August 28, 2012

State of Alabama
Press Release: Alabama Department of Commerce

Survey Says Small Business Optimism Faltering, but Mobile Still Claims an Airbus Lift

August 26, 2012


Airbus President Fabrice Bregier, July 2, 2012 at the Arthur R. Outlaw Convention Center in downtown Mobile, Ala. Bregier, left, and Alabama Gov. Robert Bentley celebrate the announcement with a model of the A320neo in the foreground. (Press-Register/Mike Kittrell)

MOBILE, Alabama -- A new survey by Wells Fargo on small business optimism across the United States indicates that less than half of owners expect revenue gains over the next 12 months, and only six in 10 expect to be in a "good financial position" by mid-2013.

But while participating Mobile businesses somewhat reflect the national viewpoint, the area is uniquely balanced with optimism stemming from Airbus's recent announcement to build a $600 million final assembly plant at Brookley Aeroplex, said Chuck Harmon, Wells Fargo's Mobile market president.

"With Airbus coming in, there is definitely some optimism," he said. "It's going to fuel quite a bit of expansion and there's already a lot of dialogue going on with the potential suppliers that could come to this area."

The quarterly survey indicated that business owners expecting increased revenues declined by six percentage points to 43 percent from the quarter before. Those expecting to be in good fiscal shape within a year fell to 59 percent, down seven percentage points.

At the local level, Harmon said about 60 percentage of small business owners expected to be in a good financial position over the next 12 months, slightly higher than the national result.

In the survey, which polled 600 small business owners nationwide, owners said they'd be more likely to invest in their businesses when they see improvements in their operating environment, and better sales and revenues.

Harmon said the local optimism in the survey is somewhat mirrored in the fact that he and his team are seeing more financing by small businesses in areas such as equipment purchases and buying or expanding space for business. The volume is about 60 percent higher when compared to the same period last year, he said.

"There are pockets of folks working in manufacturing that are starting to expand," he said. "Transportation, distribution, manufacturing, things that are at the front end of the economy, are coming back to normalcy. That's usually a good sign."

Harmon said that while he sees some areas of local business picking up, there are still many business owners on the fence, trying to decide when to invest further in their companies. He said there's reluctance to make capital purchases due to the persistent uncertainty in the economy.

"Over the next few years, the Airbus deal should fuel the creation and expansion of small businesses in the area," he said. "Over the longer term, that's a huge investment coming in. That will generate jobs which will push unemployment down."

At 10.1 percent, unemployment in Mobile is higher than the national average of 8.3 percent. But Harmon said he expects that will change within 12 months.

"Right now, the economy is pretty much slowing, with some expectations that it will slow a little more in 2013," he said. An expanding aerospace sector, he added, "doesn't have an economic impact yet, but you've got a lot of excitement in the air."

Darrell Randle, vice president of small business development for the Mobile Area Chamber of Commerce, said he is surprised the survey doesn't measure more optimism along the Gulf Coast. He blamed the general tone of national news, especially as attention turns increasingly to the upcoming presidential election.

"For the most part, people in the community are very upbeat," he said. "We have so many great opportunities ahead us, how can you not feel optimistic?"

Randle said he hopes the chamber can facilitate a business-to-business matchmaking event in the future, which would match Airbus and its tier one suppliers with local businesses offering everything from janitorial to IT services.

Michael Payne of Gwin's Commercial Printing said he believes Mobile's economy is much better than the national economy and he has already seen an increase in business stemming from Airbus' decision. The local, family-owned company was responsible for printing the banners and programs for the press conference Airbus held at the Mobile Convention Center last month.

"I think we're lucky to be in Mobile," he said. "I'm very excited about the prospects of our local economy and I think the big businesses will create the atmosphere and environment for small businesses. Each work together to make the other stronger."

Payne, who has also worked with Austal USA, ThyssenKrupp Steel USA, BAE Systems and ST Aerospace Mobile, said the sky's the limit when it comes to Airbus, which he said will bring a lot of opportunity to the small business community.

Sam St. John, president of Mobile-based Logical Computer Solutions, said he sees only positive things for the local economy in the next 12 months and that even markets dramatically affected by the recession, such as construction and real estate, are seeing the light at the end of the tunnel.

But he doubts any immediate Airbus bump for small business.

"These announcements make you feel good, but the reality is nothing happens with small businesses for several years," he said.

Instead, he said he anticipates a trickle-down effect.

"As long as the people that move here buy cars and houses and shop at local businesses, it helps everybody," he said. 

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