The Florida Times Union

Mobile's economy on upswing with major industrial scores

March 20, 2008

By GARRY MITCHELL
 

MOBILE, Ala. - Alabama's port city lost some 16,000 jobs in the late 1960s when the government closed Brookley Air Force base, an economic blow to a historic city proud of its giant live oaks and quiet Southern charm.

With a new downtown skyscraper, its first black mayor and plans for a German steelmaker to locate a huge plant nearby, Mobile's economy is taking off again and could be fueled even more by an assembly plant for Air Force refueling tankers.

Chicago-based Boeing is protesting the Air Force decision to give a $35 billion contract to Northrop Grumman Corp. and European Aeronautic Defence and Space Co., which have picked a Mobile site for the tanker plant. But civic leaders are upbeat about the prospect of the city becoming a jobs magnet in aerospace, steel, shipping and chemicals.

While the city - set back by political corruption in the late 1970s - has markedly changed since the Brookley heyday, it still boasts coastal lifestyles, pastel-colored gardens and Azalea Trail maids in antebellum hooped skirts posted at city welcoming ceremonies.

But the state's tallest building - the new 35-story RSA Tower - now overlooks the waterfront, and the city's first black mayor, Sam Jones, has been at the forefront of a bare-knuckle political war being waged over the tanker contract.

Shipping executive Robert Guthans, who turned 79 on Thursday, said Mobile is making a "smooth transition" to a bigger city while still holding to its traditions.

"The political climate is better than it's ever been," said Guthans, who was president of the Mobile Area Chamber of Commerce when the Air Force pulled out of Brookley.

The city's economy has had booms and busts over the last three centuries, dating back to pre-Civil War days when cotton was king here. War production jobs surged in the 1940s.

In more recent decades, the closing of Brookley Air Force base - blamed on Washington politics - was a blow to the economy that "depressed the real estate market for a long, long time," recalled Leigh Vaughan, general manager of the Downtown Air Center.

In the 1980s, more jobs were lost with the pullout of Scott Paper Co. and International Paper.

Today, Vaughan said, he's "never seen such a total positive atmosphere" in the city because of the new steel and aeronautical industrial prospects. In a twist, the once-shuttered Brookley field survived as an industrial park that now could be home to the Northrop Grumman aircraft plant.

Semoon Chang, an economist who is director of the Center for Business & Economic Research at the University of South Alabama, said Mobile's economy is "about to explode" because of new industry, including the ThyssenKrupp steel mill in north Mobile County. The German steelmaker is investing $3.7 billion in a steel processing facility, creating 2,700 jobs.

Mobile and Baldwin counties had a combined population of about 576,175 in 2007, according to U.S. Census figures released Thursday.

Tallying up the new and expanding industries in aerospace, steel, shipping, shipbuilding and plans for an auto-racing track, Chang said some 10,000 jobs could be created in the next several years, with a ripple effect.

That raises questions of adequate housing and schools for the new arrivals as changes already are evident to local residents.

Greg Watson, 33, of Semmes said he's noticed neighborhoods popping up on Mobile County tracts where he used to hunt deer. Watson said he welcomes the new jobseekers.

Trendy new condominiums, hotels and restaurants are opening downtown and historic buildings are being converted for loft-style living.

"It's not going to be anything negative, probably more traffic," said Watson, who works in retail sales. "People will buy clothes and eat out."

Carl Magee of Mize, Miss., supervising construction of a new Hampton Inn downtown, set for completion in October, said word has spread among contractors that Mobile is "THE place" for new construction for the next decade.

"It's the biggest in the South as far as future work," Magee said.

Economics professor Beck Taylor, dean of Samford University's Brock School of Business in Birmingham, said foreign investors, particularly Europeans, have been drawn to the Southeast for the "quality of life," among other attractions. He cited the Mercedes plant at Vance, west of Birmingham, as a catalyst for accelerating that foreign investment in Alabama.

Bill Sisson, Mobile's lead industrial recruiter, listed a half-dozen major projects that over the next decade will impact the area, including shipping from the city's harbor on Mobile Bay.

The port has been ranked by the U.S. Army Corps of Engineers as the 10th largest U.S. port in its 2006 port cargo tonnage by volume rankings - about 60 million tons - moving up a notch from its 2005 position with about 57 million tons.

Port Authority Director and CEO Jimmy Lyons said the Alabama port has invested over $500 million in infrastructure in the last several years, bringing in new customers. The port has more than 7,200 workers in Mobile and thousands more in related industry.

Sisson said the new Austal USA shipbuilding operation could become the largest manufacturer in the city with 2,000 jobs. Currently, aerospace is the largest manufacturing employer.

A new National Cancer Institute also will employ more than 600, creating thousands of physician and scientist positions, Sisson said.

"The demands on the region's current infrastructure will be significant, so infrastructure and work force development become our region's top priorities," Sisson said.

Mobile Register

Economist predicts boom from Spanish Fort project

Saturday, May 31, 2008

By DAVID FERRARA
Staff Reporter

SPANISH FORT — For at least the next two generations, joblessness in Spanish Fort should be almost nonexistent as long as The Highlands — an 11,000-acre, decades-long project — is under construction, a University of South Alabama economics professor said.

Anyone living in this constantly expanding city — a growth that shows no sign of slowing with this project — who wants a job should be able to get one, according to Semoon Chang, an economist who tracks Mobile business activity, who was paid by landowners International Paper for his research.

"It's just obvious because that project alone will hire hundreds of people," Chang said in a recent telephone interview, discussing a report on how the development will affect south Alabama. "And Spanish Fort has nowhere close to supplying all the manpower needed. I have no doubt about that one. There will be no unemployment problem in Spanish Fort for the next 40 or 50 years."

That's how long developers said it will be before The Highlands are complete.

Chang acknowledged that workers from other areas might have stronger skills at certain jobs than folks in Spanish Fort. But for the most part, he said, any unemployment in Spanish Fort through about 2060 would be voluntary.

International Paper, which owns the land that stretches up Alabama 181, extending north of U.S. 31 from Spanish Fort High School to Bromley Road, hired Chang recently to perform a study on how The Highlands would impact Spanish Fort, the Alabama Gulf Coast and the state.

The company expects to plant as many as 27,000 new residential units inside dozens of neighborhoods, surrounded by hotels, motels, hardware stores, schools and hospitals.

Chang, the director of the University of South Alabama's Center for Business and Economic Research, said in an interview this week that he was overwhelmed by the size of the project. He predicted that over the next 50 years the total output of construction, jobs and spending could top $8 billion. That figure is comparable to what the Thyssenkrupp steel plant would generate in three years, he said.

"The more I looked at it, I thought 'wait, what is going on here?'" Chang said. "There's just some mind-boggling numbers. That's going to change the characteristics of Spanish Fort."

At the height of the project, in 2022, The Highlands would provide jobs for about 7,000 people, according to Chang's report.

It would cost about $40 million to build roads, lighting and sewer throughout the area, he estimated. In figures comparable to today's dollar value, Chang said that the average home would cost roughly $200,000.

Stone Brook, the first 250-home subdivision, alone should provide anywhere from 100 to 150 jobs for electricians, plumbers, road workers, engineers and other construction site laborers, according to developer Jeff Thompson. The first few Stone Brook homes, which are slated to cost anywhere from $150,000 to $200,000 and run between 1,250 and 1,620 square feet, should be completed by the fall, Thompson added. Last year, Thompson paid about $1.9 million for about 80 acres, he said.

The City Council welcomed International Paper with open arms when the company announced plans to convert the land into a sprawling residential and commercial area that would launch the population of the once-quiet town to 60,000, from its current 5,000.

But with the praise, there's been at least one snag.

Brian Dangler, IP's project manager, said the company was trying to work with Baldwin EMC on paying for the main electrical trunk line for the infrastructure.

Baldwin EMC spokeswoman Karen Moore said the not-for-profit cooperative requires developers to pay for underground services, and wouldn't be able to recoup the losses.

The two companies are scheduled to meet again in the next few weeks, and Dangler said that dispute shouldn't affect the Stone Brook subdivision.

About four months have passed since the last sale on the entire Highlands property, when Pensacola developer Joe Endry purchased about five acres for an office site, but the slow sales reflect the economy, said Brien Griggers, of Coldwell Banker United, Realtors, who is marketing the land for IP.

"We launched it in a slow market and we realize it's going to be a little slow until we come out of this bad market," Griggers said. "But we do have a lot of people looking at The Highlands. Due to market conditions, they're really taking their time before they make that plunge."
 

Mobile Register

Don’t overlook this other large project

Monday, June 2, 2008

Editorial

Everyone has heard about the three big economic developments coming to the Mobile area: the Northrop Grumman-EADS assembly plant at Brookley Field, the ThyssenKrupp AG steel plant in Calvert and the Alabama Motorsports Park in Prichard.

The projections of thousands of new jobs and billions of dollars in investments that are expected from these three projects are well-known. What hasn’t been so publicized is a fourth project – one that could be just as big over the long run.

It is the Highlands, a planned community that, if the financial projections and developer’s expectations are correct, will turn little Spanish Fort into the hottest spot in Baldwin County.

Semoon Chang, the economics guru at the University of South Alabama, has put out an economic impact study on The Highlands that contains some staggering numbers: $4.45 billion worth of construction of new homes and commercial businesses; 162,817 jobs with a payroll of $4.6 million; and hundreds of millions of dollars in new tax revenue for Spanish Fort, Baldwin County, the Baldwin County public school system and the state of Alabama.

What’s the catch? These projections play out over the next 42 years, through 2050. For example, Dr. Chang says the number of jobs related to The Highlands in any one year will peak at 7,246 in 2022.

The Highlands is expected to include more than 1,000 multi-family units (such as apartments) and 27,350 single-family homes on about 11,000 acres of International Paper Realty land north of the currently settled part of Spanish Fort, toward Bay Minette. It will involve multiple developers, roads, churches, schools, restaurants, and other commercial structures.

With housing in varying price ranges, The Highlands is expected to draw employees of the large new employers such as ThyssenKrupp and of expanding businesses such as shipbuilding.

But financial projections running decades into the future have drawbacks: Dr. Chang bases everything on “today’s dollar,” and there is less certainty about the distant future than about what might happen in the next five years. 

On the other hand, even if Dr. Chang is very wrong, it would still be a huge project. For example, who’s going to complain if there are “only” 80,000 jobs over the next 42 years instead of more than double that number?

A massive project that alters the settlement patterns of Baldwin County necessarily presents infrastructure challenges. Spanish Fort’s current population is about 5,600; it may increase to 60,000. 

Already, International Paper is trying to negotiate with Baldwin County Electric Membership Corp. for electrical service. The Highlands also will need roads, water and sewer service, streetlights, schools and more.

City agencies like the Spanish Fort Police Department will have to expand, but city officials will have to balance the flow of increased tax revenue with the need to expand city services to meet the ever-growing requirements of The Highlands.

The rewards, however, should be great for all governments that receive tax revenue and for people who benefit from the new jobs and residential options. 

The development’s community profile may not be as high as that of an aerial tanker assembly center or multiple racetracks, but The Highlands community eventually could become as important to Baldwin County as any of the other big ones on the drawing boards.

Mobile Register

EconSouth

Federal Reserve Bank of Atlanta

Manufacturing Revs Up Mobile

Volume 10, Number 2, Second Quarter 2008, pages 3, 25

By: Charles Davidson
 

Change is afoot in Alabama's oldest city.

The port town of Mobile, Ala., 300 years old in 2002, anticipates welcoming two of the biggest industrial employers the city has seen since a World War II–era shipbuilding frenzy. Given Mobile's international heritage—the flags of France, Britain, Spain, the Confederate States of America, and the United States have all flown there—it is perhaps appropriate that the new factories largely will be courtesy of European companies. Moreover, Mobile's economic progress of late has been helped mightily by an Australian shipbuilder and an aerospace firm based in Singapore.

The economy goes boom
Already, Mobile County's population has begun to rise after a decade stuck at about 400,000. And forecasters predict the city is on the cusp of a full-blown economic boom.

Moody's Economy.com estimates that between 2007 and 2012, Mobile County's economy will have the greatest expansion among all 363 U.S. metropolitan areas. Economy.com and Forbes.com forecast the Mobile economy will grow 34 percent during that five-year period.

Forbes attributes the coming boom to the $3.7 billion ThyssenKrupp steel mill scheduled to open just north of Mobile in 2010, Austal USA's ongoing success in shipbuilding, and the Northrop Grumman/EADS airplane assembly plants slated to be built in Mobile. The city's port and access to interstate highways 10 and 65 are also major assets to its growth.

Based solely on projects already planned or under way, the Mobile area could easily add more than 15,000 jobs in the next three to five years, said Semoon Chang, professor of economics and director of the Center for Business and Economic Research at the University of South Alabama in Mobile. By comparison, from 2000 to 2007, Mobile added just 3,200 jobs, according to the U.S. Bureau of Labor Statistics, with the majority being added only recently.

Manufacturing and more
Austal USA has been a critical factor in Mobile's recent growth. The Perth, Australia–based shipbuilder opened its U.S. base in 1999, "and ever since, the metro area has bloomed as a manufacturing center," according to Forbes.com. Austal's arrival helped to salve the wounds when the area's venerable economic pillars, International Paper and Scott Paper, gradually shrank and finally closed paper mills in the late 1990s and 2000–01, respectively.

Austal is currently Mobile's second-largest manufacturing employer, with 1,100 workers and a plan to roughly double its shipbuilding capacity, mainly to supply U.S. Navy combat ships. The company launched the first such vessel, a futuristic 417-foot aluminum craft, in late April and is expected to add about 4,000 workers in the next few years, according to Chang.

Along with shipbuilding, the aerospace industry has surged in recent years. Mobile's present top manufacturing employer, with 1,302 workers, is ST Mobile Aerospace Engineering, a unit of a Singapore-based company that opened an aircraft servicing operation at the Brookley Industrial Complex in 1990.

Mobile's Alabama State Docks complex has also contributed to recent growth. It now ranks as the 10th busiest seaport in the country based on tonnage, according to the U.S. Army Corps of Engineers.

Even more development is on the way, including a new container terminal at the Port of Mobile scheduled to open in September and the planned Alabama Motorsports Park and Dale Earnhardt Jr. Speedway.

The biggest bang
But of all the currently anticipated new development, ThyssenKrupp's plans are expected to have the single biggest impact. After an intense competition among several states, the German steelmaker was wooed to Mobile by $810 million in state and local government incentives. With a workforce of 2,700 projected at its opening in 2010, ThyssenKrupp would immediately become the area's largest manufacturing employer.

The Northrop Grumman/EADS plants are a close second in terms of expected economic impact. The Air Force refueling tanker and civilian cargo plane assembly plants are expected to employ about 1,800. (European aircraft maker EADS opened an office last year at the Brookley Industrial Complex and already employs 75 aerospace engineers.)

Pending the outcome of a Boeing protest of the awarding of the Air Force tanker contract to Northrup Grumman/EADS, Airbus tentatively plans to break ground on the $600 million center at Brookley Field on June 28 and start producing the commercial freighters within two years, according to the Mobile Register. The aircraft assembly plant would almost certainly attract numerous suppliers, Chang noted.

A couple miles north of Brookley, the $300 million Mobile Container Terminal at Choctaw Point is expected to create 300 jobs. The terminal will eventually add two million annual tons of containerized cargo to the 700,000 tons the Port of Mobile currently handles each year, according to the Alabama Port Authority, which operates the docks. All the property abutting the terminal has been snapped up for warehouse and other development, Chang said.

Although plans are in place, construction has not yet begun on the proposed Earnhardt Speedway complex in Prichard, an area adjacent to Mobile. Chang said the complex would create about 2,000 full-time jobs, most of them in the lower-paying service sector.

Growing pains
"In three to five years, Mobile will be a boom town," Chang said. But all this additional activity creates challenges. For example, roads will likely need improvements. A long-debated Interstate 10 bridge into the city, which would supplement the aging and narrow Wallace Tunnel, is now more likely than ever to be built, Chang noted. The bridge would cost about $1 billion and take eight years to build, according to Bill Sisson, vice president of economic development at the Mobile Area Chamber of Commerce.

In addition, finding enough highly skilled workers to fill the new positions could be a challenge. "Workforce development becomes a huge issue for this community," Sisson said. The state, city, county, and local community colleges and schools have established an umbrella job training initiative to help satisfy the demand. The initiative is setting up training centers specifically for ship building and aerospace workers and for ThyssenKrupp.

If the predicted boom does come, it won't be Mobile's first. By 1840, as cotton growing spread farther inland, the city became the nation's second-biggest cotton exporter, behind New Orleans. And by 1860, Mobile was the second-largest city in the Southeast, again trailing only New Orleans.

Another boom occurred 80 years later, when workers flocked to Mobile to build Allied warships. Between 1940 and 1944, Mobile County's population soared by 91,000 people, to 233,000. But when World War II ended, so did about 40,000 defense jobs.

Today, another bonanza looms for the city. This time, though, the diversity of development means it is unlikely to end as suddenly as previous ones.