Monday, September 30 2019
By Greg Canfield, Secretary, Alabama Department of Commerce
It’s no secret that Alabama has been a prime U.S. destination for foreign direct investment for many years.
This really began in 1993, when Mercedes-Benz selected Alabama for its first U.S. auto assembly plant. The decision, which climaxed an intense nationwide competition for a coveted industrial prize, stood as a compelling seal of approval from a gold-plated global brand.
Since then, Mercedes’ success in Alabama has served to lay a foundation for future foreign investment across the state. Mercedes found what it needed in Alabama and so have other global companies. They’ve all discovered they can assemble a high-performing workforce, build world-class products, and thrive in Alabama.
In short, Alabama has become a magnet for foreign investment and the job creation that comes with it. Attracting FDI has become so important to Alabama that we just opened a business development office in Stuttgart, Germany, to enhance our recruitment efforts in Europe.
It’s easy to see why. Since 2013, FDI projects have brought nearly $13 billion in new capital investment to Alabama, led by companies from Germany, Japan and South Korea. Together, these projects have generated around 25,000 new jobs in industries including automotive, aerospace, chemicals and forest products.
Last year, companies from 16 different countries launched Alabama projects valued at $4.2 billion – a record annual total – with more than 7,500 new jobs. So far in 2019, FDI projects approaching $1 billion in value have been announced and will bring another 3,500 jobs to the state.
Those numbers hint at how foreign investment invigorates Alabama’s economy. Here is another big number: Select USA, the federal government program that facilitates foreign investment in the U.S., projects that the Alabama operations of foreign-owned companies employ 109,000 people.
The fact is, FDI typically accounts for 30 to 50 percent of new and expanding industry activity in the state each year.
Clearly, attracting foreign investment is a huge priority for us as a state, and we’re fortunate to have a diverse base of industries, along with a highly skilled workforce, to attract and retain these commitments from global manufacturers year after year.
At a time when the conversation often veers toward the ill effects of the global economy, the flip side of that debate is conspicuously on display in Alabama. The truth is that many communities across the state are undeniably benefitting from a connection to the global economy.
And it demonstrates why it’s important that the channels for foreign investment be kept open not only in Alabama but also across the nation.
Frequently, the foreign investment flowing into Alabama boosts the economies of small counties and towns, often in largely rural areas.
One recent example: In Enterprise, Tier 1 auto supplier Hwaseung Automotive Alabama (HSAA) announced plans earlier this year to add 168 jobs to its Alabama operation through a $6 million expansion.
HSAA, a South Korean company that launched its Coffee County operation in 2003 with 20 employees, will have nearly 600 team members when all the new hires are added. The company, which produces weather stripping and air conditioning hoses, has quickly grown to become one of the Southeast Alabama county’s largest industrial employers.
Its arrival has also spurred additional investment in the community. Advanced Carrier Products, whose parent company is based in Germany, opened a manufacturing operation in Enterprise to supply metal inserts to HSAA, magnifying the job creation.
Similar narratives have played out in a number of Alabama communities in recent years, particularly as growth in the state’s auto industry has intensified, driven almost exclusively by foreign investment.
A Brand-New Industry
Besides Mercedes, Alabama is now home to auto assembly plants operated by Honda and Hyundai, along with a growing Toyota engine plant that is adding 450 workers. The Mazda Toyota Manufacturing USA joint venture is constructing a new three million-square-foot assembly plant in the state.
Altogether, these companies have invested more than $12 billion in the state, creating an entirely new industry in a little more than a generation that has created 40,000 direct jobs and made Alabama one of the top vehicle-producing states.
For Alabama, 2018 was a banner year for automotive FDI.
In addition to the new $1.6 billion Mazda Toyota factory, other major new projects included Mercedes’ $268 million EV battery plant in rural Bibb County, along with a $495 million expansion at the automaker’s Tuscaloosa County campus.
Meanwhile, Hyundai constructed a $388 million facility for engine manufacturing operations in Montgomery, and Honda announced plans to spend $55 million to improve weld operations at its Talladega County factory.
The automotive supply chain in Alabama also continues to grow. With the Mazda Toyota Manufacturing assembly plant beginning to rise from a 2,500-acre site in Limestone County, Japan-based suppliers are already making plans to locate in Alabama.
So far in 2019, a total of five Mazda Toyota suppliers have pinpointed sites in North Alabama for production locations that will create almost 1,700 new auto-sector jobs, most of them in Huntsville. More are expected.
Not all the FDI flowing into Alabama, however, is tied to the auto industry.
In fact, foreign investment recorded in 2018 originated from a diverse slate of sources in a variety of industries.
Major FDI projects now under way in Alabama include the $264 million expansion of Airbus’ aircraft manufacturing plant, which will create 430 jobs in Mobile, and the $115 million, 255-job expansion of GE Appliance’s Decatur refrigerator plant, owned by China-based Haier.
In Calhoun County, Austria’s Kronospan is investing $110 million to expand its wood flooring plant.
Pharmavite, a Japan-based dietary supplement manufacturer, is growing in Lee County.
Canadian forest product companies are growing in Marshall County.
In other words, foreign investment’s influence is being felt throughout the state.
Simply put, it’s difficult to imagine the vitality of Alabama’s business landscape today without its connection to the global economy.
One thing is for sure: There would not be a substantial auto industry in Alabama, which has been the main driver of economic growth in the state for more than two decades.
Without foreign investment, Alabama wouldn’t be in the running to become the next global production hub for passenger aircraft as Airbus expands in Mobile, dealing a serious blow to the region’s economic prospects.
Small towns across Alabama would feel the pinch. Auto supplier HSAA wouldn’t be bringing those new jobs to Enterprise. Residents in small towns across Alabama would see their opportunities limited without foreign investment flowing into the state.
As the conversation over the effects of the global economy grows ever louder and more divisive, all of this goes to show that we need to remember the other side of the story as well.
The bottom line is this: Like many other states, Alabama’s future is being shaped by its global footprint, which is bringing new investment and job opportunities to communities large and small.
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