6 trends fueling Alabama’s economic growth in 2020 and beyond

January 09, 2020

Words by Jerry Underwood

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Alabama’s economy is humming on all cylinders as a new decade begins, with job rolls swelling to record numbers and an ultra-low unemployment rate as major industries expand their operations in the state.

While the foundations are firmly in place for more growth, there are some trends unfolding across Alabama that are poised to add an extra economic spark in 2020 and years to come.

“There are dynamic developments taking shape that will elevate Alabama’s growth potential and create exciting new opportunities for citizens throughout the state,” said Greg Canfield, Secretary of the Alabama Department of Commerce.

Here is a look at six important trends that will accelerate growth in key strategic industries.

Lockheed Martin says hypersonic strike weapons, capable of flying speeds in excess of Mach 5, are a key aspect of the long-range precision fire modernization effort for the national security strategy to compete with and outpace potential threats. (Image: Lockheed Martin)

YKTA is among five different Mazda Toyota Manufacturing suppliers that have announced plans for facilities in North Alabama. Together, they will employ nearly 1,700 people.

Gov. Kay Ivey cuts a ribbon to mark the opening of Abbeville Fiber, a sawmill that will employ 115 in Henry County. (Image: Alabama Governor's Office/Sydney A. Foster)

Hyundai plans Alabama production of the Santa Cruz compact utility vehicle, shown as a concept at the 2015 North American International Auto Show in Detroit. (Image: Hyundai)

The Techstars Alabama EnergyTech Accelerator will serve as a startup accelerator focused on innovations in energy technology to be located in Birmingham. (Image: Techstars)

TREND 1: EMERGING HYPERSONICS HUB

Lockheed Martin is making North Alabama its flagship location for work on futuristic hypersonics technologies, which allow weapons to fly at five times the speed of sound or even faster. The company’s plans call for almost 275 new Alabama jobs, including engineers.

Lockheed Martin is adding two new buildings at its Courtland facility for the assembly, integration and testing of hypersonics programs. The company will locate its management and engineering workforce for these programs in Huntsville.

Huntsville-based Dynetics is also working on hypersonics. The U.S. Army has awarded Dynetics Technical Solutions a $352 million contract to produce Common-Hypersonic Glide Body prototypes.

“The decision by the Army to select Dynetics, located right here in Alabama, and Lockheed Martin’s Courtland facility to advance this important national security initiative is a testament to the complex defense work taking place in our state,” U.S. Sen. Richard Shelby said.

Efforts to develop hypersonics are expected to intensify in coming years, positioning Alabama for more gains.

TREND 2: GROWING SUPPLY CHAIN CLUSTER

The Mazda Toyota Manufacturing USA plant, now under construction in Huntsville, is already acting as a mothership for suppliers.

So far, 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. Combined, their investment totals $440 million.

The largest of these projects, YKTA, will create 650 jobs at its Limestone County facility. More suppliers are expected to announce Alabama plans.

Toyota’s engine plant in Huntsville is also growing with a $288 million investment.

Mazda Toyota Manufacturing itself represents an economic bonanza for Alabama.

This $1.6 billion project will not only bring up to 4,000 direct jobs but also a fifth global automaker, Mazda, to Alabama.

“The Mazda Toyota Manufacturing USA facility will power a new phase of growth for Alabama’s auto industry by acting as a magnet for substantial new investment and job-creation,” Secretary Canfield said.

TREND 3: EXPANDING AEROSPACE CAPABILITIES

Hypersonics is hardly the only exciting development shaping the future of Alabama’s aerospace industry.

At the United Launch Alliance’s sprawling factory in Decatur, Alabama workers have begun assembling the nation’s next-generation launch system — the Vulcan Centaur rocket. In Huntsville, Blue Origin is building a $200 million factory to supply engines for the Alabama-made rocket.

On the ULA campus, Dynetics has opened an advanced rocket-testing complex that will support the Vulcan Centaur program and NASA’s SLS, the space agency’s most powerful rocket.

Boeing, meanwhile, continues to grow in Alabama with a sweeping range of activities in support of NASA and the nation’s missile defense programs. Boeing’s Alabama workforce tops 3,000.

In Auburn, GE Aviation is investing $50 million to expand its additive manufacturing hub, where it now produces two 3-D printed jet engine components. GE has been producing a fuel nozzle tip using additive technologies at the facility since 2015.

At the Airbus manufacturing site in Mobile, production of the A220 passenger jet has begun, joining the A320 aircraft already made there. Construction on a second assembly line for the A220 is well under way. Airbus is also increasing A320 production.

TREND 4: ELEVATING RURAL POTENTIAL

Alabama’s economic development team is taking concrete steps to help spark growth in the state’s rural areas.

For starters, the Alabama Department of Commerce hired Brenda Tuck as its first rural development manager to help rural counties and communities better compete for job-creating projects.

“Rural communities in Alabama can benefit from having a go-to person who can connect them with the resources they need to improve their economic development prospects,” Tuck said.

Commerce is closely aligned with the Economic Development Association of Alabama to develop and advance rural growth initiatives.

In addition, the Legislature approved the “Alabama Incentives Modernization Act,” which increases the number of “Targeted Counties” eligible for enhanced incentives.

TREND 5: EXPANDING PRODUCTION LINEUPS

Alabama automakers are making big investments to add new models to their in-state production lineups.

Today, Mercedes-Benz, Honda and Hyundai assemble 11 vehicles at their Alabama plants. By 2021, that figure will jump to 14.

Hyundai plans to add a new vehicle – the Santa Cruz crossover — to its Alabama lineup as part of a $410 million expansion project that will create 200 jobs at its facility in Montgomery. Hyundai now produces the Santa Fe SUV and the Sonata and Elantra sedans there.

Mazda and Toyota will each produce a SUV at their joint venture Alabama plant, beginning in 2021.

Growing production lineups are viewed as a positive because new models often result in additional supplier activity.

TREND 6: STRATEGIC PUSH FOR TECH JOBS

Efforts to expand Alabama’s Innovation Economy are receiving a boost from several positive developments.

For starters, the Alabama Incentives Modernization Act includes specific provisions designed to energize Alabama’s efforts to attract technology companies. It expands incentives available to tech firms while also providing potential tax benefits for tech entrepreneurs who set up operations in the state.

Technology accelerators also benefit under a new incentive incorporated in the Growing Alabama Credit.

In Birmingham, Techstars, a worldwide network that supports entrepreneurs, is launching the Techstars Alabama EnergyTech Accelerator, a startup accelerator focused on innovations in energy technology.

“With a world-class accelerator program, the Techstars Alabama EnergyTech Accelerator will be an important catalyst for Alabama to continue strengthening its reputation as a growth center for technology and energy innovation,” said Mark Crosswhite, CEO of Alabama Power Co., a partner in the project.