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Ernst & Young: Alabama ranks in Top 5 for investment

Global consulting firm Ernst & Young says companies from around the world poured more than $5 billion into capital projects in Alabama last year, earning the state a place near the top of its investment rankings.

Ernst & Young’s closely watched “US Investment Monitor” ranked Alabama No.5 among the states for mobile capital investment last year, with a total of $5.3 billion. The firm also ranked Alabama among the top states for foreign investment spending.

The findings are promising for Alabama, because Ernst & Young says its Investment Monitor acts as a “leading indicator showing where new investment spending and jobs can be expected to occur over the next several years.”

Google Alabama Robert Bentley
A very happy Alabama Gov. Bentley wears a pair of Google sunglasses after the company announced plans to build a $600 million data center in Alabama. (Governor’s Office, Jamie Martin)

“There’s no question that 2015 was a significant year for Alabama’s economic development team, with a record level of capital investment and high-impact projects from major international companies,” said Greg Canfield, secretary of the Alabama Department of Commerce.

“But we’re not standing still. We’re pursuing a pipeline of important projects across the state and developing new initiatives that will help us create more knowledge-based jobs in fields such as R&D and engineering,” he said.

Under the direction of Governor Robert Bentley, Alabama’s economic development team continues to attract concentrated capital investments in automotive manufacturing and aerospace, two sectors that received significant investments in 2015.

LOCATION DECISIONS

Alabama trailed only Texas, Louisiana, California and Kentucky in Ernst & Young’s 2015 mobile investment rankings. Ohio, Tennessee, Michigan, New York and North Carolina rounded out the top 10.

Alabama ranked even higher — No. 4 — when the 2015 investment figure is considered as a percentage of state GDP, according to the Ernst & Young analysis.

Ernst & Young noted that Alabama’s 2015 mobile investment figure was twice the state’s annual average for the 2010-2014 period, measured at $2.5 billion.

Jason Hoff, head of Mercedes' Alabama operation, speaks at a topping out event tied to the automaker's expansion. (Image: Mercedes)
Jason Hoff, head of Mercedes’ Alabama operation, speaks at a topping out event tied to the automaker’s expansion. (Image: Mercedes)

In addition, the firm’s Investment Monitor ranked Alabama No. 4 for foreign investment spending in 2015, trailing only Texas, Louisiana and New York.

Earlier this year, an analysis by the Alabama Department of Commerce showed that nearly half of the new capital investment announced in the state during 2015 originated from foreign companies. The Commerce report counted 95 projects from 18 foreign countries.

Germany was the No. 1 source of foreign direct investment (FDI) in Alabama last year, led by Mercedes’ $1.3 billion expansion at its assembly plant near Tuscaloosa. Companies based in Canada, South Korea, France and Japan also announced substantial investments in Alabama during 2015.

Alabama’s strong FDI showing was also noted by the IBM Institute for Business Value, which produces an annual “Global Location Trends” report.

The IBM report ranked the Mercedes expansion as one the Top 20 FDI projects in the U.S. during 2015.

IBM’s Global Location Trends report also said Alabama and several of its Southern neighbors have seen solid growth in FDI linked to advanced manufacturing.

“These Southern states offer competitive operating costs and good logistics infrastructure, and they have benefitted substantially from companies seeking operations closer to the North American market,” the analysis says.

PINPOINTING TRENDS

London-based Ernst & Young tracks mobile capital investment to identify trends that could be useful to investors and policymakers.

The firm defines mobile capital investment as spending for facilities such as office buildings, call centers, factories and distribution centers. These projects are called “mobile” because companies can build them anywhere, regardless of their headquarters locations.

“Many factors contribute to a company’s decision to invest in a particular location, and awareness of industry trends, workforce development levels and the availability of state and local tax incentives can help businesses choose where to locate their mobile capital investments,” said Andrew Phillips, principal at Ernst & Young.

“States should continue to find their competitive edge to attract a wide variety of investment types and maintain a healthy economy,” he added.

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