Posts

Huntsville Shows Resilience as New Economic Numbers Are Mixed Bag

New economic impact numbers have been released and according to the Huntsville Madison County Chamber of Commerce Research Director Ken Smith, they provide a snapshot into exactly what kind of impact COVID-19 has had on our local economy, and how that information compares to the national numbers.

While there is some bad news in the data, albeit expected; there is quite a bit a good news going forward as Huntsville proves to be overwhelmingly resilient.

According to Smith’s presentation on a recent teleconference call with Chamber members, there was a big dip in employment coming off March into April with Huntsville employment at 226,000. The one-month change showed an 8.3 percent dip, which Smith said is a significant drop. However, compared to the U.S. employment numbers of -13.1 percent, Huntsville stayed well ahead of the national statistics.

Furthermore, according to early calculations for May, employment has already started ticking back up, showing a 2 percent increase in employment from April to May.

“We are looking at what analysts are saying is a two-year recovery for GDP and a possible three-year recovery for employment to get back to pre-pandemic levels,” said Smith. “We are about 7.5 percent below where we were this time last year, as compared to 13 percent for the U.S. economy. That translates into 10.6 percent unemployment locally, which is a big jump, but not bad when compared to the U.S., which was up to 14.4 percent.

“The Federal Reserve recently announced they are not likely to raise interest rates until after the year 2022. So this gives us hope and a sign it will be the same for the local Huntsville economy, and it will rebound, which falls in line with what the Federal Reserve has been predicting.”

Looking at the two-year picture, backing up to January 2018, the numbers show the precipitous drop in April wiped out any gains over the past few years, and the same can be said for the U.S. economy, which lost 20,000,000 workers over the past month. It added back 3 million in May.

“We at the Chamber use trends in our marketing to potential new clients interested in moving their business into the area,” said Smith. “They like to see that our economy is strong.

“If you look out over 20 years instead of two years, you can see Huntsville’s employment growth is about twice the rate of the U.S. and it has been trending that way since 2000.

Smith’s data charts show the dip in 2008, which was the recession. It took Huntsville about five years to recover and get employment back to pre-recession levels. It took the U.S. six years.

“But what they’re predicting now is a larger drop but a shorter recovery,” said Smith. “That is a three-year recovery in employment and four years for the U.S. to recover.”

Looking at employment by industry, there are no surprises.

The biggest local job loss was in the leisure and hospitality industry, losing 8,000 jobs from March to April. That includes all the arts, entertainment, and recreation, and hotel and food services.

The second biggest loss for Huntsville was in professional and business services.

Huntsville lost 4,100 jobs during that same time period, and where engineering and technology workers did not see a big job loss, the losses were in support services such as office and administrative, cleaning services, document preparation, and employment services. With companies closed or people working from home, there was a lot less need for some of that support.

The third largest drop was some 1,500 jobs in a sector that included repair and maintenance businesses, hair and nail salons, and nonprofit organizations.

Smith said Huntsville’s employment by industry matches up pretty well against the U.S. hospitality and leisure sector, which lost 7.2 million jobs.

“Huntsville dropped about 36 percent, so we see over one-third unemployment in leisure and hospitality, where the U.S. lost almost half in that sector at about 46 percent,” said Smith. “Huntsville expects to gain it back.”

In areas where Huntsville fared pretty well, the retail trade industries only lost about 5 percent, compared to the U.S. at about 14 percent.

Huntsville also did well in manufacturing, losing only about 4 percent compared to the U.S. losing about 10 percent overall.

In the areas of construction, wholesale trade, and transportation, Huntsville lost very few jobs compared to the national numbers, but transportation is not a very big industry in the local market.

Huntsville also did not lose many jobs in finance or in the government sector.

Looking at the good news, Moody’s Analytics did an analysis at the end of May showing a sharp drop with a continued recovery through the rest of this year 2020.

“A lot of people might think, ‘Well, all we did was put on the brakes. Why can’t we just start right back up and go back to where we were two months ago?’,” said Smith. “That’s typically not going to happen. We saw after the 2008 recession it took five years to get back to pre-recession levels.

“Here, they are expecting a recovery, but not an immediate one. Huntsville is looking at two years for GDP and three years for the employment to recover, which is one year earlier than the U.S.

Why is Huntsville’s recovery faster than the U.S.?

Moody’s points to some of the area’s key strengths.

“It’s interesting to see how the short-term and long-term statistics show us in expansion mode, which is pretty positive,” said Smith.

Some of those strengths are Huntsville’s extremely highly skilled and educated workforce in areas of advanced manufacturing at key companies like Mazda Toyota, for example; and research jobs such as those at Blue Origin and Aerojet Rocketdyne. Moody’s mentions all three specifically.

Huntsville’s robust population growth and favorable migration is part of it too. It comes on the heels of new population numbers recently released showing Huntsville’s population hitting over 200,000 for the very first time, so that is definitely something to note.

In terms of weaknesses, Smith said Huntsville still gets knocked down because of our dependence on the government sector with an underrepresented private sector.

Also wage growth is slow, due in part to a higher-educated workforce whose wages are already on the upper end, so there is less room to grow.

“Lastly, if we look into the Moody’s forecast a little more deeply, you can see the year-by-year percent growth, and you can see where we were trending before 2019,” said Smith. “We were outpacing the U.S. economy in growth and jobs so this is why we say Huntsville’s economic recovery and employment growth is better, and will be faster than the U.S.”

Smith also said the Chamber still has companies interested in locating their businesses in the Huntsville community and they are working on several projects on the commercial side.

“We are still seeing a lot of investment companies and private investors looking to continue their projects here, so from the Chamber perspective, we are primed and ready!

“It’s a very difficult time for many people, especially small business, but the balance of the skilled workforce and job growth makes Huntsville residents better able to support their families than some,” said Chamber President and CEO Chip Cherry. “There’s a lot of job growth and information that shows companies are hiring, and there is a lot going on Redstone Arsenal too, so there are still a lot of opportunities in this market.

“We are not recession-proof, but we are a lot more resilient than some,” Cherry said.

 

Region’s Job Outlook Demands an Increase in the Supply of Workers

We need more people singing “Sweet Home Alabama!”

That is the overarching conclusion from the North Alabama Region Labor Market Analysis commissioned by Huntsville’s Launch 2035, the strategic regional partnership between business and elected officials in Limestone, Madison, and Morgan counties.

How many more people?

How about some 25,000 new jobs to be filled by 2023?

To answer that challenge, Launch 2035 is rethinking and re-imagining North Alabama’s regional economy over the next 20 years.

Conducted by Deloitte, the assessment had six objectives: provide a snapshot of the overall supply and demand of the North Alabama labor market; identify and assess talent and potential talent/skills demand and trends; capture insights from regional employers concerning the skill sets they will need; secure guidance concerning growth projections by worker type and skill sets; provide Launch 2035 with an understanding of the perceived quality of the workforce pipeline supplied by the region’s higher education; and provide examples of strategies to address anticipated labor shortages.

While North Alabama’s unemployment rate stands at 2.6 percent compared to the national rate of 3.7 percent, the study showed that there won’t be enough workers to fill those jobs that are on the horizon.

The region has seen $6.7 billion in capital investment over the past five years and added 14,000 jobs. Huntsville’s Metropolitan Statistical Area has the highest concentration of engineering talent; and the regional GDP increased 4.9 percent versus the national GDP growth of 3.1 percent.

North Alabama is a leader in innovation and has the highest concentration of advanced research and development capabilities in the region. The quality of life and booming economy are among the best in the nation and due to the large federal presence and ecosystem of federal contractors in North Alabama, the area can weather a recession more favorably than other communities.

The key findings of the report however, come down to the basic economic principle of supply and demand.

In fact, according to the findings, jobs will outpace the work force in key skill areas, specifically in the areas of cyber, IT, engineering and production.

The need for talent is rapidly evolving, however, despite such training programs as Toyota’s Federation of Advanced Manufacturing Education program, there are not enough of these types of programs to keep up with the need.

The organic job pipeline is slowly improving as graduates from two-year programs are finding alternatives to four-year colleges; but a tight labor market has led to “poaching” the most in-demand talent using the allure of higher wages.

While millennials value non-wage related benefits more than past workers, North Alabama has not yet reached its potential in attracting national talent, and must address housing needs in order to support and stimulate the needed increase in inbound migration to North Alabama.

According to Claire Aiello, vice president of marketing and communications at the Huntsville/Madison County Chamber of Commerce, seeing is believing.

Chamber CEO/President Chip Cherry: “Recruitment is an ongoing exercise”

“Once people get here, they are sold,” she said. “They see how affordable it is, how beautiful it is, the warm climate, an easy commute in and out of the city, the people are friendly.

“Companies admit that even if they get resistance from potential recruits who don’t know anything about Alabama, once they get here – they get it. They understand.”

Chip Cherry, president and CEO of the Chamber, said leaders from the three counties are working on a long-term strategy to address ways to increase awareness about what a desirable region this is for potential workers from other parts of the country.

“There have been myriad things happening for a while,” Cherry said. “When we did the evaluation and economic impact model for Polaris and some others, we pulled down the area by ZIP code for that particular model and that site, and we were within a half a percent of where our projections were for the number of people from Morgan County who will come over and work at that site.

“So, we have some pretty good models … and recruitment is an ongoing exercise. In Huntsville, about 60 percent of our portfolio is existing companies considering expansion, so we will continue to work with those companies to help them grow.

“The challenge is making sure we secure the labor workforce from other parts of the country, to bring them here so we can continue that growth going forward.”

That challenge – to bring the three counties together to create a strategy for long-term success is being spearheaded by Launch 2035. In the coming weeks and months, they will be coordinating among the Chambers of Commerce, business leaders and city officials from the three-county area to develop an economic and image strategy that addresses these problems.

“We are them. They are us,” said Cherry about Launch 2035. “At the end of the day, we want to create a perception of what can happen in North Alabama, and to find a way to effectively communicate that to people who don’t know anything about how dynamic our region is.”

Huntsville/Madison County Chamber Wins Prestigious Award from Site Selection Magazine

The Huntsville/Madison County Chamber has been honored with a Mac Conway Award, which was revealed in the May 2019 issue of Site Selection magazine.

The magazine’s Mac Conway Awards for Excellence in Economic Development recognize the top local and regional economic development agencies in the US for their roles in helping to deliver prosperity to their communities.

This year’s winners were determined by an index that examines corporate facility investment projects in US metro areas as tracked by Site Selection’s proprietary Conway Projects database in 2018. Scores are awarded based on six criteria: total projects, total investment associated with those projects and jobs associated with those projects; and those same three numbers calculated per capita for the metro area.


Lucia Cape, Senior VP of Economic Development, Industry Relations and Workforce for the Huntsville/Madison County Chamber; and Chamber President/CEO Chip Cherry with Mac Conway Award. (Photo: Claire Aiello)

The Huntsville/Madison County area saw record growth in 2018, with five new companies adding 4,207 jobs and $2,363,367,600 in capital investment. The largest of these was landing Mazda Toyota Manufacturing USA, which includes 4,000 jobs and $1.6 billion in investment. Facebook also announced a $750 million data center. In addition, 13 companies added 982 jobs and $346,653,096 in capital investments.

“The foundation that led to the game-changing economic development wins in 2018 are the result of the foundation laid by many partners over a long period of time,” said Chip Cherry, president/CEO of the Huntsville/Madison County Chamber. “The Chamber is proud to be part of an amazing team comprised of elected leaders, volunteers, partners, and a talented staff. The team has a common mission – to develop a world class economy that supports innovation and provides employment opportunities for our citizens, while ensuring that our quality of life is second to none.

“We are honored to accept the award on behalf of our partners and the community.”

The chamber cited support from many partners, including the state, cities of Huntsville and Madison, Madison County and the Tennessee Valley Authority.

“The number of game-changing projects landing in Huntsville in recent years, capped by Mazda Toyota Manufacturing USA, reflects the hard work of the Huntsville/Madison County Chamber,” said Greg Canfield, secretary of the Alabama Department of Commerce. “The chamber team is highly professional, energetic, and willing to put in long hours to bring jobs and investment to the community. This is a well-deserved honor.”

“This economic development team has mastered the art of collaboration and partnership through a strategic vision that has been designed and executed by the Chamber, local government, and business,” said Huntsville Mayor Tommy Battle. “The city of Huntsville is proud to be part of this partnership.”

“Our chamber gets it, and they have for a long, long time. Leaders from NASA, Redstone Arsenal, city and county governments, education, and health care take the lead from our chamber and partner with our community business leaders to help define our direction, build on our strengths, and look forward toward opportunity,” said Madison Mayor Paul Finley. “Individual viewpoints are synced, the steps to make those opportunities reality are defined, and our incredibly talented chamber team goes to work.

“We have accomplished this year after year, decade after decade, turning opportunity into jobs for our community.”

“Madison County is pleased to celebrate the Huntsville-Madison County Chamber for this much-deserved award,” said Madison County Commission Chairman Dale W. Strong. “The Chamber has always played a pivotal role in positioning our region as an economic development leader as demonstrated by the 2018 growth and expansions throughout our region. In Madison County, Alabama we’re grateful for the collaborative approach by our chamber team to bring new and innovative opportunities to Madison County.”

“TVA congratulates the Huntsville/Madison County Chamber on its recognition as a Top Economic Development Group. We are proud to partner with the chamber as we work to foster job creation and economic growth in the region,” said John Bradley, TVA senior vice president of economic development. “The results the Huntsville/Madison County Chamber have had speak for themselves, and we look forward to a continued partnership for years to come.”

Strong Economic Numbers, Distinguished Service Highlighted at Chamber Meeting

Someone said that looking back, 2018 was a year for the record books for Huntsville and Madison County …. “off the charts” and “epic”.

That someone was Chip Cherry, president and CEO of the Huntsville/Madison County Chamber of Commerce. His remarks came Wednesday at the 83rd Annual Chamber Membership Meeting.

According to real numbers, his proclamation was not overstated.

Huntsville finished 2018 ranked sixth in the nation for job growth according to 24/7 Wall Street. In all, five new companies broke ground, bringing more than 4,200 jobs to Madison County. They made capital investments of $2.3 billion while 13 current companies made capital investments of just under $350 million and nearly 1,000 jobs.

The groundbreaking of the $1.6 billion Mazda Toyota Manufacturing USA plant at Greenbrier Road and Old Highway 20 was the biggest economic story of 2018. The plant is expected to create 4,000 jobs by 2021 when it opens.

Cummings Research Park, the second-largest research park in the nation, is at 91 percent occupancy, marking three groundbreakings and 10 ribbon-cuttings in 2018.

To provide some perspective, the Economic Growth Index, which reflects combined employment, GDP, and wages, shows Huntsville with a 38 percent growth rate in 2018. Compare that to 23 percent nationally and 15 percent growth for the state of Alabama, and Huntsville more than doubles statewide economic growth!

Keynote speaker Chris Voss, author and founder/CEO of the Black Swan Group and a former international kidnapping negotiator for the FBI, used humor and intrigue in speaking to the membership about the art of business negotiation.

Before passing the gavel to 2019 Chamber Board Chair Kim Lewis, outgoing Chair Gary Bolton honored Alicia Ryan of LSINC with the Distinguished Service Award for her volunteer work serving as the vice chair of the Board of Directors for the Alabama School for Cyber Technology and Engineering, a statewide magnet school created by the Legislature in 2018. She also serves as the chair of the Board of the Foundation supporting the school, which will be the first of its kind in the nation to address the growing demand for cyber and engineering professionals in the workforce.

Huntsville received several significant media recognitions recently. According to The New York Times, Huntsville is one of 52 Places to Go in 2019; Huntsville ranks No. 7 in the Best Places to Live in the U.S. by U.S. News & World Report; and the city is No. 3 on the Wall Street Journal‘s Where You Should Move to Make the Most Money list.

Bolton, vice president of Global Marketing at Adtran, presented a $10,000 donation on behalf of his company to the Alabama School for Cyber Technology and Engineering.