June 7, 2011

State of Alabama
Press Release: Alabama Department of Commerce

Birmingham Area Distribution Projects May Be First of Many

Published: Sunday, June 05, 2011
Huge rolling cranes, shown in this 2009 file photo, are used to load and unload containers from trains at a Norfolk Southern shipping hub in Austell, Ga. The company is spending nearly $100 million to build a similar hub in McCalla. (The Birmingham News/Joe Songer)

BIRMINGHAM -- Two events this week will elevate the Birmingham metro area's place as a Southeastern leader in the distribution center industry.

On Monday, Norfolk Southern broke ground on its $97.5 million Birmingham Regional Intermodal Facility, a 316-acre railroad hub that economic developers expect will become a magnet for distribution centers, generating millions of dollars in new investment and creating thousands of jobs in the years ahead.

Dollar General on Thursday will break ground on its $60 million, 1 million-square-foot distribution center on 106 acres at Lakeshore Parkway and Alabama 150 in Bessemer. The facility is expected to have 550 warehouse jobs and 100 trucker jobs.

Alone, those two projects are substantial economic development projects coming at a time when major projects are rare. Together, they constitute two of the biggest advances yet for Blueprint Birmingham, the metro area's five-year strategic plan being pushed by the Birmingham Business Alliance.

That plan includes a goal of boosting the metro area's recruitment and retention of companies in seven industry clusters, one of which is trade and distribution.

"We've got two very large and very distinct projects," said Brian Hilson, BBA's chief executive. "Both certainly stand on their own, but they're also complementary because they represent -- through significant corporate investment and job creation -- the logistics advantages the Birmingham area offers."

The Norfolk Southern facility, part of the railroad's multi-state Crescent Corridor initiative between the Gulf Coast and the Northeast, will not create many jobs at the facility itself but could create thousands as distribution companies look to build in Birmingham.

Hilson said it's an example of the geographic location and transportation infrastructure that makes Birmingham an ideal place for the industry to grow.

"The Birmingham area has been studied and industry targets have been identified for the region," he said. "One of the leading sectors of our economy is and has been for quite some time warehouse and distribution."

Hilson said because distribution companies don't produce a specific product, they often fly under the radar.

"They shouldn't because the cumulative effect of the individual warehouse, distributions and logistics companies represent thousands of jobs in the Birmingham region," he said. "It's been a major factor in our economy for a long time, but these two developments are evidence Birmingham will continue to be a major player in logistics and it ought to be recognized as a major plank in our economic development marketing programs because it's a significant industry target in and of itself."

The groundbreakings this week come at a time when not many announcements are being made on the economic development front.

"It provides a sense of continuing momentum in economic development for the Birmingham region," Hilson said.

But Hilson said this won't be the last week some major announcements are made.

"It's certainly a good week, but we're going to have lots of good weeks going forward," he said. "The true mark of an active economy we can all feel good about is to be working on other projects while at the same time we're taking a moment to celebrate the successes we're having. I will tell you that is going on right now."

Incentive proposals

The current legislative session has already seen the passage of one new economic development incentive, and two more could be added this week.

The Legislature itself took the lead on creating and passing the "Made in Alabama Job Incentives Act," which offers foreign companies a way of recouping money it pays in tariffs while establishing operations in Alabama. The legislation is aimed at large projects that involved at least $100 million in investment and create at least 100 jobs. The company would get a state income tax credit for up to $20 million over three years to offset the federal tariffs the company would pay on imported products while it builds and opens a plant here.

The perk is not a "statutory incentive," meaning it is not automatic for any company that meets the qualifications and must be considered on a case-by-case basis. For that reason and the fact it is due to pass off the books after a couple of years, some insiders believe the Legislature has a particular project already on the hook. Could it be that a Birmingham prospect is ready to cash in on the new incentive?

"We are working with foreign-based companies that would find that new legislation to be of benefit in the near term and it gives Alabama an advantage over other states that I know economic developers throughout the state will be very pleased with," said Hilson, the BBA chief. "It's particularly important to our community and region because of some of the foreign-based companies we are currently working with and would find that to be an advantage to them."

Two bills

Gov. Robert Bentley and the Alabama Development Office, meanwhile, are pushing two bills aimed at luring companies and creating and retaining jobs with new incentives.

The "Data Center Bill" and the "Jobs Creation/Retention Act" have been approved by the Alabama House and await approval in the Senate.

The data center legislation would lower the job threshold for data center projects from the current 50 to 20, so long as those jobs average $40,000 in annual salary and benefits. But, more importantly, it would extend the length of tax abatements from 10 years to 20 if the company invests at least $100 million and 30 year if they invest $300 million or more. Moreover, it will allow them to get tax breaks for some of the millions they invest to continually expand and upgrade their equipment and software systems.

The Jefferson Metropolitan Park at Lakeshore has already become home to four data centers with more than half a billion dollars in investment. A fifth company is purchasing 4.65 acres for another data center.

The "Jobs Creation/Retention Act" would be much broader and could apply to most any new or expanding industry. Companies, once approved by the State Industrial Development Authority, would be allowed to retain a portion of the withholdings from state income taxes based on the number of full-time jobs created or retained.

"There are multiple projects carefully watching the data center and the jobs creation bills and could create hundreds of jobs with their passage next Thursday," said Linda Swann, assistant director of ADO. "These bills are critical to Alabama's economic development strategy."

As with the tariffs bill, Hilson said Alabama's largest metro area stands to gain from the other incentives.

"Each of those pieces of legislation has a very direct bearing on the Birmingham region because of some of the current economic development prospect activity we are working," Hilson said. "We have companies we are working with right now that would be impacted by those various pieces of legislation. That's really good work on the part of the Legislature for us -- not just for Birmingham, but for the entire state."

Michael Tomberlin covers economic development, commercial real estate, construction, media and advertising. Contact him at 325-3436 or mtomberlin@bhamnews.com. Follow him on Twitter: @MAJ_Chicken.

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