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Wednesday, 20 June 2012 20:46

Alabama Car Manufacturing Strengthens, Other Industries Slow

With the exception of a hot automotive industry, job growth in Alabama’s hard-hit manufacturing sector trails most other states as the anemic economic recovery struggles to take hold, economists said recently.

While Alabama had 239,400 manufacturing jobs in March, the highest level since October 2009, it remains far below the pre-recession peak of 297,800 in January 2007, figures from the Alabama Department of Industrial Relations show. Factory jobs fell by 100 last month to 239,300.

Gov. Robert Bentley touted strength in Alabama’s automotive base while announcing that Alabama’s jobless rate fell for the ninth-straight month to 7.2 percent, the lowest level since November 2008. The Mercedes plant in Vance, Honda plant in Lincoln, and Hyundai plant in Montgomery, which is adding a third shift, have all announced additional jobs over the past year.

Employment in Alabama’s auto manufacturing parts industry increased by 13.1 percent over the past year, leading the state, while auto plant employment grew by nearly four percent, state figures show.

Last week, the Toyota engine plant in Huntsville said it is adding a new 300,000-square-foot building that will create 125 jobs as it increases North American production of V6 engines. And in March, Navistar International said its Colbert County plant will begin producing a new work truck for U.S. and Canada customers in early 2013.

John Norris, managing director at Birmingham’s Oakworth Capital Bank, said despite all the talk about a resurgence in manufacturing jobs, Alabama doesn’t appear to be keeping up with most of the rest of the country. Since December 2009, manufacturing employment has grown 4.2 percent across the country, but is up only 0.5 percent in Alabama, he said.

“Yes, absolute growth is better than the alternative,” said Norris, an economist who follows the labor market. “However, the relative performance of the state has not been good. There have been some recent bright spots, like Hyundai adding an extra shift down in Montgomery. However, we need more of them, a lot more of them.”

Since the end of 2007, manufacturing employment has shrunk around 18.8 percent in Alabama compared to dropping 13.1 percent nationwide. “Neither number is good, but manufacturing is supposed to be one of our strong points,” Norris said.

Ahmad Ijaz, an economist at the University of Alabama, said Alabama’s automotive sector has benefited as more manufacturers are moving back to U.S. shores to cut shipping costs and due to lack of quality and production controls overseas.

“Overall manufacturing sector and particularly the durable goods producers in the state and U.S. in general are relatively much more competitive now than they have been in the past compared to overseas producers,” Ijaz said.

Although nondurable goods-producing manufacturers such as apparel are still struggling, those producing durable goods such as automobiles and steel have seen a considerable jump in their payrolls, Ijaz said. Over the 12-month period ending in April, there were 3,100 jobs added in the transportation equipment-related manufacturing and 900 by both fabricated and primary metals producers.

“That is good for the state since these firms pay relatively higher wages compared to services and other manufacturing firms,” he said. “It helps that that type of motor vehicles and engines being produced in Alabama have a relatively high consumer demand in both domestic and foreign markets. Foreign demand, particularly from China has been relatively strong for these products.”

Nationwide, the growth in manufacturing employment has been heavily skewed to the midwest and the state of Washington, Norris said. The rest of the country has been experiencing Alabama-like numbers, some a little less, some a little more,” Norris said.

“This makes sense, as the American auto companies have had a bit of a rebound recently, and Boeing’s sales have picked up over the last couple of years,” Norris said. “So, are we seeing an American manufacturing resurgence or bounce back from the abyss?”


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