Alabama commerce secretary looks to lift FDI tide

Q: For a small state, Alabama attracts high volumes of FDI. How central is it to your economic development agenda and what sectors are you prioritising?

A: Much like other south-eastern US states, Alabama has undertaken a strategy for growth that has focused on FDI. At the end of each year we look at our performance with regards to new and expanding industry. FDI is always accounting for anywhere between 30% and 50% of that activity. FDI in Alabama is huge.

We have seen acceleration in a number of FDI sectors such as automotives and aerospace and aviation. Alabama is fortunate because it is one of the few states that has a little bit of everything in terms of aerospace and aviation: encompassing everything from space exploration to commercial aircraft assembly tied together with maintenance, repair and overhaul activities – which have been robust over time and continue to be today.

Most recently the recovery of the US economy [has boosted the development of the] residential construction industry and commercial construction activities. Forest products have taken off in terms of interest from foreign companies looking at the capability of entering the US market in a more cost-effective manner.

Q: How do you communicate Alabama’s selling points for inward investment?

A: That really gets to the crux to our strategy with regards to creating the ‘Made in Alabama’ brand, which we launched in March 2013. Prior to that we really didn’t have a state-wide recognisable brand. We launched Made in Alabama with the idea that this would be our platform to tell stories from the perspective of the companies who have made the decision to put their capital here and have found great success in Alabama. It is projecting an image that captures the real essence of a state that’s on the rise and an economy that is taking on new dimensions each and every day.

The workforce is arguably the number one issue that every developed nation and every state in the US is having to address. In Alabama we have a workforce that is resilient, dedicated and competitive – they like to be the best and they are self-motivated.

Q: Alabama has been criticised at times for over-reliance on investment incentives. Is it a fair criticism?

A: I don’t think that we over-use incentives in this state. In the early 1990s, when Alabama made the decision to incentivise Mercedes to come here, it was widely held up as a situation where a small state with limited financial resources might be overextending itself. That certainly hasn’t proved to be the case. The incentives have paid for themselves 10 times over [through the continued investments Mercedes has made since then]. 

We have modified our approach over time and developed a new incentive programme that is more sustainable. It involves incentivising companies based on the incremental increase in tax flows that are generated by their new investments or their new activity in the state. We incentivise tax credits, we incentivise their pay roll credits, we allow them incentives in the form of cash, all on the basis that they have to create the economic activity that creates the cash flows and then we provide a small portion of that back to them as a return.

Q: What do you think of the tariffs and the trade wars [pursued by president Donald Trump]? As a state that has a lot of foreign investment and manufacturing, is it worrying for you?

A: Yes, particularly on the automotive side. The state of Alabama is the third largest exporting state in the US – a lot of people find that eye opening. We’re the fifth largest automotive producing state in the US. So, exporting Alabama-made vehicles is very important. Plus, we’ve got a global supply chain that is supporting, in a general sense, our advanced manufacturers.

We’re working very closely to educate the administration in Washington about the long-term effects of extended trade wars. We support the concept of fair trade; I don’t believe there is anything such as free trade but I do believe in the concept of fair trade. The administration’s efforts to pursue fair trade are timely but we are concerned about an extended tariff war because trade negotiations through tariffs is not in the long term in anybody’s interest, particularly if it produces no results.

Q: An anti-abortion law passed by the state in May created an international backlash. How has this impacted your efforts to promote Alabama for FDI?

A: We remain focused at the Alabama Department of Commerce on the successful recruitment, expansion and retention of world-class companies.