Martha Roby: Alabama’s second district is open for business
We don’t often hear about it on cable news, but we have a lot to be proud of in our country right now. In June, our economy added 224,000 jobs, and in July, we added 164,000. The National Federation of Independent Businesses (NFIB) this month released a survey indicating that optimism among small business owners is strengthening, and I saw this trend firsthand during my time on the road in the Second District last week. During my recent district travel, I had the opportunity to participate in two NFIB roundtables, one in Headland and the other in Opp, where I heard directly from farmers, small business owners, and community leaders about what they’re experiencing on the ground. While the energy is largely positive, one major challenge they face is finding qualified workers to fill the jobs they’re creating. In Alabama, we are fortunate to have a strong, vibrant community college system that offers countless educational and professional opportunities to students in our communities, ultimately creating the workforce that our small businesses rely on. In Congress, I have been a vocal advocate for properly supporting and funding our two-year schools, and I will continue to fight for their interests. We must always ensure that our community colleges have the tools they need to train today’s students for tomorrow’s jobs. Of course, our state has many large manufacturers and chain stores that make significant contributions to our economy, and we should always be thankful for that. However, it’s the local small businesses that are the heartbeat of our cities and towns, passed down through generations, defining the culture of our communities. As the representative for countless small businesses here in the Second District, I consider it a tremendous responsibility to fight for their well-being by advancing policies that foster economic growth. I remain committed to continuing this important work on their behalf. I cannot express enough how beneficial it is for me to hear directly from the people I represent, and I greatly appreciate all the hardworking people who took time out of their busy schedules to share their views with me this month. The bottom line is that Americans are confident in our economy, and rightfully so. I will continue to work alongside my colleagues in Congress and the Administration to hopefully deliver more policies that unleash our economy and create jobs here in our country. Martha Roby represents Alabama’s Second Congressional District. She lives in Montgomery, Alabama, with her husband Riley and their two children.
Kemira investing $71 million to expand Alabama operation, creating 20 jobs
Finland-based Kemira announced it is investing $70.8 million to expand production at its Mobile facility. The company is a polymer producer serving the pulp and paper, oil and gas, and water treatment industries. The project will create an additional 20 jobs, growing Kemira’s Mobile workforce by 32 percent, to handle new process operations, increased logistics and the support functions at the site. “For Kemira this investment is an important step toward the growth objectives outlined in our strategy. It also secures our position as a leading global polymer producer and demonstrates our continued commitment to the oil and gas industry,” said Pedro Materan, senior vice president, Oil & Gas, at Kemira. Richard Ryder, Kemira’s Mobile plant manager, said construction will begin this year and the expanded plant will be operational in 2021. “We are expanding on our current footprint and will significantly increase production to meet our customers’ demand in the oil and gas industry,” Ryder said. ‘Renewing a relationship’ The existing site first opened in 1938, initially focused on the area’s lumber and pulp and paper businesses. Over time, Kemira said, the site began serving the wider industrial water treatment industry and, more recently, the oil and gas industry. Kemira utilizes chemistry to add optimal quality, functionality and strength to paper and board products, ensure the safety and hygiene of water and food packaging, and maximize yield from energy resources. Mobile is one of three Kemira facilities in the U.S., with others in Columbus, Georgia, and Aberdeen, Mississippi. Kemira’s parent company, Kemira Oyj, is based in Helsinki, Finland, with its Americas headquarters in Atlanta. “There has been significant growth in the area’s manufacturing and chemical sectors, whose companies historically and continue to provide high-paying jobs for our community,” said Shelby Glover, the Mobile Area Chamber’s senior project manager of economic development. “I look forward to seeing what the future holds for Kemira as they continue to excel in Mobile,” Local officials welcomed Kemira’s decision to expand its Mobile operation. “This expansion by Kemira is about more than just jobs – it’s about a global company reinvesting in our city and renewing a relationship that dates back more than 80 years. When existing businesses are thriving in combination with new jobs and investment, that’s a winning formula,” Mobile Mayor Sandy Stimpson said. “We are very excited about Kemira’s decision to expand operations in Mobile County to meet customer demand. Their additional $70 million capital investment and 20 jobs further demonstrates Mobile’s growing attraction for foreign direct investment,” said Mobile County Commission President Connie Hudson. Republished with permission from Alabama NewsCenter
Velocity Accelerator companies start ‘boot camp’ at Birmingham’s Innovation Depot
Seven high-growth companies are one week into a 13-week intense “boot camp” of development that organizers believe is key component to the tech-sector economic development efforts to drive Birmingham forward. Velocity Accelerator introduced its seven cohort companies to the public this week. This is the third class of cohorts to go through the program at Innovation Depot. The companies range from startups to a 14-year-old business. What all of them have in common is that they’re established with a product and revenues and a diversity that is seen as part of the secret sauce that makes Velocity Accelerator work. “We intentionally don’t focus on one industry sector,” said Devon Laney, CEO of Innovation Depot. “I think it’s part of the strength of the program to have diversity in the industries and the sectors and to be able to attract companies from outside of Alabama to Birmingham and hopefully stay when they get done.” The past two Velocity Accelerator classes taught organizers that having companies at the same stage in their development was also important. “We wanted companies that were all at a very similar place – companies that all had revenue, they all had products,” Laney said. “They were all at a very similar stage so that the curriculum of the Velocity program would be applicable throughout the program at the same time to all of the teams so that they could move through the program sort of together, really, in a lot of ways, and progress at the same pace throughout the program.” This year’s cohort companies are: Fanboard was founded in Atlanta by Morgan Drake, Josh Fisher and James Simpson and marries augmented reality with live events like sports and concerts S(w)ervice was formed in Birmingham by Thomas Walker and Warren Wills and offers an on-demand auto maintenance solution with appointment bookings and vehicle valet services. Babypalooza is a Birmingham company founded by Cecilia Pearson that is a parenting platform where live events intersect with technology to make it easy for new, expectant and hopeful parents to access the products, people and parenting information they need most. Uptime Dynamics was founded in Birmingham by Thomas Smillie, Tom Woodruff and Maggie Belshe to redefine what a computerized maintenance management system can do for manufacturers. Need2Say was started in Birmingham by Oscar Garcia with the mission of helping you communicate what you Need2Say in your second language so that you will realize your full potential in school, work and daily life. Milk the Moment was founded in Nashville by Courtney “Coko” Eason and uses the MILK App, which rewards you whenever you refrain from using your phone in places or situations where we all could be a little more present, intimate, focused and safe. Fledging was formed in Birmingham by Weida Tan and Steven Robbins and produces premium electronics like storage products, such as its flagship product, Feather SSD (Solid State Drive) for Mac devices. Over the next several days, Alabama NewsCenter will feature each of the companies in this year’s Velocity Accelerator program. Laney said companies from all over the world applied to be part of the new Velocity Accelerator cohort, bolstered by the successes of the previous two classes. The initial Velocity Accelerator in 2017 had nine companies, three of which had raised additional capital by the end of the program and two more have done so since. In 2018, there were seven companies, five of which raised follow-on capital and two of them from out of state relocated and stayed in Birmingham. “We’re looking at this as economic development,” Laney said. “We see this as a pipeline of growth companies that we can help support, attract to Birmingham and retain.” Laney said the first two Velocity Accelerator cohorts took the $1.5 million invested in them and have leveraged that seed investment to raise more than $8 million and create over 70 jobs in the past two years. “The return on the investment from the private sector, I think, is phenomenal,” Laney said. Several of this year’s cohorts were well aware of the past success and cited it as a reason for wanting to participate in the intense Velocity Accelerator program. “I’m proud of the history,” Laney said. “I’m glad that now we have something to build on and that other entrepreneurs and other startups can see the history and say, ‘Yes, I want to be in Birmingham. Yes, I want to go through Velocity because I understand the potential I have there to grow my business.’” The 2019 cohort kicked off Jan. 28 and concludes April 30 with Velocity Demo Day at Iron City, where each company will pitch to potential customers, investors and community supporters. Participants in the program receive $50,000 each from the Velocity Fund, which is supported by Alabama Power, Regions Bank, BBVA Compass, Blue Cross and Blue Shield of Alabama, Protective Life, UAB, the Community Foundation of Greater Birmingham, Encompass Health, EBSCO, Brasfield & Gorrie, McWane, Altec and Hoar Construction. Laney said the support from the private sector is part of the buy-in that has been critical to the program’s success. “The program is great. The curriculum is great. We’ve done a good job with all of those things, I think,” Laney said. “The community support and the buy-in from the community is the reason that Velocity is successful.” Having the corporate community provide dollars and not just lip-service of support is a key to creating a sustainable innovation economy, Laney said. “It speaks volumes. It’s a difference-maker for us.” Republished with permission from Alabama NewsCenter
Confidentiality, infrastructure key targets for Alabama economic developers
Alabama’s economic developers say they will support two legislative measures this year that will address significant issues that affect recruitment and retention of industry in the state. Most pressing is a bill to prevent site consultants from having to register as lobbyists under the state’s ethics laws. A bill was passed in the final hours of last year’s session offered this exemption for one year, but it is scheduled to sunset April 1. Alabama Commerce Secretary Greg Canfield said ethics are important to everyone in economic development, but site consultants must operate with a degree of confidentiality. Not offering that degree of secrecy early in the process will prevent Alabama from being considered for most major projects, he said. “Confidentiality, particularly in the earliest stages of economic development and working projects, remains important,” Canfield said. “It’s a competitive world out there. Companies, for a variety of reasons, don’t want the world to know when they’re thinking about investing in a new location. There are lots of reasons for that, but the main thing is they don’t want their competitors to know what they are doing.” Jim Searcy, executive director of the Economic Development Association of Alabama, said often a site search will not lead to a project coming to fruition. Making the initial search public would not be prudent. “They don’t want to create undue issues or undue concerns for their existing industries or for their existing workforce,” Searcy said. “They’ve got a responsibility to stockholders that they cannot disclose some things that could impact their stock price.” The EDAA announced its priorities for the upcoming legislative session at its winter conference in Hoover this week. The 2019 legislative session begins March 5. (Read more from Canfield at the conference here and from Gov. Kay Ivey at the conference here.) Canfield said not being able to guarantee confidentiality will put the state at a competitive disadvantage. “We’ve been very successful in maintaining that degree of confidentiality,” he said. “We’ve won our fair share of projects. We want to win more. But in order to do that, we’ve got to continue to try to protect the privacy and the confidentiality so that we can move forward with new projects in time.” Even though confidentiality is crucial at the early stages of a project, Searcy said information is eventually made public when a project is announced. “Once the project progresses, once they announce, all of the incentives, all of the development agreements are public information,” he said. “So, there is nothing you can’t find out about what was the incentive or the development agreement – what that entails for the state’s investment and what the company is going to do.” Another proposal the economic development community is supporting is an increase in the gas tax to support infrastructure improvements in the state. “We’ve had great success in bringing great companies into the state,” Canfield said. “That, in turn, means that there’s an awful lot of products and goods and supplies and raw materials that have to flow in and out of our state. We’ve got to be able to accommodate that by having the best roads and bridges we can.” Searcy said apart from workforce, infrastructure is the greatest concern companies have when considering sites in the state. “We’ve been very neglectful in the state for decades and it is starting to impact companies’ consideration of Alabama as a location,” Searcy said. “Until we can show a plan and the resources to execute that plan, then I think we are going to be at a disadvantage in the economic development process.” Republished with permission from Alabama Newscenter
Kay Ivey: Workforce development is ‘very clear need’ that requires attention
Alabama Gov. Kay Ivey told economic developers today that the state’s success in growing jobs and capital investment is the result of teamwork and more of it will be required to address the workforce challenges ahead. “Alabama has hit record low unemployment rates and also we have more people working in Alabama than ever before,” Ivey told those gathered at the Economic Development Association of Alabama’s Winter 2019 Conference. “And jobs, y’all, are continuing to pour into our state. So, as we seek out companies to locate and expand in our great state, there remains a very clear need that we’ve got to prepare our men and women for the jobs of today and the jobs of tomorrow.” Ivey said it is an area that requires attention. “That’s why enhancing workforce development is vitally important and it’s a priority of mine moving forward,” she said. “This will be led by Nick Moore and this office will focus solely on aligning our workforce development funding streams with our workforce development programs for Alabamians all across our state,” she said. “This entity within the governor’s office is working to increase our labor force participation to surpass our goal to better equip some 500,000 of our workers with a post-secondary degree, certificate or credential.” It’s a needed element in a larger strategic plan to enhance workforce development that educators, leaders of business and industry and communities put together, Ivey said. “I know that together we can get that done,” she said. “Alabama’s workforce efforts will be known worldwide and they will be effective. And, to put it simply, they will be known as the best.” Ivey used her keynote address as a call to action. “So today, my friends at EDAA, I charge each of you, each and every one of you, to show the world that Alabama’s workforce is a force to be reckoned with and that Alabama is the place to do business,” she said. “Let’s show companies that the ‘Made in Alabama’ team is one to join because with it, our future will be filled with growth and opportunity for everyone.” Ivey’s address wasn’t all about the challenges. She did take time to celebrate the successes. “Throughout my time as governor, we have proven time and time again that success is best found when we work together,” she said. During her time as governor, Ivey said the state has seen $8 billion in new investment, 16,000 new jobs and several coveted economic development projects announced, along with strides to improve the state’s education system. “Working together, we are achieving these results,” she said. “But what matters most to Alabamians is what are the next steps. How are we going to build on the success that we’ve had?” Ivey said she and Commerce Secretary Greg Canfield recently met with seven top U.S. site consultants. “They made it very clear to me that they appreciate the teamwork that they see in our state,” she said. “They further said that they didn’t find that degree of teamwork in many other states.” That approach has led to a revamping of the state’s incentives program that is paying off, she said. One area seeing a large payoff is the way the state brings economic development to rural areas. “I’ve often said that we’re only truly successful when we are all successful together,” Ivey said. “That means also striving for economic growth is important for all 67 counties.” The incentives created by the Jobs Act focus on targeted counties allowing companies to claim more tax breaks for establishing operations in those counties. “Since I became governor, the targeted counties saw a success rate of over 70 percent by landing 10 economic development projects. This means that nearly $1 billion and some 1,200 new jobs have been created in rural Alabama,” Ivey said. “The targeted county approach certainly has merit,” she added. “It works, and we need to take advantage of that and continue to be innovative and work hard to be sure that we have economic development of our rural areas as well. Rural economic development is absolutely a top priority of mine. When there is gain in rural Alabama, it’s a gain for the entire state.” Reprinted with permission from Alabama Newscenter
Alabama looks to add to manufacturing gains along with tech, biotech growth in 2019
Alabama added more than 44,000 jobs across all industries in 2018 and ended the year by posting in December the highest average weekly earnings ever recorded in the state’s history. Alabama Commerce Secretary Greg Canfield shared the state’s 2018 economic development successes with fellow economic developers in Hoover Monday while sharing the Alabama Commerce Department’s plans for the new year ahead. The Economic Development Association of Alabama is holding its winter conference this week. “It reinforces to me what is the ultimate strength of Alabama as a competitor in the economic development arena and that is we work as a team,” Canfield said, citing state and local economic development entities and government leaders, the private sector and universities. Among the 2018 successes Canfield noted: • The $1.6 billion Mazda Toyota plant under construction in Huntsville is a gamechanger for the state with 4,000 jobs and 300,000 vehicles per year when it reaches full production. • The state saw $3 billion in new foreign direct investment that accounted for at least 6,000 new or announced jobs last year. • Shipt’s decision to expand in Birmingham and add 881 new jobs provided a blueprint for how the state can target the tech sector in the innovation economy. The Mazda Toyota deal adds to the state’s automotive sector that already includes Mercedes-Benz, Honda, Hyundai, Autocar and dozens of suppliers. Canfield said the state is on pace to become the second largest auto-producing state in the nation as soon as 2022. “It’s interesting to note that in every journal, every article that you read today talking about the automotive sector across the United States, you’re going to read that Alabama is the No. 5 state in terms of vehicle production,” Canfield said. “And that’s a great story, isn’t it? Because prior to 1997, we didn’t produce a single vehicle. In 2017 and 2016 – and we don’t have the numbers in for 2018 – but in the two previous years, Alabama hands and Alabama automakers produced over a million vehicles.” Pointing to a chart using Bloomberg data, Canfield said the state is steadily climbing the rankings compared to Indiana, Kentucky and Ohio and will trail only Michigan in a few years. “We actually believe that based on the numbers that Alabama is most likely the fourth largest vehicle-producing state, Canfield said. “We expect that by 2022, if the numbers hold and the forecast is true, Alabama will take the position as the No. 2 vehicle-producing state in the U.S. and that’s an amazing feat.” Job growth in the state is outpacing the experts’ projections, Canfield said. “We gained 44,300 jobs across all industry sectors in 2018,” he said. “Most economists believed we would be doing good and performing well if we added 30,000 jobs.” So how does the state economy continue to soar? One way is with Airbus building more airplanes. The company broke ground on a new assembly line in Mobile on Jan. 16 that will bring 432 new jobs as it produces the A220 line of aircraft, joining the A320 family of aircraft produced at its existing plant. “Having these two lines combined will ultimately make the state of Alabama the No. 5 production location in the globe for commercial large aircraft production,” Canfield said. With the Airbus project, the state is getting a 278 percent return on its “investment” over the next 20 years based on the incentives the jet maker received. Focusing ahead, Canfield said “2019 is going to be an important year. We’re going to have to do some things differently as we look to the future. We’re not going to be bashful about that, either.” Canfield noted the 2020 Census will be important to the state and its economic development efforts. A failure to count the state’s population accurately could cost the state federal dollars and representation, he said. “If we are undercounted, we will not get correct allocation,” Canfield said. Canfield said the state wants to build on the tech-sector recruitment successes of Amazon, Facebook and Google and put a greater emphasis on helping homegrown companies like Shipt stay in Alabama and grow. The strategy and program developed for Shipt is the blueprint to do that, he said. Broad partnerships, university support to drive STEM jobs, AIDT’s expansion beyond manufacturing training and working with local governments and private sector partners like Alabama Power on recruiting talent were some of the elements that made the Shipt project happen, Canfield said. Other areas that Canfield will emphasize in 2019 include: • The biotech and life science sector, • Workforce development, • Supplier network for Toyota Mazda, • Rural Alabama, • Aerospace and • Forest products. By the end of the year, Canfield said the Department of Commerce will take a fresh look at its long-term strategy. The first two versions of Accelerate Alabama helped the state add $28.8 billion in new capital investment and 105,000 new or announced jobs between 2012 and 2017. “I think it’s time to thing about Accelerate Alabama 3.0,” Canfield said. Republished with permission from Alabama Newscenter
Alabama workers built 1.6M engines in 2018
Alabama’s auto workers built nearly 1.6 million engines last year, as the state industry continues to carve out a place in global markets with innovative, high-performance parts, systems and finished vehicles. Last year also saw major new developments in engine manufacturing among the state’s key players, and more advanced infrastructure is on the way in the coming year. Hyundai expects to complete a key addition to its engine operations in Montgomery during the first half of 2019, while Honda continues to reap the benefits of a cutting-edge Alabama engine line installed several years ago. Toyota’s Huntsville engine plant also maintained its role as a critical component of the automaker’s global supply chain. Additionally, Navistar builds truck engines in Huntsville. “Alabama’s skilled auto workers have become adept at not only producing high-quality, in-demand vehicles, but also the engines that power those models and others,” said Greg Canfield, secretary of the Alabama Department of Commerce. “We look forward to their continued success as these companies invest even more resources and add new technology to their operations here.” Hyundai expansion Hyundai Motor Manufacturing Alabama produced 597,313 engines in 2018, and the Montgomery facility is in the midst of transforming those manufacturing operations. Last year, Hyundai announced a $388 million plan to construct a plant dedicated to manufacturing engine heads and enhance existing operations to support production of new models of Sonata and Elantra sedans. The investment will create 50 jobs. Preparations are under way for the next-generation Theta III engine, which requires new technologies and components as part of its assembly process. So far, the new engine head manufacturing building shell and concrete is complete, electrical work is underway and equipment for the building has begun to arrive. The project is on track to be complete by May, said Hyundai spokesman Robert Burns. In addition, the old equipment has been removed from the existing engine shop that is being updated, and contractors are prepping the interior of the building for new equipment. Hyundai’s Alabama engine operations support vehicle production in Montgomery and at the Kia plant in West Point, Georgia. Meanwhile, Honda Manufacturing of Alabama last year produced 356,439 engines that power the SUVs, minivans and pickups built at the Talladega County factory. Just a few years ago, Honda Alabama opened a sophisticated new engine line that represented a breakthrough in Honda’s North American engine assembly operations. The highly automated line was yet another indication of the global automaker’s confidence in the Alabama workforce, which has achieved an unprecedented schedule of new model launches and redesigns in recent years. In Huntsville, Toyota Motor Manufacturing Alabama produced about 630,000 engines that power one-third of the Toyota vehicles built in the U.S. The factory builds about 2,600 engines per day, or five times as many engines since production started there in 2003. Toyota milestones Two keys milestones for Toyota Alabama last year included its 6 millionth engine, built in August 2018. And the following month, the facility launched a new advanced 4-cylinder engine line to produce next-generation engines as part of the Toyota New Global Architecture Program. TNGA will improve the performance of all vehicles, including increased fuel efficiency, more responsive handling and a more stable and comfortable feel while driving. It also provides a more flexible production environment that allows the company to better respond to changing market demands. Toyota Alabama’s $106 million investment in the TNGA project increased total plant investment to nearly $1 billion. “I could not be prouder to reach this milestone,” Toyota Alabama President David Fernandes said at the time. “Launching our new TNGA engine is a true testament to our highly skilled workforce. They are leading Toyota Alabama into the future of advanced engine production.” Republished with permission from Alabama Newscenter
Blue Origin launches construction of $200M Ala. rocket engine plant
Space flight company Blue Origin this morning kicked off construction on a $200 million plant in Huntsville that will produce the BE-4 rocket engine for future national security and other missions. The 200,000-square-foot facility will be built on 46 acres at Explorer Boulevard and Pegasus Drive in Cummings Research Park. The project will create more than 300 jobs in Huntsville. Executives from Blue Origin and rocket maker United Launch Alliance joined Alabama Gov. Kay Ivey and community leaders for a groundbreaking ceremony at the plant site this morning. “It’s a great day here in Rocket City,” said Bob Smith, CEO of Blue Origin. “Thanks to the votes of confidence from United Launch Alliance, from the Air Force for national security missions, and from Huntsville and the state of Alabama, we are breaking ground on a facility to produce our world-class engines and power the next generation of spaceflight.” He told the crowd at the event: “Blue Origin is all in on Alabama.” The Huntsville manufacturing plant is expected to open in 2020, and the first flight test of the new engine is expected in 2021. “Blue Origin is a welcome addition to Alabama’s roster of world-class aerospace firms, and its new rocket engine facility in Huntsville will expand the state’s already robust capabilities in space flight,” Ivey said. Powering ULA’s next rocket Using the latest design and manufacturing techniques, the BE-4 is made for both commercial and government missions. The BE-4 uses oxygen-rich staged combustion of liquid oxygen and liquefied natural gas to produce 550,000 pounds of thrust. It’s undergoing full-scale engine development testing in company facilities in Van Horn, Texas. At today’s event, Smith said Blue Origin also plans to produce a variant of its BE-3 rocket engine at the Huntsville facility. He added that the company is in discussions with NASA to test the engines on the historic test stands at Marshall Space Flight Center. ULA selected the BE-4 to power its next-generation rocket, the Vulcan Centaur, the successor to the Atlas V and Saturn IV launch vehicles now assembled in Alabama. ULA’s production facility is in Decatur, just miles away from the site selected by Blue Origin. “I am pleased that Blue Origin has chosen to join the more than 200 ULA suppliers doing business here in Alabama,” ULA CEO Tory Bruno said. “The state of Alabama knows how to attract and help business grow and I could not be more thrilled to be part of the resurgence of rocket and engine development in the Tennessee Valley.” The production of the BE-4 engine is seen as critical to ending U.S. dependence on Russia for access to space for critical national security space systems. The BE-4 will also power Blue Origin’s reusable New Glenn launch system, which has been selected by the U.S. Air Force for future national security missions. ‘Perfect home’ Kent, Washington-based Blue Origin, founded by Amazon CEO Jeff Bezos, announced plans for the state-of-the-art production facility in Huntsville in June 2017. At the time, Blue Origin said it chose Huntsville for this project because of its high-tech aerospace manufacturing workforce and ecosystem, including NASA’s Marshall Space Flight Center, nearly 300 private aerospace and defense contractors, and the University of Alabama in Huntsville, a top university for NASA research funding. “Blue Origin selected the perfect home for this new rocket engine manufacturing because Huntsville has been a center of innovation in rocket propulsion for decades,” said Greg Canfield, secretary of the Alabama Department of Commerce. “I look forward to seeing the lofty heights the partnership between this dynamic space flight company and Alabama’s historic Rocket City can reach in the future.” Mayor Tommy Battle said Huntsville is “ready to deliver” for Blue Origin, which he called “an innovative commercial space company that is changing what we think is possible in space.” “These BE-4 engines will power launch systems to put everything from satellites and products into orbit to space tourists and perhaps even space settlers into the final frontier,” he said. “You truly can’t get to space and explore all of its untold promise without going through Huntsville first.” He added: “We will produce the greatest rocket engines in the world right here in Huntsville.”
Belt buckles and beer: federal shutdown hits businesses hard
From power restaurants in Washington and a belt-buckle maker in Colorado to a brewery in California, businesses that count heavily on federal employees as customers are feeling the punishing effects of the government shutdown. In many cases, it’s forcing them to cut workers’ hours and buy less from suppliers — measures that could ripple through the larger U.S. economy. “It’s a fog with no end in sight,” Michael Northern, vice president of a company that owns three restaurants in the Huntsville, Alabama, area near a huge Army base that houses some 70 federal agencies, including NASA. He said business is down 35 percent. “People are just going home and nesting, trying to conserve resources.” Western Heritage Co. in Loveland, Colorado, which makes buckles for uniformed employees of the National Forest Service and other outdoor agencies, has seen sales plummet 85 percent this month and laid off 12 of its 13 workers. In the nation’s capital, Clyde’s Restaurant Group, which owns the Old Ebbitt Grill restaurant down the street from the White House and 10 other dining spots, reported a 20 percent drop in sales and is cutting hours for waiters and kitchen staff. So far, the broader economic impact of the shutdown is not clear — because, well, many agencies that compile such data are closed. The Labor Department, which is open, said Thursday that the number of people seeking unemployment benefits fell last week to the lowest level since 1969, a sign the job market is still strong. But most economists are forecasting slower growth in the first three months of this year. Analysts estimate gross domestic product shrinks 0.13 percentage points for each week the shutdown lasts. Those estimates reflect the loss of government spending and lost paychecks for federal employees. What is not known is how much the shutdown will reverberate through the rest of the economy. When waiters at restaurants that serve federal employees lose income, for example, will they also cut back spending? And will that then harm other companies? Among the hardest hit are the owners of restaurants, hotels and gift shops near federal agencies and national parks around the country. In Mariposa, California, just outside Yellowstone National Park, tourism has dropped sharply and most of the 6,000 county residents who work in the park have not been paid for a month. “For my business personally it’s been absolutely devastating,” said Hanna Wackerman, owner of the 1850 Restaurant and Brewing Company. “Usually January is a pretty busy month for us. With the new snow being in Yosemite, that tends to bring new tourists to the park.” Instead, business is down 80 percent, she said. Mike Lynch, owner of Western Heritage, saw online orders collapse almost immediately after the government shut down Dec. 22. The company sells buckles, keychains, commemorative coins and badges to employees of the Fish and Wildlife Service, the Forest Service, the Bureau of Land Management and other agencies. It also sells patches and some clothing. Most of the purchases are discretionary and customized. For example, if a BLM employee is retiring, co-workers might order a plaque from Lynch’s company. His online orders went from thousands of dollars a week before Christmas to just $78 in the first week of January. On Jan. 7, Lynch laid off nearly everyone, leaving one person to answer the phone “in case someone wants to buy something.” They were the first job cuts in the company’s 43-year history. With business so slow, Lynch isn’t ordering any of the bronze, silver or pewter he uses and isn’t replenishing other inventory. Larger companies are also affected, though it is typically easier for them to weather the impact. Airlines like Delta and Southwest, for example, are losing tens of millions of dollars in business, but that’s out of billions in revenue. David Moran, director of operations for Clyde’s, the restaurant chain in Washington, worries what will happen if the shutdown extends into February, when events like Valentine’s Day typically give a boost to business. “My fear is that it is getting worse, because people are getting panicky,” he said. Republished with permission from the Associated Press
Southern Research moving ‘green chemistry’ team to new Birmingham lab
Southern Research has moved a team of scientists working to develop promising clean-energy technologies from North Carolina to a new state-of-the-art laboratory it is opening on the organization’s downtown Birmingham campus. The research team, led by Amit Goyal, Ph.D., has devised cost-efficient, environmentally friendly methods to produce valuable industrial chemicals from sources such as waste materials and harmful carbon dioxide. “These leading-edge technologies hold significant potential for commercialization, and relocating our talented scientists to an ultra-modern laboratory in Birmingham will help them advance their important work,” said Art Tipton, Ph.D., president and CEO of Southern Research. “We are committed to supporting the research being conducted by Amit’s team because it fully aligns with Southern Research’s core mission – finding innovative solutions to make the world a better place,” Tipton said. Southern Research is investing $1 million to outfit an existing 7,200-square-foot building on its Southside campus as the Sustainable Chemistry and Catalysis Laboratory. Work is under way to install pilot-scale chemical reactors and other equipment at the facility. Funds raised through the recent Change Campaign effort are also helping to drive this important project forward. The lab is expected to be operational by mid-February, and Goyal’s team, comprising eight researchers, is already working full time in Birmingham, according to Corey Tyree, Ph.D., senior director in Energy & Environment (E&E) at Southern Research. “This will be a world-class lab where brilliant inventors are creating new technologies that offer a better way of manufacturing everyday products,” Tyree said. “This group is doing award-winning work, and now that work will be carried out right here in Birmingham, where Southern Research has made many groundbreaking discoveries in its history.” Green technologies Goyal and his team have developed a method to convert biomass sugars into acrylonitrile, the chemical building block of carbon fiber, which is increasingly used in airplanes, automobiles and other manufactured products because of its strength and light weight. The Southern Research process to produce acrylonitrile for high-performance carbon fiber is around 20 percent cheaper than conventional production methods and sustainable, lowering greenhouse gas emissions by nearly 40 percent. Goyal’s team has also developed a process to transform CO2 into high-value chemicals known as olefins, which are used to make a sweeping range of products such as packaging, plastics, textiles, paints and electronics. Energy-intensive methods are currently used to produce ethylene and other widely used chemicals in the olefin family, so the Southern Research technology could yield significant environmental benefits while also converting a greenhouse gas. “This relocation represents an exciting and important opportunity to capitalize on significant Southern Research infrastructure and the scientific community in Birmingham,” said Goyal, director of Sustainable Chemistry and Catalysis for Southern Research. “This puts science at the heart of everything we do because our long-term success depends on improving R&D productivity and achieving scientific leadership.” Expanding capabilities Mayor Randall Woodfin welcomed Goyal’s team to the city where Southern Research works to discover and develop new medicines, tackles engineering challenges for major government agencies, and researches energy and environmental technologies. “Birmingham is increasingly becoming a key location for world-class research and a place where important discoveries are being made on almost a daily basis,” Woodfin said. “Southern Research’s decision to move its ‘green chemistry’ scientists to a new lab in the city will add to this momentum. I look forward to seeing their work advance in Birmingham.” As a result of the team’s relocation, Southern Research has closed its office in Durham, North Carolina. The organization’s Environmental Technology Verification team, led by Tim Hansen, P.E., will continue to operate from the city, evaluating new clean technologies around the world. Tyree said the decision to close the Durham office will yield cost savings and increase efficiency for the nonprofit organization. The move also unites the Sustainable Chemistry team with other E&E researchers in Birmingham, who focus on issues such as energy storage systems and solar panel durability. Southern Research opened the Durham office in 1992 to support work for the U.S. Environmental Protection Agency, which at the time operated a major research and development facility in Research Triangle Park. In recent years, the work in Durham has focused primarily on various green energy technologies from the U.S. Department of Energy and other customers, making the location in North Carolina less necessary than when it was tied to the EPA work. Republished with permission from Alabama NewsCenter
Opportunity Zone fever, debate spread from Birmingham to the Bronx
In a former warehouse on a dimly lit street in the South Bronx, developers sipping Puerto Rican moonshine listened as a local official urged them to capture a new U.S. tax break by rebuilding the decaying neighborhood. In Alabama, a young lawyer quit his job after seeing the same tax break’s potential to help one of the nation’s poorest states. He now spends his days driving his Hyundai from town to town, slideshow at the ready, hoping to connect investors with communities. And on a conference call with potential clients, a prominent hedge fund executive pitched investments in a boutique hotel in Oakland, which he described as San Francisco’s Brooklyn. The project is eligible for the same tax break, designed to help the poor. Fervor about opportunity zones is heating up across the U.S. For a limited time, investors who develop real estate or fund businesses in these areas are able to defer capital gains on profits earned elsewhere and completely eliminate them on new investments in 8,700 low-income census tracts. The goal is to reinvigorate these areas. But the question is whether the 2017 tax law will, as U.S. Treasury Secretary Steven Mnuchin predicts, pump $100 billion into places that need it most, or if investors will play it safe by funding projects in a few zones already on the upswing. There’s no lack of optimism among officials in shrinking Rust Belt towns, wind-swept Western landscapes and hurricane-ravaged Puerto Rico, who hope to jump-start local economies. The incentives are so flexible they could be used for everything from affordable housing to solar farms. Yet on the investor side, much of the attention is fixed on how to turn a profit in already thriving areas. They include neighborhoods surrounding Manhattan, Atlantic beach towns drawing vacation-home developers, bedroom communities near Silicon Valley and anomalies like Portland, Oregon, where the entire downtown was deemed eligible for the breaks. “The phrase I keep thinking of is ‘gold rush,’” said Michael Lortz, an accountant who works with developers in Portland. “There’s a lot of money from out of town that’s coming here.” Already, a policy debate is raging. Backers are urging people to reserve judgment, and they say the tax breaks have galvanized cities, businesses and investors to think creatively about boosting parts of the country most in need. Critics say the incentives were poorly calibrated and may amount to a boondoggle far in excess of the official $1.6 billion projected cost. Americans may have to wait months or years to learn which side is right. That’s because the law doesn’t require investors to disclose projects, making it difficult to tell which areas are benefiting the most. But there’s plenty of evidence that a boom is brewing. Goldman Sachs Group Inc., which already had an investment team focusing on struggling communities, has disclosed about $150 million in projects in recent months. Purchases of sites inside opportunity zones spiked as the tax law took effect, outpacing growth in other areas, according to Real Capital Analytics, which tracks property sales. Altogether, investors spent 62 percent more on properties eligible for tax breaks in the 12 months through September, compared with those in the same census tracts a year earlier, its data show. Here are snapshots of what’s happening across America: Driving Alabama Alex Flachsbart, 30, has a lot of time to talk when he’s in his SUV crisscrossing Alabama. A lawyer who specialized in economic development grants and tax breaks, he quit his job last year to start Opportunity Alabama, aiming to connect capital to worthy projects. For the past several months, he’s been educating people about opportunity zones, speaking to local officials, business owners and investors. “I have done the OZ PowerPoint God knows how many times,” Flachsbart, who grew up in the Bay Area, said from behind the wheel one day in December. When he read about opportunity zones in a 2017 draft of the Tax Cuts and Jobs Act, his mind reeled. Here was an uncapped subsidy far more flexible than anything he’d used before. It could draw investment for an array of projects. He imagined funding startups in Huntsville, where NASA’s presence has lured a deep bench of talented engineers, and the renovation of an old civic complex in Mobile. Flachsbart’s nonprofit – which has board members from the state’s largest utility and its biggest bank, Regions Financial Corp. – is now in talks for 10 potential projects that need more than $100 million in equity investment, he said. None have been funded yet, but he’s certain some will be. Meanwhile, he keeps driving. Bronx boost Port Morris Distillery, which makes a high-alcohol rum called pitorro, was the perfect spot for an opportunity zone pitch. It’s on a block with a colorful mural, industrial buildings ready for loft conversions and views of the Manhattan skyline. Much of the surrounding South Bronx is now an opportunity zone. “We have always been the most ignored,” Marlene Cintron, the borough’s head of economic development, told an audience of developers and lawyers in November. “These opportunity zones are here for you to take advantage of them.” The case for the Bronx, where incomes are among the lowest in New York, is that it’s the last borough awaiting revitalization. The tax incentives are designed to unleash it. If developers can buy at current Bronx prices, before seeing a Brooklyn-like rise, the breaks would be massive. “Huge, huge upside that you’re not going to get if you build a strip mall in Topeka,” said Terri Adler, managing partner of law firm Duval & Stachenfeld LLP, who also spoke at the event. Yet the Bronx faces a formidable problem: It’s competing with other zones across the city, including waterfronts in Brooklyn and Queens with stronger momentum. The tax break Bronx officials hope will rejuvenate their borough may instead lure more money to what looks like a safer bet across the river. In November, Amazon.com Inc. selected Long Island City for its next headquarters. Portions of that Queens neighborhood, including a former plastics factory the retailer plans
Airbus defies naysayers with Alabama plant for new jet
Airbus SE has broken ground for a new factory in Mobile, Alabama, defying predictions by archrival Boeing Co. that the plant would never be built. By midyear, mechanics will begin assembling the first American-made A220, a single-aisle jetliner developed by Bombardier Inc. and taken over by Airbus last year. Delivery of the initial plane with made-in-the-USA label is slated for next year. The new factory caps a dizzying turnaround for the Canadian-designed aircraft formerly known as the C Series, which Airbus rescued in 2018 after working for years to stymie sales. Bombardier turned to the European planemaker after Boeing rejected overtures. The U.S. aerospace giant then waged a high-profile and ultimately unsuccessful campaign to slap duties on imports of the jets by Delta Air Lines Inc. “That plane with our Airbus brand, with our support, our procurement and our sales is a game-changer,” said Jeff Knittel, Airbus’s Americas chief. Boeing spat In November 2017, Boeing at the height of the trade spat argued in a letter to U.S. Commerce Secretary Wilbur Ross that Airbus and Bombardier were “extremely unlikely ever to actually establish a C Series assembly line in Alabama.” Building a new factory would “make no economic sense,” the Chicago-based company said, contending there were too few orders to support a second production facility beyond the existing one in Mirabel, Quebec. Airbus has been shoring up sales and production of the jetliner since taking control over the unprofitable C Series program on July 1. The economic case once questioned by Boeing has grown stronger after a flurry of recent deals expanded the backlog of unfilled A220 orders to 480 aircraft. The initial sales and a top-up order by Delta show that there is ample demand to support a second factory in Mobile, Knittel said. Airbus is in discussions with several U.S. customers, he said, declining to provide specifics. “The trendline is terrific,” he said. “I am not concerned about filling the backlog.” Final assembly of the A220 jets in the U.S. “is a vital selling point for most U.S.-based customers,” Airbus said. Even so, Airbus and Bombardier plan to build the first 40 A220s ordered by Delta in Mirabel. Airbus is looking to achieve a “significant double-digit’’ reduction in production costs of the A220, said Philippe Balducchi, who runs the partnership with Bombardier. “The targets we have in our plan are achievable,’’ while conceding, “they are not easy.” The desired savings likely represent about $3 million per plane, according to Benoit Poirier, an analyst at Desjardins Capital Markets. In a twist, the new Airbus factory will be modeled on the production system that Bombardier created in Mirabel rather than mimic a neighboring A320 plant in Mobile, said Florent Massou, head of the A220 program. That’s unexpected, given the mass-production techniques that Airbus and Boeing have forged as they push single-aisle jet output to record-high levels. When Boeing took control of McDonnell Douglas Corp.’s MD-95 program following the companies’ 1997 merger, for example, engineers created an elaborate cable system to move jets and copy the moving line created for the 737 program. Tripling output The jigs, tooling and robotics at Mirabel are all cutting-edge, part of a lean production system that will eventually make 10 of the aircraft a month. But the engineers’ desks scattered around the factory floor hint at the problem-solving needed to triple output by the mid-2020s. “Technically, the production processes haven’t changed,” Massou told reporters at Mirabel this week. Rather than changing out equipment, Toulouse, France-based Airbus has focused on how work is organized to make sure that unfinished tasks aren’t handed over to workers downstream, while training mechanics to be more efficient. The Alabama final assembly line will look “exactly like this,” Massou said Jan. 14, from a balcony overlooking the Mirabel factory floor, where two lines of A220s were slowly taking shape. That’s so workers at the two factories can share the tribal knowledge that comes with repeating tasks – the learnings that drive down cost and speed production times for aircraft, he said. Boeing-Embraer Including the new factory, Airbus’s total investment in Mobile will approach $1 billion, Knittel said. Bombardier has committed to providing as much as $700 million in funding to the A220 partnership through 2021, Chief Financial Officer John Di Bert said last month. The figure includes a commitment of $350 million for 2019. Airbus and its partners are investing $300 million in the Mobile facility against the uncertain economic fallout from Brexit, and the emerging competitive threat of a joint venture that will give Boeing control of rival aircraft made by Brazil’s Embraer SA. “It’s sometimes hard to predict the future, but it didn’t take a genius” to anticipate the Boeing-Embraer tie-up, Airbus Chief Executive Officer Tom Enders told reporters. “We’re helped by the fact that we have by far the best aircraft in the A220.” (Contact the reporters at jjohnsson@bloomberg.net and tomesco@bloomberg.net.) Reprinted with permission from The Alabama NewsCenter.
