Mobile Register

Economy expected to build momentum
Mobile area a bright spot in a darker national picture, largely because of shipbuilding, natural gas potential and low unemployment, experts say

Sunday, December 31, 2006

By KAIJA WILKINSON
Business Reporter

New projects, contracts and expansions unveiled in 2006 have those watching the Mobile economy excited about 2007.

Mike Helmar, analyst for Moodyseconomy.com, said Mobile is a bright spot nationally and regionally for at least a couple of reasons: the strength of the shipbuilding sector, where companies have recently signed both defense- and nondefense-related contracts, and natural gas exploration and drilling.

"It takes awhile to build ships, so we think that shipbuilding is going to remain in place for a while," Helmar said.

In the fall, Austal USA revealed a multimilllion-dollar expansion plan, including two new shipbuilding sheds at its current site on the Mobile River. A third facility would likely, but not certainly, be in Mobile.

The shipbuilder, which now has about 830 employees, said a growing workload drove the expansion. Earlier this month, the company announced it had, as expected, won a second contract to build a prototype combat ship for the U.S. Navy. Austal is the shipbuilder for a contracting team led by Falls Church, Va.-based General Dynamics Corp.

Austal's neighbors on the Mobile waterfront are busy, too.

Bender Shipbuilding & Repair Co., which during the year sold its 30 percent stake in Austal USA to Austal Ltd. of Australia for $20 million, struck a $35 million deal to build a pair of offshore supply ships.

An investment firm headed by former U.S. Navy Secretary John Lehman purchased Atlantic Marine Inc.'s operations in Mobile and Jacksonville, Fla. Lehman promised new investment in the business, which is the second-largest landholder along Mobile's industrial waterfront.

Industries that support offshore oil and gas exploration are also busy.

Aker Kvaerner Subsea in south Mobile County announced several significant contacts to make steel tube umbilicals -- cords that carry fiber optic cables, electrical wiring and hydraulic fluid from oil platforms to the ocean floor -- for companies like Chevron Corp. and Kerr McGee Corp. earlier this year.

Mobile is also a finalist for a planned $168 million Berg Steel Pipe Corp. plant that would make products for the oil and gas industry. The Alabama State Port Authority, which is marketing the former International Paper site to Berg, expects a decision early in 2007.

Work is plentiful Another positive for the Mobile area is its low unemployment, said Moody's Helmar.

The national unemployment rate was 4.5 percent in November 2006, the last month for which data was available. Alabama was well below that at 3.2 percent, while in Mobile and Baldwin counties, unemployment rates stood at 3.1 percent and 2.2 percent, respectively.

So many people working means there will be plenty of customers for area banks, said Bibb Lamar, president and chief executive officer of Mobile's BancTrust Financial Group Inc.

"I think Mobile's economy and Baldwin County's both should serve the banking industry well next year," Lamar said. "Interest rates are going to be favorable, particularly long-term mortgage rates.

"If inflation stays under control you might see one or two drops by the latter part of the year."

Lamar called 2007 "a year of transition" for banking in Mobile. His bank and others will try to gain market share by capitalizing on changes in the market following the merger of Regional Financial Corp. and AmSouthBancorp. The two Birmingham-based banks were forced by federal regulators to divest a total of 52 branches in Alabama, Mississippi and Tennessee as part of that deal.

Newcomer RBC Centura acquired 22 Mobile-area branches among 39 statewide, and announced it would make Mobile its state headquarters.

Hancock Holding Co. of Gulfport also plans to open branches here, and Lama added that there could be an additional newcomer in 2007.

Helmar cautioned that the one of the challenges in a growing economy is finding a qualified work force.

Local leaders like Bay Haas, executive director of the Mobile Airport Authority, have expressed worry over having a qualified work force to perform 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 and nurture vocational programs such as those for the specialized welders Austal needs.

In the meantime, Austal is teaching its own workers using a 20,000-square-foot building at the Brookley Field Industrial Complex, he said.

Mobile area bucks national slowdownSemoon Chang, an economist at the University of South Alabama, said Mobile is defying the nation's economic slowdown. Chang said the downturn, which started in mid-2006 and is expected to continue throughout 2007, could be blamed on a deflating housing industry, high oil prices and rising expenditures on the war in Iraq.

Except for parts of Baldwin County that are seeing a housing pullback because of rising building and insurance costs in the wake of hurricanes Ivan and Katrina, the Mobile area housing market has been largely immune to the national slump, Chang said.

He expects the local market to stay strong since new jobs will bring in more residents. Chang estimates that one new home is needed for every two, permanent full-time jobs created in an area.

Ben Tom Roberts, a Mobile Realtor whose seven-year stint on the board of the Federal Reserve Bank of New Orleans ends this month, told the Press-Register recently that he believes the local real estate market has moved past a Katrina-related price spike, but will land somewhat softly at about 10 percent higher that pre-hurricane prices.

Both Steve Perry, executive director of the local industrial trade association The Forum, and Chang said that the Mobile area's economy continues to be bolstered by rebuilding efforts in south Mississippi. Mobile also plans to welcome at least one significant New Orleans transplant in 2007.

International Shipholding Corp. plans a spring move from the city in which it was founded 60 years ago to Mobile's new RSA Tower. The company plans to employ about 150.

Construction of the $162 million, 35-story tower and its adjacent Battle House Hotel and parking deck are projected to finish in March.

But construction jobs should remain numerous in the area. Hundreds of workers will be involved in building the new $300 million Mobile Container Terminal at Choctaw Point, for which groundbreaking was held in October. And a new, $600 million motorsports park -- Alabama Motorsports Park, A Dale Earnhardt Jr. Speedway -- should break ground early in 2007.

The terminal will increase more than tenfold the cargo handling capacity of the Alabama State Docks, and is predicted to be a hub of activity once completed in 2008. It's expected to create about 300 full-time permanent jobs.

"The container business will provide the real basic foundation of the future of the local economy," Chang said.

Chang has said that thousands more could have jobs if all of the planned retail and entertainment components are built around the four racetracks and RV park at the motorsports complex, which will be developed just off Interstate 65 between Saraland and Prichard.

Mobile Bay area sees investmentRobert Ingram, president of the Baldwin County Economic Development Alliance, called 2006 "another tremendous year," and said he expected the county to be ranked in the top 2 percent of all similar-size counties in the United States in terms of annual job growth.

Baldwin officials reported capital investment of $71 million in 2006, with 20 companies either locating to the county or expanding existing facilities, according to alliance data. Some 970 new jobs were created.

Ingram said "there is no doubt" that more companies will be locating and expanding in Baldwin in 2007, and the alliance could make an announcement as early as January.

Mobile County enjoyed capital investment totaling $245.3 million in 2006, according to data from the Mobile Area Chamber of Commerce, consisting of 10 new businesses and eight expansions. The chamber estimated nearly 1,200 new jobs with an average salary approaching $50,000.

Steve Russell, director of business retention and expansion at the Mobile chamber, said the manufacturing sector has been a strong driver, with Ipsco Inc. and Mitsubishi Polysilicon America Corp. in the process of completing expansion projects and

INEOS Phenol and Kimberly-Clark Corp. also announcing they are investing in their plants.

Russell said that although newcomers often get the most publicity, businesses that stay and grow are vital.

"You have to take care of the people and the employers who are in your community," he said. "They are the people who contribute to United Way, they are the people who support small business, they are the companies that are really the backbone of the community and have been investing in the community."

Meanwhile, the city continues to recruit major projects in both the aerospace and steel sectors. But The Forum's Perry said there's no need for Mobile to hang its collective head if these projects don't happen.

"Those are big pieces of lagniappe," he said, "but there's still a lot of good underneath it."

Mobile Bay Times

Bulls & Bears, Optimists & Pessimists,
City projections & County projections

Wednesday, September 27, 2006

By Chip Drago

There are bulls and bears, pessimists and optimists, county revenue projections and city estimates.

While the city is projecting three percent growth on top of record Katrina-induced revenues, the county was more Eeyore-like in forecasting a five percent reduction in revenues.

University of South Alabama economics professor Semoon Chang says the outcome will probably fall somewhere in between.

“My thinking is retail sales from January through August next year will be very close to retail sales for that period this year,” said Chang. “Our economy is doing so well. It is flowing. Local businesses have contracts and activities related to the recovery effort. We don’t know about them all. Some we learn about in the newspaper whether it’s removing automobiles or some other unique situation involving our local companies that we hear about from the media. But there is no question that a number of companies in Mobile do have contracts in Mississippi and some in Louisiana. The money into Bayou La Batre has not really started flowing in any sizable amount. I think the economy will continue to do well. The county is probably being a little pessimistic. Whether the city’s projection will be realized or not will be interesting to see.”

Mobile Register

Dale Junior backs track
Details of planned complex will be announced at Mobile Convention Center today, as NASCAR star Earnhardt gives his support to the project

Tuesday, September 12, 2006

By KATHY JUMPER
Real Estate Editor

It was fitting that Dale Earnhardt Jr. was the man of the hour at a gathering of Alabama Motorsports Park investors -- most wealthy and celebrities in their own right -- on Monday night at Ruth's Chris Steak House in midtown Mobile. Lending his high-profile name to the planned race track project can only boost the attraction's credibility in the racing world, and in south Alabama.

Details of the multimillion-dollar motorsports park will be announced today at the Arthur R. Outlaw Mobile Convention Center, according to Tonia Jackson of PSE-3, Partners In Sports and Entertainment, a marketing firm based in Raleigh, N.C.

Earnhardt Jr., son of the late NASCAR legend Dale Earnhardt Sr., will field questions from the media, along with his sister, Kelley Earnhardt Elledge, and his brother, Kerry Earnhardt. Earnhardt Jr. is the driver of the No. 8 Budweiser Chevrolet Monte Carlo in NASCAR's NEXTEL Cup. Kerry competes in the NASCAR Craftsman Truck Series.

Earnhardt Jr. flew to Mobile in his private jet and arrived at the dinner party about 30 minutes after the guests arrived. Low-key, in a striped dress shirt and slacks, he stayed on the edge of the dining room, talking quietly to friends and posing for a few photos with newly met fans.

The media interviews with Earnhardt will be held today, according to Bill Futterer, owner of PSE-3, a motorsports marketing firm representing the Alabama Motorsports Park. His firm also works as a consultant for Earnhardt and his company, Junior Motorsports.

Investors in Gulf Coast Entertainment plan to build a race park that will include an oval speedway, a road course, a dirt track and a drag strip, along with an RV park, restaurants and other entertainment venues, according to Jackson.

The investors have three possible sites for the race park in Mobile and Baldwin counties, and expect to narrow that down in the next couple of months, according to former Mayor Mike Dow and some of the investors. Dow is helping launch and promote the motorsports park.

Warmly greeted

The group has talked to several sanctioning bodies about the race park, according to Futterer. "We've been received with enthusiasm," he said. "We have not talked about any specific races with any sanctioning body."

Race schedules are set three to four months in advance of a year, so the race calendars for 2007 are coming out now, according to Futterer.

"We have not talked to NASCAR because we respect their policy about not talking about races until the track is substantially under construction," Futterer said.

The Dom Perignon flowed freely Monday night, where the party organizers had ordered cases of the elite beverage, usually selling for almost $200 a bottle. Many of the restaurant chefs were on standby, waiting to cook dinner -- from lobster, steak or fresh seafood -- for the 50 or so guests. Restaurant owner David Cooper Sr. was also one of the guests.

Investors on hand

The list of investors will be released today, and many of those were enjoying the party, including former Congressman Sonny Callahan; Armando and Mimi Fitz, who own four NASCAR Busch Series teams and two teams in Mexico; Bob Shallow, owner of REMAX Paradise in Orange Beach; Rick Edwards, a land developer of Point Clear; Richard Schwartz, a restaurant owner and developer in Gulf Shores; and Rick Skelton, who owns the Hyper-Sport team that competes in the Grand American Road Racing Association; and local attorneys Braxton Counts and Daniel Cushing. Skelton is also one of the developers of Bon Secour Village, a mixed-use community under construction on the Intracoastal Waterway in Gulf Shores.

Professional football players and Hall of Famers Willie Lanier and John Stallworth are also investors but could not attend the dinner.

"Our investment group are well-heeled, well-financed, well-connected individuals, and that's our strength," Skelton said. "I think this has a great likelihood of coming together and being the country's largest racing and entertainment complex. This is big."

Skelton plans to move his Hyper-Sport race team here. "Hopefully, that will be a catalyst for other teams to move down here," he said.

An economic impact study done by Semoon Chang at the University of South Alabama will be released today, according to Dow. "We have gone over it and we are trying to be very conservative and realistic about this," Dow said. "The impact is huge."

Other studies were done by national firms, as well, according to Futterer. "We relied on Dr. Chang for the economic aspect," he said.

"If you look at who the original investors are, they want this to be a destination," Dow said. "They are trying to build up the tourism pool."

"The concept is going to be a great boost to tourism throughout south Alabama, whether it's in Baldwin or Mobile county," said Herb Malone, president of the Alabama Gulf Coast Convention and Visitors Bureau in Gulf Shores. "We will all benefit."

Dale Earnhardt is to racing what Tiger Woods is to golf, Futterer said. "He was a natural to be involved in this. We're thrilled he shared the interest to be involved."

Investor Shallow admitted he does not follow racing like his stepfather, a die-hard racing fan. Shallow invited his mother and stepdad, Bruce Everett Grover of northern New Hampshire, to Mobile to meet his idol on Monday. Grover managed to get photographed with his favorite driver, No. 8.

Grover is a big fan, and even his address reflects it: He lives on Dale Earnhardt Drive.
 

Mobile Register

Oil find could boost Mobile maritime business

Wednesday, September 06, 2006

By RUSS HENDERSON
Staff Reporter

The discovery by Chevron Corp. and two partner companies of a major petroleum pool some 270 miles south of New Orleans could mean more jobs and profits for Mobile County's shipbuilding, work boat and equipment businesses, business owners said Tuesday.

"The industry in Louisiana isn't big enough to meet the requirement. That's been the case for a long time," said Brett Dungan of Master Marine in Bayou La Batre. The boat builders and related businesses in Mobile County "have adapted to that and have thrived for years."

Dungan and others said Mobile businesses serving the oil and gas industry have long prospered as an adjunct to Louisiana businesses and will benefit yet more with any new oil discovery in the Gulf.

Two decades ago, the Bayou was known as the "Detroit of shrimp trawlers," Dungan said. Today, most Mobile County shipyards are making vessels for use in the Gulf's oil and gas fields, he said.

Semoon Chang, an economist at the University of South Alabama, said the discovery should have little direct impact on Mobile's economy, but indirect effects are likely.

Chevron's closest facility to Alabama is the Chevron Pascagoula Refinery -- too far to have much impact on consumer spending and tax revenues if more workers are hired on at the plant, he said.

"The benefit would be limited to sales of supplies and services if Chevron can't get them from Louisiana and Texas," Chang said. "Those places are still damaged by Hurricane Katrina, so maybe some of the business has to go through Mobile."

Chang said the supplies and services Chevron might need could include:

-- Items specially manufactured for deepwater operations. As an example, Aker Kvaerner Subsea's plant in south Mobile county makes "umbilicals," the tubes that carry fiber-optic cables, electrical wiring and hydraulic fluid from platforms on the water's surface to the Gulf floor;

-- Work boats built by local shipyards like C&G Boat Works in Mobile and Master Boat Builders in Coden; or,

-- Captains and crew to run those workboats, provided by companies like Barry Graham Boat Works.

Michael Rice, president of Master Boat Builders, said he decided in 1997 to shift production as much as possible to oil and gas work boats.

"At the time, we were building 20-25 fishing boats a year, but we could see the fishing industry was in trouble," Rice said.

Today, his company specializes in 145-foot to 200-foot work boats, each outfitted with a dynamic positioning system that allows the vessel to remain in place without dropping anchor -- standard equipment for operating in rough waters by deepwater facilities, he said.

Using satellite-based technology, the onboard computers measure wind, current and wave forces and then counteract those forces through multiple engine thrusters called z-drives. The company has built 10 such boats so far this year and is currently building two more, Rice said.

Joey Rodriguez, owner of Rodriguez Boat Builders in Bayou La Batre, said Master Boat Builders is leading the way among Bayou La Batre's shipbuilders.

"The rest of us are going to have to tool up if we want to get some of the crumbs from under the Master's table," Rodriguez said.
 

Mobile Register

Baldwin is 38th in nation

Monday, August 28, 2006

By VIRGINIA BRIDGES
Staff Reporter

As Baldwin County's rural pecan orchards and cow pastures continue to be transformed into subdivisions, the need for strategic planning is emphasized by recently released U.S. Census estimates that place the county's growth in housing stock at 38th in the nation, municipal and county officials said.

University and environmental experts said that whether housing growth has a positive or negative impact is determined by the planning that came before it.

"If you do plan for rising population and an improving economy in advance then the growth will be a blessing," Semoon Chang, economics professor for the Center for Business and Economic Research at the University of South Alabama. "If you do not make advanced planning for rising population and improving economy then the growth can be a curse."

A key indicator of proper planning is whether quality of life has improved or declined, he said.

Mobile Register

Good Samaritan or Price Gouger?

Sunday, August 27,2006

By GEORGE TALBOT
Business Reporter

On the morning of Aug. 31, 2005, less than 48 hours after Hurricane Katrina struck the Gulf Coast, the universal forces of supply and demand converged for one sweet moment in Jackson, Miss., on the bumper of Jack Sheperson’s rented U-Haul truck.

The state’s capital city was powerless. Its residents were sweltering. Dozens were camped outside a shuttered Home Depot store, waiting futilely for relief supplies. That’s when Sheperson, 42, rumbled into the parking lot.

An unemployed machinist, he’d driven all night – more than 700 miles – from his home in Gravel Switch, KY. He stepped to the rear of the truck, flung open the cargo door and whistled.

“I got generators,” he hollered. “Twenty of ‘em. First come, first served.”

He was mobbed. Sheperson opened the bidding at $1,000 for a 3,500-watt Briggs & Stratton model, about double what he’d paid back home. The buyers waved cash. “I felt like I struck oil,” he said.

The first dollar had yet to change hands, and already Sheperson was figuring how fast he could return home and make another run. Then, a uniformed Jackson policeman pushed to the front of the crowd and asked to see his receipts. Sheperson said he complied.

“He said they had some cases where people were selling stolen generators,” Sheperson said. “I had done nothing wrong. I did what he said. The next thing I know, I’m in handcuffs.”

The crowd was dispersed, the truck was seized and Sheperson was hauled to the Hinds County jail. The charge: price gouging, a felony in Mississippi.

Jim Hood, the state’s attorney general, vowed to crack down on Sheperson and others who attempted to profit from the catastrophe.

“I’m going to send some people to the penitentiary before this is over,” Hood said.

The message was no less severe across the state line in Alabama, also hard hit by the storm.

“Those who engage in price gouging will be punished to the fullest extent of the law,” warned Gov. Bob Riley.

One year later, prosecutors in both states are still talking tough even though they’ve earned few convictions. And elected officials are seeking to stiffen the penalties for price gouging, even as economists argue that the laws can impede the disaster recovery process.

“Virtually any economist you talk to will tell you that anti-gouging laws are likely to backfire,” said Steven Levitt, a University of Chicage economics professor and co-author of “Freakonomics,” a best-selling business book.

Supply and Demand

Levitt, named earlier this year as one of Time magazine’s “100 People Who Shape Our World,” said price controls restrict the natural flow of supply and demand. Under normal circumstances, he said, competition forces sellers to keep prices low. During acute shortages, he said, prices should be allowed to rise, drawing new suppliers to the market.

“In natural disasters, the motivation for out-of-the-way providers like the folks who load up pickup trucks with generators and drive from out of state is precisely the attraction of unusually high prices,” said Levitt. “Since it is costly to supply goods after natural disasters, anti-gouging laws may make the entire market shut down.” 

Mobile economist Semoon Chang agreed, saying that Alabama’s price gouging legislation was particularly ill-conceived.

The state generically prohibits “unconscionable pricing” of items for sale or rent during state-declared emergencies. That’s an amount defined as 25 percent or more than the average price charged within the last 30 days.

“Twenty-five percent is nonsense – you see that much fluctuation at the grocery store every day,” said Chang, who suggested a limit of as much as 500 percent. “No one from outside the community is going to bring in a load of ice, for example, because it’s not worth it for such a small profit margin.”

The upshot, he said, “is that it actually makes the shortages much worse. If someone wants that bag of ice bad enough, and is willing to pay for it, why not let him buy? Then you get more suppliers, and the increased competition causes prices to fall. But you must let the market react freely.”

Alabama Attorney General Troy King, however, said the normal rules of supply and demand do not apply during emergencies.

“I am so tired of hearing these economists and their theories about ‘gouging is good’ – the law wasn’t written for them,” said King, a Republican appointed to his post in 2004. “It’s written to protect the citizens of Alabama in times of crisis. The fact is there are some despicable people out there who would try to take advantage at a time like that. And I’m saying I will not tolerate it, I will not allow it no matter what some so-called expert says.”

King said he has asked the state Legislature to elevate gouging to a felony in Alabama. The crime currently is classified as a misdemeanor punishable by a fine up to $1,000 per violation.

Still, he acknowledged that gouging cases can be extraordinarily difficult to prove.

Retailers, for example, are exempted if they can demonstrate that their own costs have increased proportionally. That’s just what happened in the vast majority of complaints reviewed by Alabama officials last year.

King said his office received 1,658 reports of price gouging on a special hot line established just prior to Katrina. About 90 percent, he said, concerned gasoline.

“A lot of them, there’s nothing we can do. People would claim, for example, that the price posted at a gas station was different than the price at the pump. (But) there’s no way to prove it,” King said.

King’s office ultimately issued subpoenas to the 21 gas stations mentioned most often by consumers, seeking records about their fuel purchases, sales and pricing. Of those, he filed civil lawsuits against four stations – two in Montgomery, one in Monroeville and one in Decatur.

The Monroeville case was dismissed by a judge, and King’s office in May settled complaints against the three remaining stations, which collectively agreed to pay $5,300 to the Red Cross and the Salvation Army.

The three settlements “may be a small number, but it’s more than we’ve ever held accountable before,” King said. “The point is we’re sending a message that we’re not going to stand for this kind of behavior in Alabama.”

Mobile County District Attorney John Tyson, who is running to unseat King as attorney general in the Nov. 7 election, said his opponent has not done enough to discourage potential profiteers.

“It’s not just the gouging. It’s the construction fraud, the disreputable contractors, and all sorts of scam artists that prey on hurricane victims,” Tyson said. “We have to do better at the state level at identifying and prosecuting those cases. And the first place you start is in Mobile and Baldwin counties, where the most damage is, not some gas station way up in north Alabama.”

Tyson, a Democrat, said he established a local disaster response team to help Mobile County residents about scams after the storm.

“We built a network there to help us develop cases. It worked very well, and I’d do the same for the state,” if elected, Tyson said.

King said he is continuing to participate in a multi-state investigation of rising gas prices and whether gouging occurred in the weeks after the hurricane. The investigation, launched by King and Florida Attorney General Charlie Crist, includes attorneys general from 47 states.

“It’s still ongoing, even as we near the anniversary of Katrina,” King said. “We started with the local retailers and we’re methodically working our way up the distribution chain. And it’s and incredibly complex review, but we owe it to the American people to see it through.”

 Sheperson Still Waiting

Nearly one year after his arrest, Sherperson’s case is unresolved.

The Mississippi Attorney General’s Office referred questions about Sheperson to the Jackson Police Department. A spokesman for the department, however, said he had no information about the case.

“All gouging cases are being handled by the attorney general,” said Commander Lee Vance.

The crime in Mississippi is punishable by penalties up to $5,000 and five years in state prison. Sheperson, the son of a Kentucky state trooper, claims he was unaware of the law and would never have come to Jackson had he known about it.

At the time, the decision had been simple: Sheperson said his small business, a machine shop, had recently closed. He had a 14-month-old daughter, and his wife had been diagnosed with epilepsy. The bills were piling up in Kentucky when Katrina struck just east of New Orleans on Aug. 29.

Sheperson watched the crisis unfold on television. The morning-after pictures showed terrible devastation, but he also saw opportunity.

“People on TV were saying how they didn’t have power and the stores didn’t have generators. So I told my wife, ‘Let’s go down there and sell some,’” he said.

The gas-powered electric devices were indeed a hot item. Demand had surged in the days immediately before and after Katrina, wiping out inventories across the Deep South. Retailers, struggling to restock, were hindered by blocked roads, widespread power outages and a lack of available workers.

Early on the 30^th, using credit cards and family loans, Sheperson rented the truck and hit a pair of home improvement stores in nearby Danville, KY, and Somerset, KY. He rounded up 20 generators, spending about $15,000, and headed south.

“I wasn’t trying to take advantage of anyone,” he said. “I went there to make money, sure. But I thought I was helping. Boy, I was wrong about that.”

Sheperson said he spent four nights in jail before his family could post the $10,000 bail. One of the ironies in his case, he said, is that the generators remain confiscated as evidence, meaning nobody was allowed to use them.

He said he remains puzzled that he could be convicted of selling something for an exorbitant price when he never completed a sale. In his billfold he carries a check for $1.54, issued to him upon his release from jail. That’s the sum total of his cash at the time of his arrest.

Sheperson’s story was featured on ABC News in May. Commentator John Stossel proclaimed him a hero, saying he took needed supplies to people who needed them most. Milton Friedman, a Nobel-prize winning economist, said he deserved a medal. Two other Nobel winners agreed, saying Sheperson’s actions were logical.

“People want to live in a world where love is what motivates people to help others,” the economist Russell Roberts said. “And love does that. But there isn’t enough love to go around. Love for strangers isn’t going to motivate enough people to get in their trucks, load them up with generators and take them down to people who are cold and hungry.”

Sheperson said he figured the broadcast would bring a swift end to his legal problems or maybe draw the attention of a high-powered defense lawyer. Didn’t happen. Instead, he said his neighbors shunned him, and the only phone call came from his bail bondsman in Mississippi. The case dragged on.

“I know nobody is going to feel sorry for me. Nobody like to pay for something – myself included,” he said. “But I keep going back to the moment I pulled up in that parking lot. Those people were ready to buy. Some of them were thanking me because Home Depot was sold out.”

“I would have sold every one of those generators. And they would have been glad to have them.” 

Wall Street Journal

“Ill Winds of '05 Blew Some Good To Mobile, Ala.”

August 23, 2006; Page B1

By THADDEUS HERRICK
 

MOBILE, Ala. -- For years, this historic port city was something of an afterthought, overshadowed by other Gulf Coast hot spots stretching all the way to New Orleans.

But Mobile's fortunes were changed a year ago when Hurricane Katrina hit, destroying much of the coast but striking the metropolitan area of nearly 600,000 here with little more than a glancing blow.

The sudden twist of fate leaves Mobile poised to play a far bigger role on the Gulf Coast. The storm added considerable strength to Mobile's already reviving economy, as evacuees snapped up apartments and houses and disaster officials set up shop. Mobile's retail-sales-tax revenue rose more than 20% in the 12 months ended in July 2006 compared with the year-ago period. "It's one of the best periods of economic development in many, many years," says Mayor Sam Jones.

Several cities hit by Katrina are also reporting surges in sales-tax revenue, as locals snap up cars and construction material. But Mobile has also become a bedroom community for cities such as nearby Pascagoula, Miss., which last week repealed a residency requirement for municipal employees. "Ninety-five percent of our city was underwater," says Kay Kell, the city manager.

Mobile's resurgence highlights how Katrina, while taking a considerable human toll, also reshuffled the regional economy. Cities like Houston and Baton Rouge, La., have seen their economies flourish since the storm. Other cities, like Gulfport, Miss., and New Orleans were hobbled and remain so.

Few in New Orleans see Mobile as a long-term threat because of the Louisiana city's considerable population, huge port and its sizable oil-and-gas operations. "There are certain companies that need to be here," says Peter Ricchiuti, assistant dean at Tulane University's Freeman School of Business.

Still, the storm has helped position the Alabama city, with its own French roots and Mardi Gras, as an increasingly credible alternative. In June, International Shipholding Corp. announced it would move its 135-person headquarters to Mobile from New Orleans because of uncertainty about the future of the Mississippi River-Gulf Outlet. The company is relocating to the 35-story Battle House Tower, a project funded by the Retirement Systems of Alabama that is set to open in downtown Mobile next year. It will eclipse One Shell Square in New Orleans as the tallest office building on the Gulf Coast, outside of Houston. (Though One Shell Square has 51 stories compared with Battle House Tower's 35, the Mobile building -- topped by a spire -- is taller by 48 feet.)

Since 2004, Mobile has been home to Carnival Cruise Lines' Holiday cruise ship, which has renewed interest in Mobile's 300-year-old downtown. The Retirement Systems of Alabama, the pension fund for Alabama teachers and state employees, is also restoring the grand Battle House Hotel and renovating the 28-story Riverview Plaza Hotel, while clubs are opening up along Dauphin Street and lofts around historic Bienville Square. "Everybody is waking up," says Elizabeth Sanders, executive director of the Downtown Mobile Alliance.

Situated on Mobile Bay some 30 miles from the Gulf of Mexico, Mobile has rebuilt its economic base largely around aerospace, shipbuilding and shipping. Its new container port, a $350 million joint venture between APM Terminals North America -- a unit of APM Terminals InternationalBV -- and Alabama's State Port Authority, is scheduled to open this fall and will expand container-shipping capacity tenfold, officials say.

Mobile has also attracted Austal USA, a division of the Australian company Austal Ltd. that builds aluminum-hull ships, and the city has transformed the former Brookley Air Force Base into an industrial park. Northrop Grumman Corp. has chosen the site should it win a $200 billion contract -- or a portion of it -- to be awarded next year to build a military refueling aircraft.

The boom represents a remarkable turnaround for Mobile, which suffered a series of economic setbacks between the 1960s and 1990s, including the closure of the air base and the loss of some 16,000 jobs. Through the 1980s, the central business district was a veritable ghost town. "It was a terrible, desolate time," says Ms. Sanders.

In the 1990s, the city watched casinos along the Mississippi coast further erode its economy. While gambling is illegal in Alabama (outside Indian reservations), residents of Mobile flocked to cities such as Biloxi, Miss., some 60 miles away. One study estimated that nearly half of Mobile County's residents more than 21 years old visited Mississippi's casinos an average of nearly five times in 1993 -- spending a total of $40 million.

Today Biloxi's casinos are rebuilding bigger than ever, but much of Biloxi and the Mississippi Gulf Coast are in ruins.

Mobile itself suffered some of the worst flooding in 100 years, as a storm surge of 12 feet pushed across the bay and into its downtown. But the city's relatively protected location away from the Gulf and some 40 feet above sea level spared it from the worst.

The population of Mobile County surged by about 10,000 in the three months following Katrina, according to Semoon Chang, a professor of economics at the University of South Alabama; the county, meanwhile, gained some 4,700 new jobs.

Within weeks, Mobile retailers were swamped, just as they had been in 2004 when Hurricane Ivan hit Pensacola, Fla. Tim Nolen, general manager for Mobile's Colonial Mall Bel Air, says September 2005 sales jumped 50% from the previous year, with most of the business coming in the last two weeks of the month. "It felt like a second Christmas," he says.

Hotels filled, then apartments. Housing followed, with sales for October 2005 rising more than 30% above the year-ago period, according to the Center for Economic and Business Research at the University of Alabama. Businesses such as insurance companies sought housing for their adjustors, while others snapped up houses to rent or sell. Melissa Morrissette, a broker with real-estate firm LLB&B Inc. in Mobile, says, "Anything selling for under $350,000 would get up to six offers in a day."

Though still vigorous, Mobile's housing market has begun to slow, and more than half of the 10,000 people who flocked to the county following the storm have moved on. Mobile officials say they knew from the outset that some of the population explosion was temporary. County Commissioner Stephen Nodine says, "For a while, we were the only ones with the electricity on."

The University of South Alabama's Dr. Chang says that while Mobile's sales-tax gains aren't expected to match those of last fall, they are likely to stay well above prestorm levels in the months ahead. He says Mobile's expanding economic base and a continuing windfall from Katrina will sustain the boom. For instance, DRC Inc., of Mobile, is completing the terms of a $33 million contract to haul about 100,000 abandoned vehicles from Louisiana.

Write to Thaddeus Herrick at thaddeus.herrick@wsj.com

Mobile Register

School construction pumps millions into local economy

Monday, April 24, 2006

Construction over the last decade by the Mobile County Public School System has pumped more than $52 million into the local economy annually, according to studies by University of South Alabama economist Semoon Chang.

The $500 million that the school system has spent as part of its largest building campaign ever has generated more than twice the tax revenue than has construction of the $160 million RSA Tower in downtown Mobile, according to Chang.

"Much more than twice," he said.

The school system's construction "is one of the most important economic development projects we've had in recent years. There's no question about that because the amount is so large."

Tommy Sheffield, executive director of facilities for the school system, said the district hired local construction, architecture and engineering firms to do the work. As a result, several local companies had to expand to keep up with the school system's projects.

"We're about the business of education, but we're really, really good for the economy," said schools Superintendent Harold Dodge.

Since 1996, school system projects have directly and indirectly created thousands of jobs. For example, from 2000 through the end of 2007, Chang estimated, the projects will have sustained 975 jobs directly and another 1,877 indirectly.

Though the school system was not charged sales tax on materials and does not pay property tax, the people who worked on those projects made millions of taxable dollars.

Chang estimated that those workers spent most of their money here, helping the local economy.

The workers bought new homes or paid rent, bought cars and gasoline and paid for food, clothes, entertainment and other items. As a result, other businesses profited and were able to hire additional employees to meet the demand, he said.

The Mobile County school system commissioned Chang to do two studies on the economic impact of its construction program. The first covers 1996-2000. And the second, released recently, is for 2000-2007.

Last year, the Baldwin County school board approved a $290 million construction and maintenance plan. Baldwin officials could not be reached Friday to say whether that system has conducted a similar economic impact study.

Chang used a formula adopted by the U.S. Bureau of Economic Analysis to come up with his figures.

The Mobile school system is currently winding down its construction campaign. Two brand new schools -- Haskew Elementary in Theodore and Gilliard Elementary off Dauphin Island Parkway -- are scheduled to open this week.

And construction on the new Collins-Rhodes Elementary School, which will replace Eight Mile Elementary, will begin soon.

Since 1996, the school system has taken out $371 million in bond issues for construction projects. Add that to money spent from the system's annual budget during that time, and the district by the end of 2007 will have paid out $503 million for construction.

By the time the system is finished, 31 brand new schools will have been built in addition to new wings, athletic facilities, multi-purpose buildings and cafeterias or major renovation projects at many existing schools.

Almost all of the system's 100 schools have benefited "in some form or fashion," Sheffield said, though projects at some campuses have been as minor as installing new roofs, sprinklers or air-conditioning systems.

Chang presented his second study at a recent meeting of the Mobile County school board. Several board members said that while they knew the school construction was having a positive impact on the economy, they were surprised to hear how high the actual dollar figures were.

Outgoing board member Lonnie Parsons has suggested that the school system borrow more money to build additional schools. But officials have said that the school district could not afford to do so right now.

Sheffield said the school system still has a list of construction needs totaling another $338 million.

Rod Cooke, owner of Rod Cooke Construction Inc., or RCCI, said his company has done $180 million worth of school construction along the Gulf Coast over the last 10 years, with two-thirds of that being in Mobile County.

"I would say that accounts for 40 to 50 percent of our business," Cooke said. Among his company's projects were the new Blount High School in Prichard, Gilliard and Alma Bryant High School.

Before the hurricanes, Cooke said, some construction businesses were laying off employees off, but not his.

"Absolutely, it's kept a lot of folks in jobs," Cooke said of the school system's construction projects. "I guess that's the biggest thing."

Tommy Lawshe, with Bagby & Russell Electric Co. Inc., said his company installed the wiring in six brand new Mobile County schools over the last few years and installed security systems in dozens more.

The company handled somewhere between $2 million to $3 million in projects for the school system, Lawshe said. As a result, the firm hired about 12 new employees.

"It's not just with our company," he said. "I know it's created new jobs with the other subcontractors and with the general contractors. There were people hired in all crafts to man this work."

Lawshe said he applauds the school system for using local firms to do the work.

"It seems like a craftsman takes a little more pride in what he's doing when it's for his community," Lawshe said. "They're proud to ride by the school with their kids or they go to a football game, and they can say, 'Hey, your daddy worked on that school.'"

The Business View

Alabama's Seafood Industry Continues to Suffer
Updated economic study estimates Alabama seafood industry to lose $112 million

April 2006

By The Mobile Area Chamber of Commerce

The quiet community of Bayou La Batre has exercised its vocal cords a lot lately, belting out a message that its fishing community and seafood industry are struggling, and can’t wait much longer for help.

Prior to Hurricane Katrina, area fishermen and seafood processors were already under pressure to keep their businesses afloat while combating fast-rising gasoline prices and tons of foreign imported shrimp that drastically lowered the market value of Gulf catches.

“This industry was almost on its knees before these last two hurricane seasons,” said Walter Underwood, director of small business development for the Mobile Area of Chamber and staff liaison to the organization’s seafood task force. The Chamber hosted a news conference in February to highlight the lingering effects of Hurricane Katrina on an already fragile industry.

An updated economic impact study of Hurricanes Katrina and Rita, funded by the U.S. National Marine Fisheries Service, was presented with estimates that the Alabama Seafood Industry will suffer more than a $112 million loss. The latest number is updated from a previous estimate of $88 million. And if the federal government doesn’t speed up its efforts, losses will continue to escalate, according to Semoon Chang PhD, director of the University of Alabama’s Center for Business and Economic Research and lead author of the 45-page report.

Chang’s projected losses are based on damages to boats and facilities excluding insurance coverage, cost of vessel removal, value of lost inventories, unpaid wages and invoices and past and future lost sales. Estimates include shrimp and commercial fishermen, dealers and processors, and charter boat owners and operators. Chang emphasized that the report excludes personal properties and non-business expenses and the total impact of the community.

“We’ve heard a lot about things that are in the works on the federal level but we haven’t seen any results,” said Vernon Minton, director of the marine resources division of the Alabama Department of Conservation and Natural Resources and a member of the Mobile Area Chamber’s seafood taskforce.

Minton, referring to the seafood industry, said this is a group of hard-working people who aren’t looking for a handout, but a hand up. Minton would like to see grant programs, small business low-interest loans with long-term payback and fuel subsidies.

Ralph Atkins owns Southern Fish and Oyster Co., a retail and wholesale seafood supplier that has been in business since 1934. He and his family have come back after Hurricanes Camille, Frederic and Danny. Atkins said that he will again revive his business after taking in eight feet of water during Hurricane Katrina that broke down walls and damaged his cooling and freezing equipment.

“It’s all I know. You’re born into the business. You get to be a meteorologist, marketing expert and you have to know your customer. It’s what I like.”

The U.S. Department of Agriculture helps farmers with up to 90 percent of repair expenses, according to Minton. He used the example that if a farmer’s fence fell, the farmer could repair the fence, turn in receipts and get up to 90 percent reimbursed.

“That’s nothing new with land-based programs. We need the same thing for the seafood industry,” said Minton.

While 70 percent of south Alabama’s seafood processing shops are operating again at some level, their recovery is complicated by labor shortages and reduced quantities of seafood from Mississippi and Louisiana.

Alabama is both a harvesting and processing state. Based on value, Bayou La Batre is among the top 10 seafood ports. Eighty to 90 percent of oysters shucked in Bayou La Batre come from Mississippi and Louisiana.

But those communities were hit even harder. Mississippi and Louisiana are still dealing with the lack of infrastructure. “In parts of Louisiana there is still no electricity, no ice, no gas,” said Minton.

Chang’s study is intended to put science into cost recovery estimates and will be used as a model for similar work needed in Mississippi and Louisiana, said Minton. The study spells out the need for assistance.

In his remarks to Congress on Dec. 15, Bill Hogarth said “the Gulf of Mexico is home to a significant share of the U.S. fishing industry, contributing almost 20 percent of commercial landings and roughly 30 percent of saltwater recreational fishing trips.”

Hogarth is assistant administrator of the National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA) within the U.S. Department of Commerce.

The Chamber’s seafood task force will continue to monitor recovery efforts in Alabama’s seafood industry.

“We will continue to vocalize this issue and put the pressure on in Washington D.C. until we see progress and a plan for the future,” said Underwood.

Lagniappe

Katrina's Windfalls
Cover Story

March 14, 2006

By Megan Hill
Contributing Writer

Houston. Baton Rouge. Dallas. San Antonio. Memphis. Atlanta.

These popular destinations have absorbed most of the 300,000 households permanently displaced by Hurricane Katrina.

But don’t forget Mobile.

Some 9,000 people have moved to the port city permanently, according to U.S. Postal Service data. And the effects of this migration have been significant.

Mobile was a temporary destination for many – artists, patients, the University of New Orleans baseball team, Tulane University’s football team, the Times-Picayune, WVUE Fox Channel 8, boats seeking repairs and countless others.

Even though Bayou La Batre and Dauphin Island were slammed by the storm and many skewered County Commissioner Mike Dean for his recent comments that Katrina "really helped Mobile County," it’s true that on a whole, Mobile looks to profit long-term.

While there are certainly local individuals for whom the hurricane was a very real disaster, the overall area economy wasn’t left wrecked and in need of one of those ubiquitous blue tarps. Real estate sales are up, apartments are full, the economy is strong and even Mobile’s most famous celebration reaped the benefits of a devastated Gulf Coast.

The real estate boom

While the quick rash of home sales immediately following Hurricane Katrina is largely over, realtors and builders in Mobile are projecting long-term impacts across the area.

Jeffrey H. Newman, chief executive of the Mobile Area Association of Realtors, said Mobile’s median-level homes went fast just following the disaster.

"We found a slight bump in the weeks immediately following Katrina," he said. Mobile has seen a strong real estate market in recent years, but in 2005 the number of homes sold increased dramatically. Homes sold jumped from 4,697 in 2004 to 5,587 in 2005, or a 19 percent increase.

"A good bit can be attributed to the hurricane. It definitely had an impact," Newman said.

Most of the homes bought were small-to-medium-sized in the Theodore and Tillman’s Corner area, where median home prices made purchases attractive to Gulf Coast refugees.

"A lot of that had to do with people not having insurance by then, so it was easier to buy a smaller home," Newman said.

Mobile was a popular place to move to for two reasons. First, its sheer proximity to the damaged areas made it an obvious choice.

"Mobile is the closest large town that was not very adversely affected," Newman said. But he added that a big reason is that housing here is enticing because the median price for a home in the Mobile area – $125,000 – is 68 percent of the national median price.

"Our housing is very affordable," he said, especially compared to areas like New Orleans.

For those who weren’t able or weren’t ready for anything permanent in Mobile, home and apartment rentals provided a good alternative to purchasing.

"There are virtually no vacancies as far as rental homes go," said Newman. He said the influx of contractors and FEMA workers contributed to the gobbling up of rentals.

"Everything was pretty much immediately swallowed, between insurance adjusters, FEMA adjusters and displaced individuals," said Ellen Maxime, vice president of property management at Delaney Development, a Mobile property management company. Delaney has over 2,000 apartments, 97 percent of which are occupied, not including holdings not yet taken by tenants.

"If we have any vacancies at all, we probably already have people waiting to move in," Maxime said.

These apartments were already pretty full before the hurricane hit, so there weren’t a lot available, Maxime said. Many people are living in apartments that are smaller than what they prefer, but they had to take what they could get.

"People were not able to be choosy. If there was something to be had, they took it," she said. Most of these people probably came from Mississippi and are commuting to jobs at home.

Newman believes Mobile will feel the effects of the real estate boom for two or three years down the road.

"We think it’s going to bring on a big boom in new construction because there’s such a demand," he said. "We think houses will appreciate faster because our inventory of available houses is going down. That little bump in sales of lower-price-range houses has taken a lot of them out of the market. There is a lot of money coming into the area, so sales will continue at a real brisk pace."

Opportunities for the port

Mobile’s port suffered $34 million in damage, but its resilience and quick recovery are likely to make it more attractive down the line. The Port of Mobile was operating at full capacity before the storm, so it wasn’t able to pick up much additional business, said James K. Lyons, chief executive of the Alabama State Port Authority. He said they’ve had to turn down more business than they’ve picked up.

Lyons was hesitant to call Katrina beneficial to the port as a whole.

"Overall, we do not view the storm as beneficial. We gained little business, but I am not sure that the gains will offset the uninsured losses or the tremendous amount of effort and personal time that it is taking to deal with the aftermath," he said.

But the city’s port may still gain somewhat in the long run from the storm, Lyons said.

The port was up and running within ten days after the storm hit and this may help in the future.

"Our infrastructure is pretty hearty and thus more reliable," Lyons said. "In today’s shipping world, reliability is very important. We were handling cargo within a few days of the storm and almost at full speed within two weeks."

Three major chiller-freeze warehouses in New Orleans, Gulfport and Pascagoula were wiped out by Katrina, so Mobile picked up 30 percent more traffic in frozen poultry.

Long term, the benefits will not come in extra business but in reputation, said Lyons.

"Any long-range gains would accrue with the knowledge that our infrastructure is more resilient and that we can get back in operation faster."

Mardi Gras: a bigger party

A bigger Mardi Gras for Mobile was prophesized across the country, as both hotel shortages and a scaled-down show in New Orleans caused Mobile to expect more revelers.

"Naturally we were thrust into the spotlight because of Katrina and the shortened Mardi Gras season in New Orleans," said Leon Maisel, president and CEO of Mobile Bay Convention and Visitor’s Bureau.

And indeed, a larger Mardi Gras was in the cards for Mobile. This year’s celebration reined in over 1 million people, up from last year’s estimate of 850,000 on the season, according to Maisel. Fat Tuesday specifically saw 244,000, up from 170,000 in 2005. Overall, that comes to a 19 percent increase for the season and a 44 percent increase on Mardi Gras Day, Maisel said.

The early signs of a bigger party were increased inquiries on the bureau’s Web site and more calls to its 800 number, said Maisel. And he says the larger crowd didn’t hurt Mobile’s claim to fame: its family-oriented Mardi Gras.

"Many of the bookings according to the hotels were families. We had our usual mix of adult visitors along with family visitors," Maisel said.

And more people means more money for Mobile.

"It could boost our share 8 to 10 percent," Maisel estimated. "It will boost the $400 million economic impact for sure."

Long-term, Mobile looks to gain considerably from its center-stage spotlight at the Mardi Gras party.

"The positive result of the Katrina disaster is our higher profile as a major upper Gulf Coast destination," said Maisel. "Mardi Gras is only a part of that picture. I do foresee us gaining market share in the convention, cruise and event business from our neighbors both east and west of Mobile Bay."

The Mobile CVB marketed the city a little differently this year. Many local attractions were suffering and visitor numbers were down to places such as Bellingrath Gardens and the Exploreum. Usually, the attractions market themselves and do so locally. This time around, they partnered with the CVB and were marketed within a 150-200 mile radius, beginning in September and ending in March to boost numbers, said Harriet Sharer, communications coordinator at Mobile CVB.

"Not just a back-up plan"

And it worked. Not only did locals begin to act as tourists in their own city, but as early as October, more outside travelers were flocking to the Port City. Sharer said this resulted from a combination of the CVB’s marketing efforts, as well as people looking for alternatives to damaged Gulf Coast locations.

Sharer said it’s hard to connect conventions and the hurricane because these are booked in advance. But her office hopes traffic will pick up in that area, as well as with cruises.

While cruise lines wait for New Orleans to start accepting ships – it will reportedly do so beginning in October – Mobile hopes to pick up the slack.

"Our ship has sailed at capacity each time since coming here in October 2004. We hope that will show we do have the market to support more cruise ships in Mobile," Sharer said.

She noted that being in the national media spotlight leading up to Mardi Gras as well as the bureau’s increased efforts to market Mobile as a viable tourist destination, will help the city in the long run.

"Mobile is not just a back-up plan," Sharer said. She added that the health of the entire Gulf Coast is important for tourism in Mobile. "We see it as a Gulf Coast destination" where visitors will book two-week long excursions to the region, visiting New Orleans, Biloxi, Mobile and the beaches. Before the hurricane, people often overlooked Mobile. No longer. Mobile now has now gained the name recognition necessary to be a top destination, said Sharer.

"The hurricane created both some challenges and some opportunities for us," she said. "We met them all face-on and have seen some encouraging results."

Sharer recalled speaking with visitors from Oregon, New York and Philadelphia, who were impressed with Mardi Gras and with the city. They wanted to come to Mardi Gras, she said, but never considered Mobile until Katrina stunted the show in New Orleans. Now, they have a lasting good impression of Mobile.

"Many people I spoke with were impressed with how much there was to do in Mobile between parades – Exploreum, Ft. Conde, Carnival Museum, etc. – as well as being impressed by how clean our city was and how safe our Mardi Gras celebration is," she said. "It’s (Hurricane Katrina) put us in such a spotlight and given us such recognition. That right there is priceless."

A stronger economy

Overall, Mobile’s economy is strong. It’s on pace to out-perform the national economy in 2006, expecting to benefit from increased construction, higher sales tax revenues, low unemployment and more tourists.

Not all of this is due directly to Hurricane Katrina, though, said Dr. Semoon Chang, director for the Center for Business and Economic Research at the University of South Alabama.

"I would not attribute all to Katrina. Even before Katrina hit us, several large projects were in place for sound growth," he said. He cited the construction of the RSA Tower, public school construction projects, the Choctaw Point Container Terminal and more. These projects will complement the benefits of Katrina.

Chang said he expects that the influx of recovery dollars, such as assistance from the federal government and the American Red Cross to continue for three years.

And while Mobile’s early sales tax increases have dropped off since they peaked in September, Chang predicts they will stay strong through August. And that’s saying a lot because the county’s tax revenue has made only minor gains, at best, in recent years.

"Katrina was such a massive storm, the impact will continue although the magnitude of the impact may decrease and fluctuate," Chang said.

Many people in the area are still living in trailers, looking for jobs or otherwise living in Katrina’s aftermath. But the numbers show Mobile as a whole has built a stronger economy and spiced up its reputation as a bright spot along an otherwise devastated Gulf Coast. In the long run, that may turn prove to indeed be a golden lining on a very dark storm cloud.

Mobile Register

Figures show 'Katrina effect' receding
Mobile area received a windfall of revenue in the months after the hurricane

Sunday, February 26, 2006

By DAN MURTAUGH
Staff Reporter

The post-Katrina economic surge in Mobile County is starting to recede, recent financial figures indicate.

In September, right after Hurricane Katrina hit, the county took in more than $5 million in sales tax revenue, a 43 percent jump over September 2004.

The ensuing months have seen that increase trend down. October revenue was up 27 percent from 2004, November was up 17 percent, and December, the most recent month for which complete figures are available, is up 15 percent, according to county figures.

County officials said they're thrilled with the extra revenue, and commissioners have approved more than $5 million in budget amendments this year, much of it because of the windfall.

But officials are now striking a more cautious tone, saying the downward trend shows that the Katrina effect is just temporary, and the extra money should be handled conservatively.

"We don't want to make any long-term commitments based on this revenue," said County Finance Director Michelle Herman.

A one-cent sales tax is the county's largest revenue stream. It was expected to bring in about $47 million in fiscal year 2006, about 43 percent of the $109 million in general fund revenues budgeted by the county.

Sales tax figures for the first three months of the fiscal year indicate that the county stands to take in much more in sales tax revenue. In fiscal 2005, the county brought in $49 million and through December, the county has collected 19 percent more than it had in 2005.

Officials can expect that trend to continue, said Semoon Chang, an economics professor for the University of South Alabama. He said he expects the county's sales tax revenue to continue double-digit percentage growth over last year through August.

"We are really benefitting, there's no question about that," he said.

It's a big difference for a county that had endured either a loss or only modest gain in gross receipts tax revenue from fiscal years 2000 to 2004. The recent windfall has allowed commissioners to open up the county's pocketbook.

Commissioners have approved several different measures to spend about $5 million that was not budgeted at the beginning of the fiscal year. Some of the expenditures, such as $1.7 million for new voting machines, eventually will be reimbursed.

The county has given $750,000 to both the sheriff's office and the county engineer's office for new equipment and vehicles. It has budgeted $325,000 to add a new license commission office in Saraland, although officials don't expect to spend the full amount.

Commissioners voted to give $173,500 to the Revenue Commission to create three new positions. And the commission also gave $100,000 to the Mobile County Association of Volunteer Fire Departments to help fund local matches of federal and state grants.

County Administrator John Pafenbach said a lot of the spending has been on capital requests in the county's strategic plan that have gone unfunded in recent years because of the economic downturn.

"There's quite a bit of pent-up demand and need," Pafenbach said.

Herman said even with the extra revenue there will still be requests that won't be funded by year's end.

Commissioner Stephen Nodine said that now that the capital improvements have been funded, he and his fellow Republican commissioners should consider a spending freeze as they look at a possible tax cut.

Last week the commission approved spending $10,000 to have a conservative think tank, the Beacon Hill Institute, conduct a study of the impact of waiving the county's sales tax for food and non-prescription drugs and also for creating a sales-tax-free weekend for back-to-school shopping.

"We're Republicans who have had substantial revenue growth," Nodine said. "It should be our duty to get money back in the taxpayer's hand, which in turn they will spend back into the economy."

Katrina Costs Seafood Industry $112 Million

February 14,  2006

By Garry Mitchell
The Associated Press 
http://www.montgomeryadvertiser.com

BAYOU LA BATRE -- Getting shrimp nets and oyster boats back into coastal waters was only one step in the storm-battered Alabama seafood industry's recovery from Hurricane Katrina.

With industry storm losses in the state at more than $112 million, according to a new Mobile study, a spokesman for seafood processors in Bayou La Batre said the next step is regaining market share and luring back displaced workers.

But there are a lot of economic unknowns as bills are coming due.

"I don't know what's going to happen this next year, and we're not even there yet," said Greg Ladnier, president of Sea Pearl Seafood Co. Inc. in Bayou La Batre. "There's not that many of us left to support this industry."

Sales collapsed when the bayou's processing plants shut down because of Katrina damage and power outages, idling plants with a 2004 value for processed seafood at nearly $136 million in crabs, oysters, shrimp and fish. The industry had gross sales revenues in 2004 of $398.3 million, compared to $480.4 million the previous year.

From a total loss in September, immediately after Katrina hit Aug. 29, the industry reports that the value of landings is still off 25 percent this year, with shrimp prices apparently a factor in that drop.

Ladnier said the bayou's customers are still there, but, he said Thursday, "production capacity has decreased so much with loss of plants gulfwide." Loss of ice plants in Mississippi and Louisiana "is a huge problem," he said.

Other seafood dealers outside the bayou filled the void in the market during the Katrina shutdown, says seafood dealer Pete Barber, president of the Alabama Seafood Association.

Barber said the recovery could slow down if federal officials impose more restrictions on gulf fishing.

"If you're going to make a business with a natural resource, you have to have some level of confidence in your producers, boats and such, that have an incentive to stay out there to provide a continuous supply. We're competing in a worldwide market," Barber said.

The industry's recovery greatly hinges on how soon fishermen in Mississippi, Louisiana and Texas are back at work. Most of the seafood processed in the bayou plants, about 6.5 miles from the Mississippi border, arrives by truck from other states.

Many in Alabama's seafood industry, which employed about 5,765 workers before Katrina and 2,485 after the storm, expect their sales losses to continue through 2006, according to an economic impact report by the University of South Alabama and the Alabama Department of Conservation and Natural Resources released Thursday.

The report estimated total damages and losses from Katrina to the state's seafood industry at $112.25 million.

In addition, the report estimated potential loss from loans at $61.135 million as some borrowers will be unable to repay them.

Economist Semoon Chang, a co-author of the report and director of the Center for Business & Economic Research at the university in Mobile, said the damages and losses are divided into five groups: damages on boats and facilities excluding insurance coverage; costs of vessel removal; value of lost inventories; unpaid wages and invoices; past and future lost sales.

The boats and facilities figures break down to $19.7 million for dealers and processors, $7.8 million for shrimpers, $5.6 million for other fishermen and $4 million for charter boats. Most of the charters work out of Orange Beach and Dauphin Island.

But the lost revenue and future lost sales for dealers and processors, fishermen and charter boat operators totaled $57.4 million -- more than half of the total industry losses.

Chang said a "real question mark" is future loss of sales in an industry anchored in this fishing village of about 2,700 residents, where the poverty rate is nearly twice the national rate at about 23 percent, with median household income of $24,539 (in 1999 dollars).

"Clearly, some dealers and fishermen lost their facilities and boats to the extent that they cannot recover without government assistance," the report says.

And if assistance comes slowly, the loss estimate is likely to be higher due primarily to the continued increase of lost sales, the report says.

The National Oceanic and Atmospheric Administration, which funded the Mobile report, has not completed its own comprehensive study of Katrina's damage to the fisheries infrastructure in the Gulf of Mexico.

Parts of the gulf were declared fishery disaster areas by NOAA after Katrina and Hurricane Rita, which signaled Congress that it might send aid.

Alabama charter boats without storm damage lost out-of-state business because of negative publicity about the storm devastation and lack of hotel rooms, the Mobile report says.

High fuel prices have compounded the problems for charter boats as well as commercial fishermen. When fuel prices went up last year, some fishermen simply stopped fishing and Katrina only convinced more to stay home.

Mobile Register

Mobile economy big winner after Katrina
Federal report shows conditions in state are far better than those in Mississippi and Louisiana

Wednesday, January 11, 2006

By ANDREA JAMES
Business Reporter

When talking about the fallout from Hurricane Katrina, economists often lump Alabama with Mississippi and Louisiana, but a new federal report indicates that the states' economic conditions are drastically different.

In the third quarter of 2005, Mississippi had the highest unemployment rate in the country at 7.9 percent, followed by Louisiana at 7.6 percent. Alabama's figure was among the nation's lowest -- just under 4 percent.

In quarterly job growth, Alabama ranked 29th nationally, while Mississippi and Louisiana experienced net losses and finished among the bottom three nationally. That's because the catastrophic Aug. 29 storm wiped out 290,000 jobs in Louisiana and Mississippi, setting the states back after years of gains, according to a Federal Deposit Insurance Corporation analysis of regional economic data released Tuesday.

"Alabama's experience in the wake of Katrina is going to be quite different than Mississippi and Louisiana," said Jack Phelps, an FDIC regional manager in Atlanta. "In terms of industry performance, you are going to see winners and losers."

The economy in Alabama, and particularly Mobile, was one of the "big winners," University of South Alabama economist Semoon Chang said in a separate presentation given in Mobile Tuesday morning.

However, south Alabama has some big losers too, Chang noted in a presentation to Mobile United. Most notable were problems in the seafood and attractions industries, Chang said.

For example, Katrina will cost Alabama's seafood industry almost $90 million in lost sales, wages and property damage, according to data compiled by Chang.

Winners like the city of Mobile, which can expect increased tax revenues, should help the losers out, Chang said. He suggested direct aid for Bayou La Batre, hardest hit among seafood towns, and a city effort to buy tickets from tourist attractions that suffered declines in attendance.

Although Alabama weathered Katrina in much better fashion than its neighbors to the west, local business leaders have struggled with a national perception that Mobile sustained heavy damage. Almost immediately after the storm, conventions were canceled and Delta Air Lines cut half of its flights from Mobile Regional Airport. A Delta official later said the company thought Mobile had been destroyed.

"People have an image of a place from the last thing that they remember or what they saw," said Bill Sisson, who leads the Mobile Area Chamber of Commerce's economic development effort. "What a lot of people remember after Katrina was downtown flooded on CNN."

To combat the image, local and state tourism bureaus last fall launched a $400,000 nationwide media advertising blitz, with the help of a federal grant, to tell the country that "Mobile is open for business."