EconSouth (Third Quarter 2006)

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Volume 8, Number 3
Third Quarter 2006


The Energy Debate: Is Ethanol the Answer?

The Gulf Coast’s Tourism Comeback: Playing for Even Higher Stakes?

Hurricanes Spawn
Insurance Rate Increases

Katrina Update: One Year After


Fed @ Issue


Q & A

State of the States

Research Notes & News

Southeastern Economic Indicators




Huntsville: From Rockets to Riches

Space Camp
Photo courtesy of the Huntsville Convention and Visitors Bureau
Thousands of children a year find fun and feel the allure of an aeronautics career at the Space Camp program at the U.S. Space and Rocket Center in Huntsville.
In 1819 a group of 44 men gathered in a cabinet shop in what is now Huntsville for an armchair constitutional convention. Their purpose was to organize the territory to become the 22nd state in the United States.

For nearly 140 years, being Alabama’s birthplace was Huntsville’s chief claim to fame. But for the past 50 years, Huntsville has become known more for rocket science than for historic merit.

Launching the area’s economy
Just before World War II the U.S. Army built two arsenals near Huntsville to produce artillery shells. After the war, the army transferred all its missile experts to the area’s Redstone Arsenal. Redstone has since become one of the army’s most important strategic posts, responsible for research, development, production, and worldwide support of missiles, aviation, rockets, and related programs.

The work done by a team led by Dr. Wernher von Braun at Redstone became the beginnings of America’s push toward space. In 1960, the National Aeronautics and Space Administration (NASA) opened Marshall Space Flight Center (MSFC) in Huntsville. In the decades since, the center has developed or been involved in many critical aspects of America’s space program, including the Saturn rockets used in the Apollo lunar and space station missions, lunar roving vehicles, the space shuttle fleet, and the Hubble Space Telescope. The center has also been chosen to manage some of the key projects and programs in NASA’s initiative to return to the moon by 2020.

Huntsville, Ala.
Population (city only) 166,313
Population (Madison County) 298,192
Households (metro area) 146,870
Median household income $48,006
Source: U.S. Census Bureau, 2005 estimates

The defense and aerospace industry has become the backbone of the Huntsville area’s economy. In the two-county (Madison and Limestone) metropolitan area, with a population of 368,000, more than 44,000 people work directly in the aerospace and defense industry—over 17,000 civilian and military personnel at Redstone Arsenal and MSFC and 27,000 employees of the 250 aerospace and defense contractors in the area, according to a 2006 aerospace industry profile from the Huntsville Chamber of Commerce. Information from the Huntsville mayor’s office shows that, in Madison County in 2002, the defense sector generated over 26 percent of the total personal income and accounted, directly or indirectly, for nearly 30 percent of the jobs.

While both the defense industry and NASA contribute a great deal to the local economy and way of life, these benefits come with a downside—they could be wiped away with the stroke of a pen in Washington, D.C.

On the grow
But Huntsville’s economy is diversifying beyond defense and government, especially in the software and information technology industry. According to the Alabama Development Office, Huntsville industrial firms added more than 6,500 jobs and $544 million in new capital investments between January 2004 and June 2005. Tenants at Cummings Research Park, the second-largest research park in the United States, include Fortune 500 companies, local and international high-tech companies, U.S. space and defense agencies, and a technology business incubator. In a recent announcement, the Hudson-Alpha Institute for Biotechnology said it will build a 600-acre campus within Cummings Research Park and add between 500 and 600 jobs from 2007 to 2008.

With a high concentration of highly skilled and educated workers who fuel educational and research facilities as well as government laboratories, Huntsville offers high-tech industries a ready-made pool of potential workers. And the city’s strong school system—with 85 percent of the city school system’s high school graduates enrolling in college, an active magnet school program, and close partnerships with Redstone Arsenal and NASA—appears set to keep this pool of attractive workers well stocked.

A standout on the national stage
Huntsville enjoys many other advantages in attracting new businesses and residents. In 2005 alone, Huntsville was mentioned among the best cities to live, work, or grow a business by no less than seven publications and Web sites. rated Huntsville the second-best city in the United States for salaries and cost of living, and Forbes magazine selected it as one of America’s Top Business Cities. Additionally, government relocation information places Huntsville among the top ten cities in the United States for college educated residents.

Facts About Huntsville
A large natural spring first drew settlers to the Huntsville area. In 1823 “Big Spring” became the water source for what may have been America’s first public water system, consisting of cedar troughs carrying water from the spring to a wooden storage tank.
Born in Huntsville in 1902, the daughter of a U.S. Speaker of the House and granddaughter of a U.S. senator, Tallulah Bankhead became a colorful, and often scandalous, Hollywood and Broadway star.

The workforce of Huntsville and Madison County commands relatively high salaries because of the skills and education demanded by the area’s major employers. U.S. Census Bureau estimates for 2005 show a median household income for the Huntsville metro area of $48,006, higher than the nation’s $46,242. Yet the area’s cost of living is quite low. A government survey showed that it would take a 36 percent higher wage to achieve the same standard of living in Washington, D.C., as in Huntsville, but the U.S. government’s actual wage differential is only 2 percent. In addition, the Huntsville metro area’s unemployment rate (3.4 percent in July 2006) is considerably better than the national rate (4.8 percent), according to data from the Alabama Department of Industrial Relations.

Housing affordability is a big selling point. An affordability index for Alabama housing calculated by the Real Estate Research and Education Center at the University of Alabama shows that Huntsville residents have around twice the median income needed to purchase a median-priced home.

American idyll
Besides affordability and a high living standard, Huntsville enjoys other quality-of-life advantages, including natural beauty. Situated between the Tennessee River and the Appalachian Mountains, the city has a varied terrain of lush, green mountains and gently rolling valleys. Huntsville also offers a rich cultural and recreational base. The internationally renowned U.S. Space and Rocket Center Space Camp program, the Huntsville Museum of Art, the EarlyWorks Children’s History Museum, Burritt on the Mountain (a living museum of regional life), and an array of recreational facilities provide a well-balanced environment in which to raise families.

This article was written by Lynne Anservitz, editorial director of EconSouth.