Like many other quarters of the state, they’re already thinking about 2021 at Montgomery’s Hyundai Motor Manufacturing Alabama.
When work resumes at the plant on Monday after an annual retooling and maintenance shutdown, there will be about 1,300 contractors on site as the factory begins preparations for next year when the plant will begin building Hyundai’s Santa Cruz compact SUV. Last November, the automaker announced it was adding the Santa Cruz to the stable of vehicles built there, and would begin a $410 million expansion with an expected increase in hundreds of jobs,
But that’s a year away, and the first six months of 2020 at the plant - as with the rest of Alabama’s economy - were turbulent and trying because of the coronavirus pandemic, which has infected more than 40,000 Alabamians and killed almost 1,000 since mid-March. That period was when the plant, like other parts of Alabama’s economy, was forced to shutter.
Now, the lockdown over, there are signs, like at Hyundai, that Alabama is preparing for its post-coronavirus future, whenever that may be. Just last month, Mobile created Alabama’s first Tourism Improvement District while shipping from the port was unabated during the lockdown and looks to improve. Hiring and construction continues at Huntsville’s $1.6 billion Mazda-Toyota plant.
Hyundai suspended work March 18 after a worker tested positive for COVID-19. Alabama’s other automakers followed soon after. A worker eventually died of the virus before the plant reopened in early May.
Robert Burns, vice president for HR and administration at Hyundai, said the factory is encouraging employees to follow state and federal guidelines dealing with the virus during their time off. “We want them to be healthy and energized to build vehicles when they return in July,” Burns said.
The trials of the first half of 2020 are well known - everything from retail outlets to non-profits to schools were closed for weeks. More than a half-million Alabamians were laid off or furloughed from their jobs from mid-March through June. Others found a “new normal” working from home. Local and state revenue plummeted. Then, as commerce and industry resumed, case loads began to escalate.
Better than expected
But talking to figures in business, economic development and recruitment, consensus is the state has bounced back faster than expected. The worst predictions of where we would be at the midway point of 2020 have not materialized, though Alabama still has some way to go.
The second half of 2020 will likely involve repairing the wreckage left by its first half, and trying to contain the virus going forward.
By May, more than 80,000 fewer Alabamians were counted as unemployed by the state’s Department of Labor compared to the month before, while the number of employed rose by more than 128,000. The final week of June saw the fewest number of people statewide file for unemployment since the crisis began. Still, that number - 18,340 - was 10 times what it was the week before the lockdowns began, when Alabama’s unemployment rate was a historically low 2.7 percent. More than 11,000 of those unemployment filings last week were directly related to COVID-19.
Brian Hilson, a longtime figure in economic development statewide, is now a rural development strategist for the Economic Development Association of Alabama. He said the state before the pandemic saw jobs available for people who wanted to work, but the historically low unemployment rate also masked a large number of people who were no longer seeking employment.
“Now people who are highly qualified are looking for jobs,” he said. “It’s going to be interesting to see how we reset our workforce geographically.”
Alabama’s largest cities have seen their share of job losses, but are on a more solid footing than other parts of the U.S. In Birmingham, the May jobless rate fell to 8.7 percent, as the region gained more than 28,500 jobs that month. That’s better than 70 percent of U.S. metros, according to the Birmingham Business Alliance, but still leaves about 48,000 people out of work across the seven county metro area.
Huntsville’s unemployment rate went from 10.7 percent in April to 7.6 in May. Business Insider named the Huntsville area one of the 30 best cities in the U.S. to live in after the pandemic ends, as about 42 percent of the area’s jobs can be done from home, which is higher than most metro areas.
It won’t be more apparent until the second half of this year how deep and lasting some job cuts were in various metro areas.
Claire Aiello, VP of marketing & communications with the Huntsville/Madison County Chamber, said the area still has some distance to travel as businesses navigate coronavirus measures and provide services. Only about 30 percent of Redstone Arsenal’s 40,000-member workforce is back on the base, she said. Childcare is a strain on working families, and the lack of foot traffic from offices has hit restaurants that rely on lunchtime crowds.
Aiello said Moody’s forecasts a steady recovery over the next two years, but it will take three years to return to 2019 levels of employment. However, Huntsville should recover faster than the rest of the U.S. because of its steady population growth and a strong technical workforce.
“We are in the process of planning some (development) announcements in the coming months,” she said. “Some want to announce virtually, some in person, and we are working through details to help companies make a splash when they are ready to do so.”
To aid in recovery, the Chamber has set up a website to support gift card purchases for local businesses.
‘The fear of the unknown was the worst part.’
Jim Page is the CEO of the Chamber of West Alabama. He said the Tuscaloosa region is “holding its own,” seeing unemployment shrink five-and-a-half percentage points between April and May, to 11.1 percent. Back in late March and early April, it was just a question of surviving.
“There was no playbook for this,” he said. “What we needed to do was get by day-to-day. The fear of the unknown was the worst part.”
The chamber has been part of a $1.25 million small business relief fund to aid businesses shuttered during the lockdown. Manufacturing took a hit as some plants closed, but reopening has picked up pace.
“I was speaking to the plant manager of a major employer, and they feel good about where their business sector is, where demand is,” Page said.
Dothan has seen a steady increase in the pace of business since reopening in late May, Dean Mitchell, executive director of the Dothan Area Chamber of Commerce, said. Manufacturing there has remained steady. Entertainment and hospitality are improving, but their climb back is expected to take longer.
“Our community has pulled together to show its support for area businesses and we expect that support and economic growth to continue as time goes on,” Mitchell said.
The City of Mobile’s unemployment fell from 15.1 percent in April to 12.6 percent in May.
And Alabama’s beach tourism in neighboring Baldwin County is recovering better than expected.
Herb Malone, president and CEO of Gulf Shores & Orange Beach Tourism, said in June that during Memorial Day in nearby Baldwin County, occupancy was higher than 2019, and some weekends since have been down “but not dramatically.”
At the same time, the biggest concern continues to be the rising number of coronavirus cases, and their impact on economic activity going forward in the late summer and fall. Alabama has added more than 11,000 cases over the last two weeks, swelling hospitals and taxing health care workers.
Page noted the importance of the University of Alabama to Tuscaloosa’s vitality. Students returning in the fall will inject dollars into area restaurants and hangouts, but things will obviously not be normal. Alabama football contributes about $200 million to Tuscaloosa’s economy, and it’s still up for grabs in what mode the Crimson Tide will play this fall, if it plays at all. As Page noted, Tuscaloosa’s city government is already slashing departmental spending by 38 percent.
“We’re used to having people coming to town seven or eight weekends in the fall,” he said. “If that’s reduced by any percentage, it will have a negative impact on tax collections. And that could get worse depending on the prognosis for students returning and football season.”
Cities across the state are also taking steps to control the virus. This week, Mobile joined Tuscaloosa in approving a mask mandate. Jefferson County, Birmingham, Selma, and Montgomery have mask wearing ordinances in place, and Huntsville appears on the horizon. Aiello said the Huntsville Chamber is working with business to encourage customers to wear protective masks, with a “Mask Up Huntsville” campaign.
But the need for mask ordinances is a troubling sign, Page said.
“On some fronts, things have worked out well, but we’re still talking about the same things - basic precautions to prevent the spread. I’m frustrated that our health care professionals are still saying the same things they told us three months ago. Unfortunately, too many people haven’t taken the proper precautions,” he said.
‘An encouraging sign'
What will the long term future look like?
Anecdotally, the shutdown may have moved back timetables for development, but it hasn’t so far stopped companies from considering Alabama for expansion. Hilson said coronavirus didn’t kill projects as much as put them on hold.
“Some may be smaller, some maybe larger,” he said. “There are some rural communities that have fantastic projects on the horizon that are undeterred by the pandemic.”
Hilson said it’s too early to tell, but social distancing requirements may also negatively affect economic trends that were evident before the coming of coronavirus, such as revitalized downtown urban areas with vibrant dining and entertainment districts to attract young professionals.
Greg Barker, president of the Economic Development Partnership of Alabama, said site selection project activity came to a near halt earlier this year as everyone sheltered. However, in recent weeks, companies “in multiple sectors” are moving forward with site searches.
“While that may not speak directly to Alabama’s current economy, it is an encouraging sign that Alabama is still very much top-of-mind among companies that are looking to locate new facilities,” Barker said.
At the same time, Alabama may be aided by other economic factors directly related to the coronavirus crisis, he said. One arena: reshoring, or relocating industrial resources back to the U.S. that had moved overseas.
Supply Chain Management Review reported that between 2010 and 2018 - long before the pandemic - 749,000 jobs were brought back to the U.S. across 2,900-plus companies, including firms such as Intel, General Electric and Boeing. Coronavirus may accelerate that momentum.
A world where travel and supply chains are hampered, and medical supplies are prone to shortage, presents an opportunity, especially for a state like Alabama, with existing assets in automotive, aerospace, biotech and healthcare.
“As we think about economic development once we are beyond the global pandemic,” Barker said, “we believe Alabama is likely to see significant opportunities as a result of factors such as reshoring and reconfiguration of supply chains.”
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