Alabama team showcases state for foreign investment at SelectUSA
Alabama’s business recruiters were in the nation’s capital last week, selling the state’s diverse and growing business scene to potential investors from around the world. The 2018 SelectUSA Investment Summit in Washington, D.C., is the premier foreign direct investment (FDI) event in the U.S. Alabama already attracts significant numbers of jobs and amounts of investments from international companies in a broad range of industries, including automotive, aerospace, biotech and beyond. Last year alone, the state’s FDI came from 16 different countries, totaling more than $1.2 billion in investment and 3,391 new and future jobs. Since 2013, Alabama has attracted more than $8 billion in FDI, according to data from the Alabama Department of Commerce. Last week, recruiters were looking to build on those past successes, said Vincent Perez, a project manager for the Alabama Department of Commerce. “This summit is always a great opportunity for us to show off the advantages of doing business in Alabama,” he said. “A lot of the companies that will be at SelectUSA are those that don’t have a presence in the U.S. and also those that haven’t done business in the U.S. through trade.” The 2017 Select USA Investment Summit saw a record 2,800 participants from 60 international markets. (SelectUSA) Seeking opportunities A new feature from the Alabama team this year was a booth operated by the Port of Mobile. Alabama’s export business is strong, with shipments that reached a record $21.7 billion last year. Port officials were able to address trade questions from summit attendees who see that as a first step toward doing business in the U.S., Perez said. “They may not be ready for an investment in a new facility in the U.S., but they may be ready to sell products here,” he said. Meanwhile, the Commerce Department shared a booth with the Economic Development Partnership of Alabama, North Alabama Industrial Development Association, PowerSouth and Alabama Power. In addition to capitalizing on Alabama’s booming export activity, recruiters also aimed to build on strong ties to Japan. Honda and Toyota, along with their extensive supplier networks, have a long history of successful operation in the state. “And with the announcement of the new Toyota-Mazda plant in Huntsville this year, that’s another place where we can reach out and keep that momentum going,” Perez said. State commerce officials meet with international business representatives at the Alabama booth at last year’s SelectUSA Investment Summit. (SelectUSA) ‘Open for business’ Likewise, there was a focus on continued investment in the automotive sector, particularly in advanced technology research and manufacturing. Last year, Mercedes-Benz U.S. International announced plans to launch electric vehicle production in Alabama as part of a $1 billion project. “We’re focused on job creation and getting new investment into the state,” Perez said. “We have positioned ourselves well, through Governor Kay Ivey’s leadership, to be one of the best places in the country for FDI, and we want to make sure everybody knows Alabama is open for business.” The U.S. is home to more FDI than any other country in the world, with an estimated $3.7 trillion at the end of 2016, according to the latest SelectUSA data. FDI also supports nearly 13 million direct and indirect U.S. jobs. Last year, the summit set attendance records with more than 3,000 participants, including 1,200 business representatives and economic development organizations from 52 U.S. states and territories. The theme for the 2018 event was “Invest Here. Grow Here. Succeed Here.” Speakers included key government and industry leaders from across the country who discussed opportunities in areas including infrastructure, energy and advanced manufacturing. This story originally appeared on the Alabama Department of Commerce’s Made in Alabama website. Republished with permission from the Alabama NewsCenter.
International Paper to boost investment in Alabama mill to $522.7 million
Memphis, Tennessee-based International Paper (IP) plans to increase its investment in its Riverdale Mill in Dallas County to $552.7 million as it optimizes the facility’s products and productivity. In September 2017, IP announced plans to invest around $300 million at the Selma plant as part of a strategy to grow its industrial packaging business. The additional investment expands on those plans to convert a line making uncoated freesheet, or copy paper, to the production of high-quality white-top and linerboard, as well as containerboard. These products are important to the packaging industry, which is experiencing a boom because of surging levels of e-commerce. “Our system runs most effectively when there is flexibility, and this conversion will also help us define a more streamlined and balanced system overall,” Tim Nicholls, IP’s senior vice president, Industrial Packaging the Americas, said in September. Wayne Vardaman, executive director of the Selma and Dallas County Economic Development Authority, recently briefed county leaders on the IP project, which will be supported by abatements of noneducational property and sales and use taxes. “This is a tremendous investment in our community, and solidifies the presence of IP in Selma and Dallas County,” Vardaman said. “IP is Dallas County’s largest employer, with over 750 employees and numerous indirect jobs. These employees now know that the Riverdale Mill is here to stay.” Dallas County officials said IP is making the largest industrial investment in the county in many years. “This latest number floored us all,” Dallas County Probate Judge and Commission Chairman Kim Ballard said. “It’s the biggest investment in Dallas County that I remember.” Alabama Reinvestment Act Vince Perez, a project manager at the Alabama Department of Commerce, said the IP project is taking advantage of the Alabama Reinvestment Act, a new version of the traditional abatement act used on such projects. The new abatements are designed to assist companies reinvesting in a facility to prevent it from becoming a “legacy plant,” which ceases to get new investment and sheds jobs. “This project is another indication of International Paper’s strong commitment to its Riverdale Mill and its workforce there,” said Greg Canfield, secretary of the Alabama Department of Commerce. “It’s a great example of a company preserving its investment in a facility, and the jobs there, by pivoting output from one product to another that is in greater demand,” he added. Vardaman said IP’s increased investment stems from discussions between local officials and company representatives. “Since IP’s announcement in late September 2017, we have worked with local and corporate officials on the project, and we are extremely pleased with the increase in capital investment and the generosity of the company,” he said. Vardaman said IP will donate $250,000 per year to the county for six years as an existing industrial development bond winds down and no taxes would be due. When the bond matures, the county will receive more than $5 million in education taxes annually. Once the abatement period ends, the county will receive even more money in noneducational property taxes, he added. “Our work with IP proves our slogan, ‘When We Work Together, Together We Work,’” Vardaman said. This story originally appeared on the Alabama Department of Commerce’s Made in Alabama website. Republished with permission from the Alabama NewsCenter.
Briggs & Stratton makes $12 million investment in Alabama expansion, creating 50 jobs
The Milwaukee-based Briggs & Stratton Corporation announced on Monday it will move production of its Vanguard big block V-twin engines from a joint venture partnership in Japan to its existing manufacturing facility in Auburn, Ala. in 2018, ultimately creating approximately 50 new jobs for the area. The project involves a $12 million investment from the company. “Briggs & Stratton is a valuable, longtime member of Alabama’s business community, and the company’s decision to expand its product manufacturing in Auburn is a testament to the strong partnership we have developed together over the years,” Governor Kay Ivey said of the announcement. “I’m committed to creating an ideal environment for commerce and letting the world know that Alabama is open for business.” Briggs & Stratton worked closely with state officials in Alabama and Georgia, where the company will also expand a plant in Statesboro, to ensure a collaborative transition. “Moving production of the Vanguard Small and Big Block V-Twin engines to the U.S. is another step in the execution of our commercial growth strategy,” states David J. Rodgers, senior vice president and president – Global Engines & Power. “We see this as a strategic competitive advantage because we can manufacture closer to our customers in the U.S., resulting in faster production times and faster shipping.” Auburn Mayor Bill Ham congratulated the team at Briggs & Stratton for its success and gaining the new product line for the facility. “We are truly grateful that the leadership at Briggs & Stratton continues to trust our community with their investment,” said Ham. “The contributions to our economy and the lives of our citizens cannot be overstated. From providing jobs to helping fund our annual Fourth of July fireworks display for many years running, they are an outstanding corporate member of the community.” Briggs & Stratton, which has operated in Auburn for 22 years, is one of the city’s largest industrial employers, with 430 workers. “I would like to extend a thank you the Alabama Department of Commerce for their overwhelming support, which has helped enable us to not only grow and compete, but also to strengthen our connection with the communities,” Rodgers added. Greg Canfield, secretary of the Alabama Department of Commerce, said the addition of the new product line at the Auburn facility reflects the high level of confidence the company has in its Alabama workforce. “A top priority for Alabama’s economic development team is to support world-class companies like Briggs & Stratton that are looking to expand in the state, and one of the most important resources we have in that mission is Alabama’s highly skilled workforce,” Canfield said.
Daniel Sutter: The convention center bubble
Government can importantly help create the conditions under which enterprise and entrepreneurship flourish. The required tasks include protecting property and contract rights, regulating sensibly, and efficiently providing valued public services. Whether active investment of tax dollars in selected enterprises helps grow the economy remains a matter of debate. Recently I wrote about public investment in professional sports stadiums, where billions have been spent, primarily benefiting players and team owners. America has also experienced a government-driven boom for convention and exhibit halls, as detailed in Convention Center Follies by Heywood Sanders, a professor of public administration at the University of Texas at San Antonio. First, let’s consider the magnitude of the boom. Exhibit hall space across the nation nearly doubled between 1989 and 2011, to more than 70 million square feet. City and state governments spent $13 billion on centers between 2002 and 2011, a period of stagnation in the convention business. The convention center boom has occurred in cities both large and small, and in both the Sunbelt and Rustbelt. Alabama’s four largest cities all have centers, along with Dothan, Gadsden and Ozark. Professor Sanders documents how the rationale for public funding has changed over time. The first public auditoriums in the 1920s provided places for large public gatherings that might not make money. Such auditoriums served a reasonable public purpose. The rationale is now growing the local economy. Convention centers can provide what local economic developers crave, dollars from outside of the community. Out-of-town convention attendees spend on event registration, hotel rooms, restaurants, and so on. Their spending benefits hotels and restaurants, and then sets off a multiplier effect when these businesses and their employees spend the money. Prestigious consulting firms provide precise forecasts of hundreds of millions of dollars of spending and thousands of jobs that convention centers will create. Only reality has consistently fallen short of promises, as Professor Sanders documents. For instance, expansion of the Civic Plaza and construction of a 1,000 room convention center hotel was forecast to bring Phoenix 375,000 visitors a year. Two years after completion, convention attendance was less than half of the forecast, and the hotel could not make its bond payments. As Sanders writes, “Almost every convention center in the U.S. operates at a loss, not even counting the annual debt cost.” Visitor taxes imposed on hotels and rental cars typically fund construction of convention center projects. I recently wrote about how such taxes can be exported and are portrayed as a costless way to make outsiders fund convention centers (and sports stadiums). But as Professor Sanders emphasizes, the tax dollars could be used to improve schools, repair roads, or pay for other public services. Voters across the country have frequently turned down convention center proposals. San Diego voters rejected three proposals, voters in Cleveland and Columbus, Ohio, each did so twice, and proposals went down in Atlanta, Pittsburgh, and Raleigh. But convention center politics has evolved to eliminate voters from the approval process. End runs have been accomplished by turning to states for funding and creating special purpose authorities to impose visitor taxes and issue bonds. Why have we seen such poor investment by governments? Professor Sanders identifies the owners of the properties (hotels, restaurants and shops) frequented by attendees are located as the driving force. This illustrates how the benefits of many state and local government economic development projects are highly localized. Government is supposed to protect property from physical invasion, not protect or raise the market value of any person’s property. Consequently, convention centers exemplify crony capitalism, or the use of government to provide benefits to favored business interests. State and local governments have spent billions of tax dollars building millions of square feet of underutilized exhibit space. Convention centers, after sports stadium subsidies, represent a second strike against government economic development. Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision. Respond to him at dsutter@troy.edu and like the Johnson Center on Facebook.
