On a sunny day in June 2015, a cargo ship docked in an Alabama seaport, loaded with the major structural components for the maiden Airbus passenger jet to be assembled at the company’s first US manufacturing centre. On board the BBC Fuji were fuselage sections produced in Germany, Spain and France, as well as other components with parts sourced from around the world. Also on the cargo vessel were the wing assemblies – produced in the United Kingdom – that will give the Airbus A321 flight. The wings for the Alabama-made aircraft serve as a reminder of the strengthening economic ties between the UK and a south eastern US state with a growing international connection.
In 2014, two-way trade between the UK and Alabama approached $800 million, a healthy figure that has been growing over the years. The value of Alabama exports to the UK climbed 47% in the decade stretching between 2004 and 2014, making it a top five export market for the state. UK firms ship machinery, computers and electronic products, transportation equipment, chemicals, plastic products, and other items to Alabama. Meanwhile, UK companies continue to view Alabama as a favoured location for capital investment, with around 30 British firms today operating facilities in the state. These firms include BAE Systems, BP America, GKN Aerospace and Tate & Lyle.
Let us examine the reasons why Alabama is attracting investment from the UK and around the world, and identify the industrial sectors in the state that hold promise for UK companies looking to build a presence in North America or establish one there.
Many international firms are discovering that Alabama offers a low-cost, business-friendly environment with an extensive and convenient transportation network that includes a deepwater port, cargo airports, Class 1 railroads and interstate motorways. Significantly, Alabama recently updated its incentives programme to offer qualified businesses a tax credit specifically tied to job creation which, combined with other changes, increases the state’s competitiveness in the economic development realm.
In addition, the state has moved decisively to improve its already robust workforce training programmes by consolidating many of its primary workforce development functions within the Alabama Department of Commerce. Governor Robert Bentley has made improving educational outcomes, together with preparing the state’s residents for the demands of the modern, technology-focused workplace, one of the top priorities of his administration. As part of the initiative, Alabama research universities are more actively engaging with businesses in areas of mutual benefit.
The strategy is laying a foundation for future growth.
Alabama’s chief sources of foreign direct investment in the automotive manufacturing sector are Germany, Japan, and South Korea, but many auto-related companies from the around the world are finding their way to the state.
Mercedes-Benz came to Alabama in the 1990s and now plans to inject an additional $1.3 billion investment into its manufacturing centre in the state. “With this expansion and modernisation of our plant, we will create 300 new jobs and continue the success story of Mercedes-Benz in Tuscaloosa”, Jason Hoff, president of the car manufacturer’s Alabama operation, said at the announcement of the additional investment. “Our entire team is proud to reinforce the State of Alabama’s growing reputation as a leader in high-quality automotive manufacturing”.
The project will push Mercedes’s total investment in Alabama to an impressive $5.8 billion as its production line-up has expanded to four distinct luxury vehicles. Alabama is also home to assembly plants operated by Honda and Hyundai, as well as one of Toyota’s largest engine plants, along with the vast supplier networkers that serve them. Thanks to first-rate training resources and a supportive government, Alabama’s auto industry will produce more than one million vehicles and two million engines in 2015 – records that will likely be eclipsed in 2016 as growth continues.
With Airbus launching aircraft production at its new $600 million manufacturing facility at the Mobile Aeroplex, other European aerospace companies have announced plans to locate operations in Alabama. These include Ireland’s MAAS Aviation, which will open a $39 million paint shop at the Aeroplex, and France’s Hutchinson Corp., which is opening an aerospace manufacturing centre of excellence nearby. These projects, and others, are confirming predictions that Airbus will act as a catalyst in the formation of an aerospace cluster in the region.
UK-based GKN Aerospace, meanwhile, has expanded its state presence with a new, 10,000 square-foot engineering design centre at its aerostructures plant in central Alabama. GKN has operated in Alabama for three decades and today employs around 1,000 people.
In north Alabama, where the aerospace industry is focused on space exploration, rocket production and defence work, one of Europe’s leading space companies – RUAG – recently announced plans to set up a production line at the factory where the US workhorse Atlas V and Delta IV rockets are assembled. NASA’s Marshall Space Flight Center in Huntsville anchors the region’s aerospace sector.
GROWING LIFE SCIENCES
Another sector that has seen growth in Alabama is life sciences. In late 2014, Oxford Pharmaceuticals, a new venture established in England, announced plans to open a $29 million generic drug production facility in Birmingham, a city with significant activities in health care and research. The plant, which eventually will employ 200 people, gives Alabama’s largest city a foothold in a new segment – pharmaceutical manufacturing.
“Oxford Pharmaceuticals has made the decision to locate a new state-of-the-art pharmaceutical facility in Birmingham over other competing markets because of many positive factors, including a good employment base, a great history of health care-related businesses in Alabama, and a tremendous recruiting effort by the state, county, and city leaders”, Oxford Chairman John Hoffmire said at an announcement ceremony.
Across Alabama, there are 550 firms in biotechnology and life sciences, with major research clusters in Birmingham and Huntsville. The Hudson-Alpha Institute for Biotechnology in Huntsville has earned a reputation as a top genomics and genetics research centre. The University of Alabama at Birmingham (UAB) is a national leader in cancer research and often teams with Southern Research to advance knowledge about specific diseases and investigate possible new treatments.
BUILDING GLOBAL CONNECTIONS
Alabama’s leading officials view capitalising on global opportunities as a key priority, and the figures on foreign direct investment (FDI) illustrate that point. In the past 15 years alone, Alabama has attracted FDI topping $24.5 billion, with nearly $1 billion of that investment coming from UK-based companies.
Alabama officials are actively seeking to build international partnerships. The Alabama Department of Commerce and its allies sponsor international trade missions to explore possible business collaborations and identify new export markets for companies based in the state. Recent European missions have visited Scandinavia, and Belgium and The Netherlands.
Top Alabama officials also travel to European events like the Farnborough International Airshow to connect with business leaders from the UK and around the world.
For more information, contact:
Greg Canfield, Secretary
Alabama Department of Commerce
401 Adams Avenue
Montgomery, AL 36130–4106