrial Development Training will continue to work with Mobile community leaders to establish vocational programs. Austal is teaching its own workers using a 20,000-square-foot building at the Brookley Field Industrial Complex.

· The rate of unionization in Mobile is higher than the southeast - 14% in Mobile versus 5% in the southeast according to the Competitive Strategies Group report.

According to the Mobile Chamber of Commerce, the percentage of unionized manufacturing plants in the Mobile area is estimated at 3% with the largest representation in the Oil, Chemical and Atomic Workers and the United Paperworkers International.
According to www.unionstats.com, the overall rate of unionization in 2006 was about 10%, 5% of private employees and 30% of public employees.
The Mobile Chamber of Commerce lists union coverage by company

Alabama is a "right-to-work" state with 12% of its manufacturing workers unionized.

· Mobile Works Inc.. is a partnership of business, education, labor and community leaders, providing businesses and people with training, leadership, labor market information and employment programs. Since its inception in 2000, Mobile Works has invested more than $19 million to fund job and educational programs.

· 53% of Mobile area employers said they expect to add workers during the fourth quarter of 2007, according to the survey by Manpower Inc. The outlook was the highest in Alabama and ranked eighth nationally. – PR 9/11/07

Mobile County Economic Development

· The Mobile Chamber of Commerce was the first in the state, chartered by the Alabama Legislature in 1854.

o Mobile Chamber of Commerce Mobile Bay Regional Overview 2008

· Envision Coastal Alabama is a regional development organization started in 1998.

· Mobile, Washington, and Baldwin counties have voted to join a regional economic development alliance. Clarke and Escambia counties are considering resolutions supporting the alliance in coming months

· The Mobile County Commission implemented a tobacco tax with a portion used for economic development purposes. This tax totals about $950,000 annually

· The Small Business Administration has announced it will be opening an office in Mobile. SBA already has "partners" in Mobile -- among them the Small Business Development Center at the University of South Alabama, the Women's Business Center and the SCORE chapter housed in the Mobile Area Chamber of Commerce.

· University of South Alabama Small Business Development Center

· The two key public business parks are the Mobile Commerce Park, which has seen limited growth over its fifteen-year history, and USA’s Technology Park.

· The Mobile Innovation Center is the community’s small business incubator

· Low cost of living is an asset to Mobile. Mobile’s ACCRA Cost of Living Index is 89.7.

· Come Back Home to Mobile is an effort to attract young, educated Mobilians back to Mobile

· Mobile Area Young Professionals Association (MAYPA)

· The City of Mobile Industrial Development Board (IDB) is granted the power by the State Legislature to give tax exemptions to recruit businesses to move to or expand operations in Mobile. - Harbinger

o Alabama enacted its first major industrial recruiting legislation, the Cater Act, in 1949 which remained largely unchanged for four decades. The law allowed local governments to create Industrial Development Boards with authority to issue tax-exempt industrial development bonds and to grant tax exemptions. These boards sold municipal bonds, used the proceeds to construct manufacturing plants, and leased the plants to their client companies. Local government, through an industrial development board, became the landlord of the industrial property. The board charged a rent to cover costs and the repayment of the bonds. Ownership of the property by a public board exempted the property from ad valorem taxes. Under the Cater Act, property-tax breaks were tied to the board holding title to the property.

o This requirement for board ownership of industrial property ended with Alabama's Tax Incentive Reform Act of 1992. The 1992 act allows city and county governments themselves, or the industrial development boards or county authorities they approve, to abate property taxes and other taxes without a lease.

o The 1992 act also states that educational taxes cannot be abated, and business must contribute to the schools.

o In 1962, the city of Mobile approved the City of Mobile IDB. In 1981, the county approved the Mobile County IDB under the 1977 law authorizing county industrial development boards.

o The Mobile Industrial Development Board is a 13-member commission appointed by the mayor of Mobile that can grant 10-year renewable property tax holidays for industries that locate in the county.

o While a tremendous tool for economic growth, critics charge that the IDB courts energy-intensive and polluting industries, such as chemical plants, paper mills, and incinerators, because the heads of the electricity and gas utilities hold positions on the board. Since the board's creation, its members have consisted exclusively of prominent businesspeople, including the presidents of utility companies, banks, and the Chamber of Commerce. See here for environmental concerns and the IDB. - Harbinger

· Mobile’s Foreign-Trade Zone (FTZ) accounted for roughly $1 billion in economic activity. The zone consists of 12 non-contiguous sites, comprising 9,848 acres, located throughout Mobile and Baldwin counties offering an array of industrial and commercial environments that provide the utilities, infrastructure and transportation links.

· The Gulf Opportunity (GO)-ZONE Act of 2005 establishes tax incentives and bond provisions to support rebuilding the areas of Alabama, Louisiana and Mississippi that impacted by Hurricanes Katrina, Rita and Wilma. Under the provision, the state of Alabama has the authority to approve the issuance of private activity bonds (Gulf Opportunity Zone Bonds) up to $2.17 billion for non-residential real property and improvements; public utility property; and residential rental projects meeting certain tests for low and moderate-income.

Competitive Strategies Group September 2005 Report:

· Strategies for job creation placed greater emphasis of retention of existing business instead of diversification of industries from 1985 to1995, when existing industries were closing or reducing its work force considerably. Mobile Chamber’s Partners for Growth capital campaign has a 5 year budget of $7 million of which $3.7 million is allocated for existing businesses and $2.6 million for new development

o The Chamber’s vice president of economic development is quoted in the May 19, 2003 Mobile Register as saying, “The days of the hunter-gatherer approach to economic development are gone. While bringing in new business is important, he said, the majority of his time must be spent helping existing companies prosper.”

· The Mobile County Commission contributes over $400,000 a year to different organizations for economic development, including the Chamber, the Business Information Center, the Forestry Commission, Mobile United, Women’s Business Assistance Center and others. The County does not conduct an annual audit of these organizations.

· The Chamber’s economic development capital campaign “Partners for Growth” has a target goal of 1,100 new jobs per year or 5,500 over five years. This compares to similar campaigns in Chattanooga, with a goal of 20,000 jobs and Macon, GA with 8,400 jobs.

· In the aftermath of Hurricanes Ivan, Katrina and Rita, office and industrial space has gone from 17% vacancy rates to near zero. The challenge to the County leadership will be to install sound economic policies and structure that will sustain this growth after a three-year period when many of these leases will expire.

· “We applaud the University’s investment into cancer research and in a research and technology park, but these two product improvements initiatives will not necessarily be a panacea to Mobile’s economic success… Biotech is limited to a select few cities: San Diego, Research Triangle Park, NC, Boston and in emerging cities such as Houston, Austin and Baltimore. Florida will become more predominant in biotech research and commercial applications once the Scripps facility comes on line. There is limited growth opportunity for this to be a significant cluster in Mobile”.

· “Nearly all of our survey respondents said that the City of Mobile’s permitting processes and customer service was a hindrance to growth in the City. The County of Mobile has fewer permitting and regulatory restrictions than the City and as a result, receives higher marks for its business climate and ease of doing business in the County.”

· “High Speed Internet access is in limited areas geographically of the County. Investment needs to be made to expand high-speed access throughout Mobile County if the County is to be successful in attracting “Mobile Entrepreneurs”. Further, Mobile should consider creating WI-FI locations downtown, and in all public buildings.”

· “Many of the economic development allies familiar with Mobile commented that even though some in the business and government leadership within the community like to say that there is a team approach for economic development in Mobile, it’s hard to see. In many instances, these allies and consultants observed territorial boundaries, run away egos, or weak leadership as a result of no one defined lead organization for economic development.”.

· Jay Garner, who wrote the study for CSG, was director of economic development for the Mobile Chamber of Commerce during 1985-1994

Industries

· Among Alabama’s publicly traded companies in 2001, Mobile claimed only three (Birmingham was headquarters to 26). Among Alabama’s top 100 private companies in 2001, five were headquartered in the Mobile area (compared to 37 in the Birmingham MSA).

· Business with headquarters in Mobile include: International Shipholding, Ball Healthcare Services (nursing homes and assisted living facilities); BancTrust Financial Group; Big 10 Tire Stores; Integrity Media; The Mitchell Company; Shoe Station; and Volkert & Associates.

o Mobile suffered the loss of corporate headquarters in the 1990s, including Delchamps, Ruby Tuesday’s/Morrison’s Restaurants, and Gayfer’s.

· The heaviest concentration of large firms in the Mobile area is in chemicals and fiber manufacturing. Mobile is also heavily weighted in lumber and wood products industries and in maritime and shipbuilding.

o Although the chemical industry remains a strong player, the area has diversified its economy away from its traditional paper and chemical industry core. During the last 15 years, the oil and gas, tourism, and aerospace industries have expanded significantly.

Manufacturing

· The Alabama Industrial Directory for 1999-2000 includes 78 Mobile area manufacturing firms with over 100 employees (compared to 156 in Birmingham area).

o 23.1 percent of Mobile’s firms are categorized as technology companies (compared to 16 percent of Birmingham area firms).

· Mobile has three primary industrial areas: south Mobile county and the Theodore Industrial Park, downtown Mobile on the waterfront and Blakely Island, and north Mobile County along the Mobile River.

· Proximity to port facilities makes the Mobile area a prime location for firms that export and/or import. Of Mobile area businesses, 59 percent export, while 38 percent import (compared to 53 percent and 31 percent respectively in Birmingham)

o Foreign investment is also pronounced in Mobile— about 18 firms, or 23 percent, are foreign-owned (compared to 6 percent in Birmingham).

Lumber and Pulp

· In the post-war period, the pulp and paper industry became a major industry. Between the 1920s and the 1990s, Scott Paper Company and International Paper combined to have one of the area's largest workforces. However, the industry declined in the 1990, with International Paper closing its mill in 2000, and Kimberly-Clark closing its pulp mill in 1999.

· International Paper, started in Albany, New York, opened its Mobile Kraft paper mill in 1929.

o IP closed the mill in 2000. Eight hundred workers lost some of the best-paying jobs available in the Mobile area as a result. Four years later, the vast majority of the former IP workers had found jobs, but most earned a fraction of what they had before.

o The Alabama State Port Authority purchased the International Paper mill for $1.6 million in 2005.

· Kimberly-Clark’s Mobile paper mill employs 780 people and produces 700 tons of paper products daily. Mobile has one of the company’s three largest facilities in the business-to-business segment known as Kimberly-Clark Professional, and is a primary producer of commercial tissue products. Wood fiber is delivered by rail, since the pulp mill was closed in 1999. The 200-acre plant makes Scott and Kleenex brand toilet tissue and paper towels for commercial and industrial accounts