Foreign direct investment in Alabama topped $3.4 billion in 2015, as companies based in 18 different countries extended their reach into the state.
The vast majority of the 95 FDI projects were expansions, including a major addition to the Mercedes-Benz plant in Tuscaloosa County. Other auto industry investments were growth at Hyundai’s Montgomery factory and a host of supplier projects.
Meanwhile, Airbus’ aircraft manufacturing facility in Mobile spurred investment by foreign companies in the aerospace industry. Much of it came from France, where Airbus is based, signaling a more active phase of investment from that country.
In all, foreign companies last year announced nearly 4,500 planned new jobs in Alabama, according to the 2015 New & Expanding Industry Report that was released last week by Gov. Robert Bentley and the Alabama Department of Commerce.
Overall, the state landed more than $7 billion in capital investment and nearly 20,000 new jobs, the report shows.
“Alabama continues to be a top choice for business for companies both at home and abroad,” said Greg Canfield, secretary of the Alabama Department of Commerce. “Members of our economic development team are telling the state’s success stories around the world, and they’re bringing back valuable investments and high-paying jobs for our communities.”
The trend shows no sign of letting up. This week, Germany’s Berghoff Group, a specialist in precision machining, announced plans for a $30 million manufacturing facility in Auburn, creating 100 jobs. Also this month, South Korean auto supplier Mando announced a $19 million expansion in Opelika.
Germany led the way in foreign investment during 2015. Fueled by the Mercedes project, worth almost $1.3 billion, the country’s total announced investment in Alabama last year topped $1.6 billion.
Rounding out the top five were:
- Canada ($568.8 million)
- South Korea ($300.9 million)
- France ($230.2 million)
- Japan ($208.6 million)
Germany also was the top source of new job announcements, at 951. Other leaders were:
- South Korea (775)
- Canada (712)
- India (650)
- Japan (388)
Other countries that are home to companies contributing to the state’s 2015 FDI included Australia, Austria, Brazil, China, Finland, Ireland, Israel, Luxembourg, the Netherlands, Sweden, Switzerland and the United Kingdom.
Any type of investment leads to economic growth, but spending that comes from companies outside of Alabama has a more immediate impact, said Keivan Deravi, an economist at Auburn University Montgomery.
“It doesn’t matter if it’s coming from South Korea or South Carolina,” he said. “If it’s coming from out of state, that’s the highest multiplier we can have. There’s no local economic activity that needs to precede it.”
But foreign direct investment is important because it adds global connections to Alabama’s economy at home, and it places the state on a prominent stage to attract new business abroad.
“It is no surprise that when Mercedes came here, all of a sudden the floodgates opened and the other car manufacturers followed,” Deravi said. “And we are continuing to build on that.”
Plus, nearly 45 percent of the world’s future economic growth will happen in emerging markets, so Alabama must be poised to capitalize on that, he added.
Automotive and aerospace industry growth dominated Alabama’s 2015 FDI projects. Both are prominent target sectors in Accelerate Alabama, the state’s strategic economic development growth plan that went into effect in 2012.
German, Japanese and South Korean companies accounted for the lion’s share of auto deals, but firms based in other countries also announced high-profile investments in the sector during 2015.
Canada’s numbers were bolstered by a $534.7 million expansion at the Birmingham operations of auto supplier Kamtek Inc., creating 354 jobs.
India also was the source of a major automotive industry investment, as SMP Automotive Systems Alabama Inc. revealed plans for a new $154 million plant in Tuscaloosa County that will employ 650 people.