EconSouth - Second Quarter 2008


Manufacturing Revs Up Mobile

Photo of Mobile Area manufacturing
Photo courtesy of the Mobile Area Chamber of Commerce
Mobile's economy should get a jump start from German steelmaker ThyssenKrupp and European airplane maker EADS. Foreign manufacturing firms have long played an important role in the city's employment composition.

Change is afoot in Alabama's oldest city.

The port town of Mobile, Ala., 300 years old in 2002, anticipates welcoming two of the biggest industrial employers the city has seen since a World War II–era shipbuilding frenzy. Given Mobile's international heritage—the flags of France, Britain, Spain, the Confederate States of America, and the United States have all flown there—it is perhaps appropriate that the new factories largely will be courtesy of European companies. Moreover, Mobile's economic progress of late has been helped mightily by an Australian shipbuilder and an aerospace firm based in Singapore.

The economy goes boom
Already, Mobile County's population has begun to rise after a decade stuck at about 400,000. And forecasters predict the city is on the cusp of a full-blown economic boom.

Moody's estimates that between 2007 and 2012, Mobile County's economy will have the greatest expansion among all 363 U.S. metropolitan areas. and forecast the Mobile economy will grow 34 percent during that five-year period.

Forbes attributes the coming boom to the $3.7 billion ThyssenKrupp steel mill scheduled to open just north of Mobile in 2010, Austal USA's ongoing success in shipbuilding, and the Northrop Grumman/EADS airplane assembly plants slated to be built in Mobile. The city's port and access to interstate highways 10 and 65 are also major assets to its growth.

Based solely on projects already planned or under way, the Mobile area could easily add more than 15,000 jobs in the next three to five years, said Semoon Chang, professor of economics and director of the Center for Business and Economic Research at the University of South Alabama in Mobile. By comparison, from 2000 to 2007, Mobile added just 3,200 jobs, according to the U.S. Bureau of Labor Statistics, with the majority being added only recently.

Manufacturing and more
Austal USA has been a critical factor in Mobile's recent growth. The Perth, Australia–based shipbuilder opened its U.S. base in 1999, "and ever since, the metro area has bloomed as a manufacturing center," according to Austal's arrival helped to salve the wounds when the area's venerable economic pillars, International Paper and Scott Paper, gradually shrank and finally closed paper mills in the late 1990s and 2000–01, respectively.

Austal is currently Mobile's second-largest manufacturing employer, with 1,100 workers and a plan to roughly double its shipbuilding capacity, mainly to supply U.S. Navy combat ships. The company launched the first such vessel, a futuristic 417-foot aluminum craft, in late April and is expected to add about 4,000 workers in the next few years, according to Chang.

Along with shipbuilding, the aerospace industry has surged in recent years. Mobile's present top manufacturing employer, with 1,302 workers, is ST Mobile Aerospace Engineering, a unit of a Singapore-based company that opened an aircraft servicing operation at the Brookley Industrial Complex in 1990.

State outline highlighting Mobile
Mobile, Ala.
Population 193,464
Mobile County population 404,157
Households (city) 78,480
Median household income $31,445
Sources: City population from 2003 U.S. Census estimates; county population from 2006 U.S. Census estimates; households and income from the 2000 U.S. Census.

Mobile's Alabama State Docks complex has also contributed to recent growth. It now ranks as the 10th busiest seaport in the country based on tonnage, according to the U.S. Army Corps of Engineers.

Even more development is on the way, including a new container terminal at the Port of Mobile scheduled to open in September and the planned Alabama Motorsports Park and Dale Earnhardt Jr. Speedway.

The biggest bang
But of all the currently anticipated new development, ThyssenKrupp's plans are expected to have the single biggest impact. After an intense competition among several states, the German steelmaker was wooed to Mobile by $810 million in state and local government incentives. With a workforce of 2,700 projected at its opening in 2010, ThyssenKrupp would immediately become the area's largest manufacturing employer.

The Northrop Grumman/EADS plants are a close second in terms of expected economic impact. The Air Force refueling tanker and civilian cargo plane assembly plants are expected to employ about 1,800. (European aircraft maker EADS opened an office last year at the Brookley Industrial Complex and already employs 75 aerospace engineers.)

Pending the outcome of a Boeing protest of the awarding of the Air Force tanker contract to Northrup Grumman/EADS, Airbus tentatively plans to break ground on the $600 million center at Brookley Field on June 28 and start producing the commercial freighters within two years, according to the Mobile Register. The aircraft assembly plant would almost certainly attract numerous suppliers, Chang noted.

A couple miles north of Brookley, the $300 million Mobile Container Terminal at Choctaw Point is expected to create 300 jobs. The terminal will eventually add two million annual tons of containerized cargo to the 700,000 tons the Port of Mobile currently handles each year, according to the Alabama Port Authority, which operates the docks. All the property abutting the terminal has been snapped up for warehouse and other development, Chang said.

Facts About Mobile
bullet image Mobile was founded as Fort Louis de la Louisiane in 1702 as the capital of the French colony of Louisiana.
bullet image Spanish forces captured Mobile in 1780 during the Revolutionary War and held it until American forces captured it in 1813.
bullet image Mobile's Mardi Gras celebration is the oldest in the United States, dating to 1840.

Although plans are in place, construction has not yet begun on the proposed Earnhardt Speedway complex in Prichard, an area adjacent to Mobile. Chang said the complex would create about 2,000 full-time jobs, most of them in the lower-paying service sector.

Growing pains
"In three to five years, Mobile will be a boom town," Chang said. But all this additional activity creates challenges. For example, roads will likely need improvements. A long-debated Interstate 10 bridge into the city, which would supplement the aging and narrow Wallace Tunnel, is now more likely than ever to be built, Chang noted. The bridge would cost about $1 billion and take eight years to build, according to Bill Sisson, vice president of economic development at the Mobile Area Chamber of Commerce.

In addition, finding enough highly skilled workers to fill the new positions could be a challenge. "Workforce development becomes a huge issue for this community," Sisson said. The state, city, county, and local community colleges and schools have established an umbrella job training initiative to help satisfy the demand. The initiative is setting up training centers specifically for ship building and aerospace workers and for ThyssenKrupp.

If the predicted boom does come, it won't be Mobile's first. By 1840, as cotton growing spread farther inland, the city became the nation's second-biggest cotton exporter, behind New Orleans. And by 1860, Mobile was the second-largest city in the Southeast, again trailing only New Orleans.

Another boom occurred 80 years later, when workers flocked to Mobile to build Allied warships. Between 1940 and 1944, Mobile County's population soared by 91,000 people, to 233,000. But when World War II ended, so did about 40,000 defense jobs.

Today, another bonanza looms for the city. This time, though, the diversity of development means it is unlikely to end as suddenly as previous ones.

This article was written by Charles Davidson, a staff writer for EconSouth.