President's Message
- Volume 51, Number 1 - 2007
State's latest corporate coup will forever change the economic landscape of Alabama.
The spread of the news was almost instantaneous. In today’s world, something this big could not be hidden, even for a few minutes.
It was somewhere near 5:00 a.m. here in Alabama when the news came: ThyssenKrupp AG of Dusseldorf, Germany, would locate its new steel mill valued at $4.19 billion in the northern end of Mobile County. And this state was – again -- changed forever.
We used the phrase “changed forever” when the other recent king-sized industrial announcements were made, such as the location of Mercedes Benz in west Alabama, Honda in east Alabama and the new Hyundai plant in central Alabama. There is no question these industrial projects have and will change our state, shaping its future for decades.
But the numbers distributed by the German company on this economic project are almost mind-boggling -- 29,000 jobs during construction, and 2,700 jobs at the plant, paying between $50,000 and $65,000 per year – once it is opened sometime in 2010. And, of course, there will be many other facilities that will locate in the area, hiring more Alabamians to supply the equipment and materials necessary for this facility to operate.
As we all know, the competition for this industry was fierce. We moved heaven and earth to attract what some have called the largest industrial project in history. The state of Alabama, including the counties and cities in south Alabama, provided enormous tax incentives in order to entice the project away from the other proposed location in Louisiana.
In recent years, the Association has looked at tax abatements, refunds and exemptions with a bit of a critical eye. Our “official” position has evolved to the point that the Association now opposes local tax abatements, refunds and exemptions for industrial projects unless such abatements are approved by the local governing bodies. During the 2007 regular legislative session alone tax abatements were proposed for all manner of industrial activities, including movie production, airplane repair and construction and the use of alternative fuels.
The steel project was so large, and the impact on the local economy so strong, that we did not take the legislative steps necessary to require local approval of this project. In fact, the county officials in the area were so intimately involved in this project that no one could honestly argue the counties had not already given the abatements a thumbs up – albeit unofficial.
For example, in Mobile County alone the county commission played a major role in the recruitment process and will be expected to provide significant local revenue and manpower that were central to the effort to secure this announcement. And that’s a significant change from how the industrial recruitment business was conducted just a few years ago.
It hasn’t always been that way. Many years ago county commissioners heard about a new industrial prospect when they read it in the newspaper. In many counties the commission was more concerned with other activities, leaving the industrial recruitment to “state” employees and officials. But today, industrial recruitment and economic expansion is one of the most critical issues on the county commission’s “to do” list. And that’s a very positive step forward.
One could certainly argue the increased role for counties in this arena can be traced, at least in part, to the association’s demand that local governments be involved if local taxes are to be abated. Certainly county commissions are considered a major resource in industrial matters today and our voice is very important.
For example, the involvement of local governments played a major role in the recruitment of the Hyundai facility in south Montgomery County. And those neighboring counties near Montgomery all helped in the location of the smaller industrial facilities that supply the products necessary to feed the construction of the automobiles by Hyundai.
Today, an effort is underway to land a major industry in northwest Alabama. Legislation is pending to allow the county commissions in Colbert and Lauderdale to levy local sales taxes to fund the incentives the commission will be asked to provide to this new employer. Again, without the support of the county commission, this project would not be on the table today.
But, it is important that the excitement and pride over the Mobile announcement not reverse our insistence that local voices be heard on the issue of local tax abatements. We cannot afford for this posture to be softened in the coming years. The location of new businesses brings with it costs on behalf of local governments. Consistently, the county commissions have been willing to accept their share of the load and to do whatever they can – within reason – to help secure more jobs for the area.
But every industrial project is different and should be considered on its own merits and no one is in a position to evaluate the local merits as well as the local officials.
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