Entries in Alabama (3)


US South Winning Economic War for Foreign Investment

Jason Alden/Bloomberg via Getty Images(MOBILE, Ala.) -- Airbus' choice of Mobile, Ala., as the site for its first-ever U.S. aircraft manufacturing plant is but the latest Southern victory in an economic war between the states: The fight to win direct economic investment from overseas, in manufacturing especially.

"For 10 years now, 39 percent of all direct foreign investment in the U.S. has gone to the South," says Michael Randle, owner, editor and publisher of Southern Business & Development, the economic development magazine of the South, based in Birmingham. "It's part of a trend you're going to see more of. If you want to sell to North America, it makes sense to make your products here."

Though an increasing number of foreign manufacturers, says Randle, want a foothold in U.S., "They don't want to throw their money around. They want a good deal." They're extremely conscious of costs, he says, and costs for lots of things--including land, infrastructure, electricity and labor—tend to be cheapest in the South. "Plus, there's the work ethic that the South is famous for."

Starting in the early 1990s, he says, Alabama made a huge commitment to winning aerospace and automotive manufacturing from Europe and Asia. After the state persuaded Mercedes-Benz to build a plant in 1993, it "knew it was on to something."

Other wins for Alabama (besides the decision by France's Airbus) include a $5 billion investment by Germany's ThyssenKrupp, which operates two steel plants in the state, and an announcement by Mercedes that it will produce its new GL-Class sport utility vehicle at its Alabama factory. Honda, Hyundai and Toyota have plants in Alabama as well.

As for Airbus's decision, economic development experts in Alabama and elsewhere say Mobile had an all but unbeatable advantage over other locations. Asked what city was the number-two competitor, Leigh Perry Herndon, vice president of marketing for Mobile's chamber of commerce, says simply, "There wasn't one."

The city's attributes, says Greg Canfield, Alabama's Secretary of Commerce, include a former airbase with long (9,600-foot) runways, two nearby freeway intersections, port access, an abundance of cheap land, low taxes and a local workforce skilled in aerospace manufacturing.

"The fact that Alabama is a right-to-work state, I think, too, was very important," he says.

Mobile already had a seven-year relationship with Airbus, dating back to when Airbus was in competition with Boeing for a contract to build air-tankers for the U.S. Air Force. Airbus competed out of Mobile for that contract, which they lost. Now they again have chosen Mobile as the base from which they will go up against Boeing for the commercial aircraft market.

Kudos to Mobile have come from a surprising quarter: Washington State, original home to Chicago-based Boeing and still the site of Boeing manufacturing.

"We congratulate them," says Alex Pietsch, director of the governor's office for aerospace development in Washington. Rather than seeing Airbus' decision to manufacture in the U.S. as a cause for war, Pietsch sees it as good news for his state's 720 aerospace suppliers.

"As Airbus grows its presence," he says, "we know our companies are going to be part of that supply chain."

A win for Alabama, he says, is a win for Washington State and for the U.S. aerospace industry in general--further confirmation that "U.S. manufacturing is back."

That generous attitude is not shared by Boeing, which in a statement denounced Airbus' decision: "While it is interesting once again to see Airbus promising to move jobs from Europe to the United States," said Boeing, "no matter how many are created, the numbers pale in comparison to the thousands of U.S. jobs destroyed by illegal [European] subsidies."

Alabama is kicking in $158 million in incentives for Airbus to locate to the state.

Copyright 2012 ABC News Radio


Debt-Ridden Jefferson County Files for Bankruptcy

Comstock/Thinkstock(JEFFERSON COUNTY, Ala.) -- Jefferson County, Ala., which contains the city of Birmingham, filed for bankruptcy on Wednesday after suffering for three years from the collapse of a sewer bond refinancing.

It is poised to be the largest municipal or county bankruptcy in U.S. history, reported The Wall Street Journal.

Defaulting on more than $3 billion of debt over the sewer deal, the county had come close to filing for bankruptcy months ago, but negotiated a tentative agreement with creditors in September.

The commissioners for the most populous county in the state voted Wednesday in a meeting to file for bankruptcy in a 4-to-1 vote.

Gov. Robert Bentley said he was disappointed in the filing.

The county reportedly was so strapped for cash and public spending problems that bridges were not repaired. For safety, school buses drove around them, accruing 1,722 miles in detours for an added cost of $2.5 million a year, according to Bloomberg.

Jefferson is the seventh municipality or county to file for bankruptcy this year, following Harrisburg, Pa., last month.

Since 1937, when Chapter 9 filings first became an option for municipalities, there have been only 625 filings, according to Chicago attorney James Spiotto, who has written books on the subject. Six filed in 2010.

Copyright 2011 ABC News Radio


How Did Most Desperate US Cities Fall into Bankruptcy?

Comstock/Thinkstock(VALLEJO, Calif.) -- The city of Vallejo, Calif., knows what it's like to go through desperate times -- a distinction it shares with similarly-blighted towns and counties around the U.S., including Central Falls, R.I., Harrisburg, Pa., Boise County, Idaho, and Jefferson County, Ala.

All these municipalities are either facing bankruptcy, have already declared it, or, like Vallejo, are now emerging from it painfully.

Few cities get so desperate as to seek bankruptcy protection.  Since 1937, when Chapter 9 filings first became an option for municipalities, there have been only 625 filings, says Chicago attorney James Spiotto, who has written books on the subject.  Only five communities this year have filed for bankruptcy, while six filed in 2010.

For some towns, bad times arrived slowly by a variety of roads.  For others, a single event tipped them into darkness.

The closing in the 1990s of a U.S. Navy base pulled the financial rug out from under Vallejo.

Boise was the victim of bad legal luck: A jury ruled in 2010 that the county had wrongly prohibited a developer from building a teen treatment center.  The developer won a $4 million judgment, which Boise has been hard-pressed to pay.

Harrisburg fell victim to the "incinerator from hell" -- a waste-to-energy incinerator whose renovation caused the town to go $310 million into debt, five times as much money as the city has in its general fund, according to the Stateline newspaper.  Pennsylvania in December declared the city -- its capital -- financially distressed.

Jefferson County in Alabama, home to Birmingham, has been suffering for three years from the collapse of a sewer bond refinancing.  As of mid-August, it stood poised to file the largest municipal bankruptcy in U.S. history, according to Bloomberg News.  It has since delayed filing to continue negotiating with its creditors.

Central Falls' economy declined over many years, starting in the 1970s, when local textile makers began moving plants overseas.  Some 1,400 jobs ultimately were lost, according to the National Council of Textile Organizations.  Crime increased to the point that Central Falls in 1986 was crowned the cocaine capital of New England by Rolling Stone magazine.

According to court papers, Central Falls ran out of money to pay its bills on Aug. 31.  It has a structural budget deficit of $5.6 million and an unfunded liability of about $80 million for retirement benefits and pensions.

To stave off bankruptcy, Central Falls now is trying to wrest back from its police and firemen some $2.5 million in promised pension benefits.  It has eliminated funding for its library, laid off staff, and has closed a community center.

All this pales, however, in comparison to what Vallejo has been through. Since filing for bankruptcy in 2008, the town has become overrun by crime and prostitution in the wake of budget cuts that have reduced the city's police force by almost half.  Prostitutes and pimps can be seeing plying their trade in the middle of residential areas.

In response, residents have taken matters into their own hands, instituting a neighborhood watch program, The Kentucky Street Watch Owls -- or, unofficially, the "Ho Patrol."

Copyright 2011 ABC News Radio

ABC News Radio