MOBILE, Alabama – On a sunny day in April 2013, an excavator began clawing up the soil at a 116-acre site at the Mobile Aeroplex picked to become the Alabama home of Airbus’ first U.S. passenger jet manufacturing facility.
Today, France-based Airbus is assembling the first Alabama-made A320 Family aircraft at a $600 million facility that one day will employ 1,000 people. Alabama economic development leaders see Airbus’ presence as a powerful catalyst for growth in the state’s aviation/aerospace sector.
The project also highlights Alabama’s vital global connection. Like many other major projects in the state over the past two decades, a foreign company was driving the investment. In fact, foreign direct investment, or FDI, has played a critical role in reshaping Alabama’s economic landscape.
In the past 15 years alone, Alabama has attracted FDI topping $24.5 billion, with German, Japanese and South Korean companies leading a parade of firms from 30 countries making Alabama investments. Together, those FDI projects have created more than 78,000 jobs if announced targets were met, according to data from the Alabama Department of Commerce.
“What would the economic landscape in this state look like without Mercedes, Honda, Toyota, Hyundai, and let’s throw in Airbus?” asked Rick Davis, head of economic development for the Birmingham Business Alliance. He added: “I really do like the fact that we are continuing to get this reputation as a great place for FDI.”
International aviation companies are already feeling the pull of Mobile Aeroplex. In June 2015, Ireland-based MAAS Aviation revealed plans for a $39 million aircraft paint facility at the Aeroplex, and France’s Hutchinson Corp. announced it will establish an aerospace manufacturing center of excellence at the complex, creating as many as 100 jobs. Two other French aviation companies plan to open nearby workshops.
The effect of this foreign investment in Alabama has been far-reaching.
More than $10 billion in investment from companies based in Germany, Japan and South Korea has turned Alabama into a major North American hub of auto production. Their presence has sparked the creation of a vast supplier network, much of it landing in smaller Alabama communities.
Pell City, with 13,000 residents, is one of those communities. Two German auto suppliers – Eissman Automotive and WKW Erbsloeh – have settled into the St. Clair County city and expanded repeatedly. Their combined investment today tops $72 million, with nearly 1,000 jobs created.
While auto-industry foreign investment has been significant, FDI in other sectors also has been a major force in reshaping the state’s economy, particularly in fields such as shipbuilding, advanced materials, metals and chemicals.
Australia-based Austal has invested more than $300 million in Mobile, where it has established a shipyard that produces aluminum warships and transport craft for the U.S. Navy. Austal arrived in Mobile in 1999 with a small investment. Today, the company is the port city’s largest private employer, with more than 4,000 workers.
Pharmavite, a company in Japan’s Otsuka Pharmaceutical Group, invested $74 million in 2011 to open a plant in Opelika that produces vitamins, minerals and dietary supplements. A $16.6 million expansion followed in 2013, pushing the workforce to 260. Last year, Pharmavite expanded again, with a $21.6 million project and another 54 new jobs.
Japan-based Toray, a major producer of polyacrylonitrile (PAN)-based carbon fibers, operates a plant in Decatur that houses one of the world’s biggest composite-materials production lines, capable of producing 8 million pounds of carbon fiber a year. The company has invested $511 million in Morgan County, where it also operates a Teflon fibers facility.
“FDI has been really important. It put us on the map — and that’s a good thing,” said Sam Addy, director of the Center of Business and Economic Research at the University of Alabama. “It says we have resources like the Port of Mobile, that we have a good workforce, that we are close to markets. There are a lot of things going for the state that are attractive to foreign investors.”
$1 Billion in FDI
Foreign investment continues to make a mark on Alabama. In 2014, FDI topped $1 billion in 56 projects with 2,570 new and future jobs across the state, according to Commerce data. Foreign investment – which represented nearly 30 percent of the state’s total that year — came from companies based in 14 different countries.
Japan was Alabama’s No. 1 source for FDI in 2014, with $346 million in investment and 1,118 announced jobs. South Korea and Germany, following the pattern of recent years, were the other top sources. Most of this investment was directed toward advanced manufacturing, primarily automotive.
Beside automotive, FDI in 2014 went into Alabama facilities making chemicals, metals, composite materials, plumbing systems, plastics, minerals, lumber, laminated flooring, and poultry processing.
“I can tell you that foreign direct investment has led the way. It has changed Alabama. It has changed the reputation of the state,” said Steve Sewell, executive vice president of the Economic Development Partnership of Alabama.