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Area Development

A conversation with.Neal Wade, Director, Alabama Development Office

"Alabama is experiencing a large amount of activity in the category of mega projects that require cash incentives; so many, in fact, that the governor is seeking to increase his incentive budget."

Apr/May 07
Q. What types of projects are shaping Alabama's development picture?
A. Alabama is experiencing a large amount of activity in the category of mega projects that require cash incentives; so many, in fact, that the governor is seeking to increase his incentive budget. The incentives are funded by oil and gas reserves off the shore of Southern Alabama in Mobile Bay and the Gulf of Mexico. [Governor Bob Riley called a special session of the legislature beginning February 26 requesting a constitutional amendment ballot that would allow the state to increase the amount it borrows for industrial development from the current $350 million cap to $750 million. If passed by the legislature, then the amendment must be voted in by the citizens.] This will give us a basis of incentives to use and for additional projects for the next two years.

Q. Are any sectors dominant in the state?
A. Kia is next door in Georgia. Toyota will be next door in Mississippi, and we are focusing on suppliers to ensure that we continue to diversify. In November, Honda Manufacturing of Alabama, LLC (HMA) celebrated the production of its the 1 millionth vehicle in Lincoln, five years after the start of mass production at the $1.3 billion facility. HMA employs more than 4,500 associates. A study released in November shows that Honda and its suppliers account for $4.5 billion a year in economic impact, a figure equal to three percent of the state gross product. The Mercedes plant in Vance celebrated 10 years of production of the M-Class vehicle. During this time, Mercedes has expanded the plant, raising its total investment in Vance to more than $1 billion. Employment has grown to 4,000, and 30 first- and second-tier suppliers have located in Alabama to help produce Mercedes models. This fall, that plant is also is expected to produce its 1 millionth vehicle.

Q. Any other promising industries?
A. Aerospace/aviation is also a targeted sector. Boeing provides 3,000 jobs in North Alabama, and Lockheed Martin has been awarded a $619 million contract from the Missile Defense Agency (MDA) to begin production of the Terminal High Altitude Area Defense (THAAD) Weapon System in Huntsville. Last year, the EADS airbus engineering center located in the Mobile area. With our history in the rocket industry - starting in the 1950s when Wernher von Braun's rocket team arrived in Huntsville to the innovations at NASA's Marshall Space Flight Center and the U.S. Army Space and Missile Defense Command - we are a natural for growth in this area. Life sciences is our third target sector. The Initiative for Life Sciences Entrepreneurship at the University of Alabama at Birmingham (UAB) - a collaborative initiative among the engineering, medical, and business schools at UAB and the UAB Research Foundation and Southern Research Institute (SRI) - offers academic courses and new venture development and funding. Also, Huntsville won the $130 million Hudson-Alpha Institute for Biotechnology that will open in September with eight to 10 companies. This project combines private and state resources and will house nonprofit research teams and for-profit companies and about 900 total employees. An emerging life sciences/technology area is wrapping around Auburn thanks to Auburn University and three technology parks.

Q. Are you concentrating on exports?
A. Alabama was one of the top four states in terms of export growth during the first half of 2006, with exports increasing by 42 percent from January to June 2006. The largest export partners are Germany, Canada, Mexico, the United Kingdom, and Japan. The automobile industry has become the engine for many of our exports to countries like China, India, and Central America. Eight hundred thousand vehicles are produced per year here, and 15 years ago we produced none. Last year, the governor went to China, marking first time in 20 years that one of our governors has gone there. Development representatives just completed a trade mission to India, and we are opening trade offices in China by the end of the year and India next year.

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