What company is downsizing again in the Yellowhammer State? Who holds the key to auto industry boom in the state? Which Alabama company has purchased a defunct power plant in Maine?
Answers to the these questions and more in today’s Alabama business roundup.
Alabama NewsCenter: Mercedes holds key to Alabama auto industry boom
In the 20 years since Mercedes-Benz began producing the M-Class SUV in Tuscaloosa County, Alabama’s auto industry has roared to life in communities across the state.
Vehicle production has steadily risen to make Alabama one of the Top 5 auto-producing states in the U.S. Last year, for the second year in a row, workers at Mercedes, Honda and Hyundai combined to build more than 1 million vehicles.
Jobs are on the rise, too, growing by more than 200 percent over the past 15 years.
In 2016, there were 38,730 jobs at auto, engine and motor parts manufacturers in the state, up from 12,760 in 2001, according to data supplied by the Economic Development Partnership of Alabama (EDPA).
The average annual earnings of all of those jobs combined is $70,680.
Meanwhile, the economic output of the state’s auto and parts manufacturing industries has grown from an estimated $1.1 billion in 1997 to about $6.2 billion by 2014, according to the Center for Business and Economic Research at the University of Alabama.
On Feb. 14, 1997, the day the first customer-ready M-Classes began rolling off the assembly line, no one dreamed where it would lead, said Steve Sewell, EDPA executive vice president.
“The growth and economic impact have far exceeded our expectations, and the industry’s extraordinary success has earned the state a reputation as a top business location,” he said.
While Mercedes started it all, the industry would not be what it is without the major contributions of Honda and Hyundai, which built their own auto assembly plants in the state in the years following the M-Class debut, as well as Toyota’s engine plant and hundreds of suppliers and support businesses.
But Mercedes’ decision to build its first U.S. manufacturing plant in Alabama was a signal seen around the world that the state was fertile ground for new business opportunities, said Greg Canfield, secretary of the Alabama Department of Commerce.
“That decision was the key that opened the doors to an industry that continues to create new opportunities today,” he said. “It was a vote of confidence from a premium automaker with a long and storied history of innovation and excellence that saw great potential in Alabama.”
That signal is still reverberating globally, as Mercedes has completed multiple expansions at its Tuscaloosa County operations, Canfield said.
Today, the facility, known as Mercedes-Benz U.S. International Inc., has seen investment valued at more than $4.5 billion and has the capacity to produce 300,000 vehicles per year.
Another expansion, which includes a new body shop, major enhancements to the SUV assembly shop and upgraded logistics and IT systems, is in the works. The project is valued at $1.3 billion and will create 300 jobs.
“Mercedes’ initial vote of confidence in Alabama has been proven correct time and time again, thanks to the company’s strategic vision and the skill and dedication of their workers here who have helped them achieve and surpass those goals,” Canfield said.
Alabama’s business recruiters often say the Mercedes success story helps in courting other companies, and not just those in the auto industry.
The automaker’s presence here helped usher in a new era of foreign direct investment in Alabama, in industries including automotive, aerospace, chemical and more. In 2015 alone, the state’s FDI topped $3.4 billion.
Mercedes has lifted other areas of the state’s economy, too.
The company is consistently Alabama’s top exporter, and in 2015 alone shipped more than $5 billion in products to 135 markets around the world.
Overall auto exports for that year, the latest for which data is available, topped $7 billion, a record annual total and a 5.8 percent growth from the previous year. Exports of motor vehicle parts reached $1.2 billion, an 18 percent increase.
“Mercedes has had a transformational impact on Alabama’s auto industry, as well as the state and its economy as a whole,” Canfield said. “With new growth on the horizon for the company in Tuscaloosa County, we anticipate even more opportunities for Alabama workers and support businesses throughout the state.”
Google Fiber is losing hundreds of employees, according to press reports, but it still plans to bring its Gigabit Internet service to Huntsville.
Google Access, the part of the larger Google empire that oversees fiber, is moving hundreds of fiber employees to other jobs, the website Business Insider reports. The report says no employees will be laid off, but they will be moved to divisions that are growing such as cloud and hardware.
Earlier reports said Google wouldn’t expand to several cities as originally planned, and there has been speculation that Alphabet, the Google parent company, will sell the fiber division. Business Insider discounted the sale reports on Wednesday.
“Google Fiber is committed to Huntsville. Once the Huntsville Utilities fiber network is built we intend to bring Google Fiber to Huntsville as planned,” a spokeswoman said Wednesday. “We can’t wait to share Google Fiber with the Rocket City.”
Birmingham Business Journal: Alabama company buys defunct Maine power plant
A newly formed Alabama company recently purchased a mothballed biomass power plant in northern Maine and plans to create about 300 jobs there.
The company, 42 Railroad Ave LLC, plans to bring the former Sherman Development Power Plant in Stacyville, Maine online as a renewable energy facility. The company was recently established by CEO Steven Johnson, a longtime renewable energy investor and redevelopment entrepreneur, and focuses on heavy industrial and small-town revitalization projects.
The company bought the 24 megawatt power generation station from Niagara Worldwide LLC after more than four years of negotiations, according to a press release. A purchase price was not made available.
Johnson said he plans to rebuild the turbine, activate new transmission lines, and build a rotary kiln to produce more than 100 tons per day of activated carbon, which has a number of applications, including water and air purification, oil spill cleanup, medical treatments, and trapping mercury emissions from coal-fired power stations.
“Sherman Power Station was constructed to be the diamond jewel of the industry, with an automated feed system and other state-of-the-art technologies, which have been maintained very well by Wheelabrator and Boralex, and when the plant was shuttered a few years ago, it was shut down properly, with all the infrastructure left in place to make the restart very economical,” Johnson said. “In today’s market, the cost to build a biomass fueled power generation station of this magnitude could easily be over 100 million dollars, but at Sherman, even with installation costs of the new activated carbon rotary kiln, we’ll still be able to keep the re-start budget under 10 million dollars.”
The deal makes 42 Railroad Ave the owner of one of the largest privately owned power stations in the United States.
2016 feasibility study conducted by Jonathan Bjork of Alabama-based Viking Green Energy Exploration confirmed the plant to be intact and available for use.
Johnson said the Sherman Plant as a solid return on investment, with projected revenues of $34 million per year. The company expects to have the plant operational by June.
Whole Foods remains committed to Alabama after announcing plans to shutter nine stores this year in the U.S.
Betsy Harden, a spokeswoman for the Austin supermarket chain, said the stores that will close or have already closed are in Georgia, Colorado, California, New Mexico, Utah, Arizona and Illinois. The retailer has also closed one commissary kitchen and will shut down two others in the coming weeks.
Whole Foods, which has 93 stores in development, also recently terminated two leases and signed four new ones. Harden said the company is renewing its portfolio and being “more thoughtful” about future expansion.
“As a company, we are looking forward to continue to grow,” she told AL.com.
The company’s most recent earnings report shows comparable store sales dropped for the sixth straight quarter to 2.4 percent in the 16 weeks ending Jan. 15. Total sales were up 1.9 percent, while net income was $95 million overall.
Whole Foods launched 13 stores, including two relocations, during the first quarter. In the current second quarter, the grocer has already opened three stores and expects to open three more soon.
Whole Foods has been in expansion mode in Alabama since 2014, opening stores in Mountain Brook, Huntsville, Mobile and Montgomery over a two-year period.
John Mackey, CEO of Whole Foods, co-founded the organic and natural foods store in 1980 with Rene Lawson Hardy, Craig Weller and Mark Skiles. The business now employs 87,000 team members and has more than 465 stores in the U.S., Canada and United Kingdom.
Mackey said they are “committed to taking every step necessary to improve comps and deliver higher returns for our shareholders.”
“To this end, we are refining our growth strategy, refocusing our efforts on best serving our core customers, and moving faster to fully implement category management,” he said in a statement.
Birmingham Business Journal: North Alabama manufacturing plant to lay off more than 300
A fiber manufacturing plant in Jackson County is shutting down a significant portion of its operation segments.
According to AL.com, Beaulieu America in Bridgeport plans to shutter its extrusion, cabling and heat set operations by March 31. The move will put 359 employees out of work, according to the state’s Worker Adjustment and Retraining Notification list.
“Our associates there have performed very well over the years, and we are grateful for their dedication and service,” company president Michael Pollard said in an announcement. “We determined that these short-term changes are necessary to allow us to invest long-term in our commercial, residential carpet and hard surface product offering.”
The Bridgeport plant has been in operation since 1987, while a separate fabrics facility has been open since 1990.
Still, more jobs are on the way to the area after Franklin Haney’s November purchase of the Bellefonte Nuclear Plant. Plans are in place to finish the generating station and bring the plant back online, a move the developer’s proposal claims would create up to 12,000 jobs.