July 9, 2012

Airbus-Alabama’s Future – Airbus impact like Mercedes

by Phillip Rawls
Associated Press

The governor who recruited Mercedes-Benz to Alabama said the Airbus plant in Mobile could have the same transforming effect on the state that Alabama’s first auto assembly plant had without creating a political backlash over the $158 million the state is paying to secure the plant.

Former Gov. Jim Folsom said the aerospace industry was already a major factor in the state’s economy before Airbus announced it would build its first U.S. assembly plant in Mobile.

“But this puts us in another league. We will be one of the top aerospace states in the country,” he said in an interview with The Associated Press.

For Airbus, the $600 million plant is an opportunity to compete with Boeing on its home turf. For Alabama, it’s a marquee industry with a name that’s recognized worldwide.

“It puts us on the map in the world markets as a place to do business,” Folsom said.

In 1993, Folsom shocked the international business community when he persuaded Mercedes-Benz to build its first American assembly plant in Vance. Mercedes’ praise of Alabama’s non-union workforce helped recruit other industries. Honda and Hyundai picked Alabama for assembly plants, and Toyota built an engine plant.

The auto industry now accounts for 35,000 jobs in the state.

Folsom said Mercedes-Benz got people to look at Alabama in a different way, which led to more companies of all types considering the state for plants.

“Sometimes these announcements create a climate that you can’t quantify in dollars,” he said.

Gov. Robert Bentley noted that July 2 when he joined Airbus officials in Mobile for the announcement.

“I believe Alabama has the opportunity to build on the economic foundation of the aviation and aerospace industry – just like what we’ve done with the automotive industry,” he said.

Alabama’s aviation and aerospace industry already provides 36,000 private sector jobs and 37,000 federal jobs, with the biggest concentrations around Huntsville in northern Alabama and Fort Rucker in southeastern Alabama.

The Airbus plant is supposed to employ 1,000 people when at full production, with another 3,700 jobs created at suppliers, according to the state government’s estimates.

To get those jobs, the state government is providing $124.9 million in economic incentives and the city of Mobile, Mobile County and the Mobile Airport Authority are adding $33.6 million, for a total of $158.5 million.

That includes initial bond payments, cash, site preparation for the plant and employee training. In addition, Airbus will get the same breaks on state sales, property and income taxes that other new industries receive. The state government estimates those will be worth at least $19 million, depending on the plant’s profitability.

It’s less than the $253 million package that Folsom offered in 1993 for Mercedes. The size of that package drew criticism from many, including Folsom’s Republican opponent, Fob James, who ended up defeating the Democratic incumbent in 1994.

Once the Mercedes-Benz plant opened in 1997 and other auto plants followed, criticism of the incentives disappeared, and people began referring to Folsom as the father of Alabama’s auto industry.

Folsom said he doesn’t expect Bentley to get any of the criticism he faced in 1993 because Alabamians have become accustomed to putting up big money to get big employers.

After all, no one said much in 2007 when former Gov. Bob Riley promised a state record $811 million in incentives for the ThyssenKrupp steel mill at Calvert that now employs 2,300.

“We are past that. With the development of the automotive industry in the state, people realize it’s well worth the incentives,” Folsom said.

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