Alabama Climbs Ranks Due To Automotive And Manufacturing Investment

Thanks in part to a continued influx of manufacturing investment and its steady flourishing of its digital capabilities, Alabama continued its climb up the 2018 Chief Executive Best States and Worst States for business rankings, to No. 17 from No. 19 last year and from as low as 24 in 2015.

“Part of what’s going on is that we have suffered from people remembering the old Alabama, not the new Alabama,” Steve Leath, president of Auburn University in Auburn, Ala., told Chief Executive. “But we wouldn’t have these companies coming at the rate they are if it wasn’t a great place to come.”

Toyota and Mazda chose a site near an existing Toyota engine factory in Alabama for a new plant that will employ up to 4,000 workers at an average annual salary of $50,000. Alabama’s package of incentives was worth more than $350 million. The plant is to produce $951 million in net revenue to the state after the incentives are taken into account.

Alabama put the bulk of its incentives into a jobs credit worth $91 million over a decade and an investment credit that will be good for $210 million over the same period. There also was reimbursement for eligible capital costs, state sales-tax abatement, a non-educational property-tax abatement and a vow that the state employment agency will build and operate a training center.

“Part of what’s going on is that we have suffered from people remembering the old Alabama, not the new Alabama.”

It helped that Alabama already was fifth in auto production among all states, with not only Toyota building engines there already but Mercedes-Benz, Hyundai and Honda assembling vehicles and many suppliers providing in-state production as well. Vehicles have become the state’s No. 1 export.

Alabama also has carved out a huge spot in aerospace production thanks in part to the legacy of the location of an important National Aeronautics and Space Administration operation in Huntsville.

And now Alabama leaders, including Leath, are trying to take a page from one of the all-time Sun Belt economic-development success stories: the Research Triangle in North Carolina, which was built around three major universities.

“We’re learning from many of the things they did but trying to move at a quicker pace,” Leath said about Auburn’s role in integrating a public research university with successful economic development. “We’re going to make Auburn the best partnership school in the country.”

Auburn also is partnering with General Electric and other manufacturers to develop more skilled engineers for expanding additive-manufacturing operations. “Our graduates have a lot of experiential learning while at Auburn, so these companies can come and get young engineers and supply-chain people who’ve actually done things already,” Leath said.

The complete listing for the Best and Worst States for Business can be found here.