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Economy

Task force looks at reopening state economy

Brandon Moseley

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Lt. Gov. Will Ainsworth announced Thursday that the Alabama Small Business Commission Emergency Task Force has formed a subcommittee on reopening the state’s economy and plans to present a plan to Gov. Kay Ivey and State Health Officer Dr. Scott Harris by April 17.

“Reopening Alabama’s economy and getting businesses back to work will not be like flipping a light switch, but it will more likely be accomplished in stages once the COVID-19 pandemic begins to ease,” Ainsworth said. “The purpose of this subcommittee is to provide a roadmap to reopening the economy that balances the public’s health and safety with the need for small business owners and employees to resume operations.”

The subcommittee will consider issues like how to best ease restrictions on restaurant and store capacity guidelines and how to incorporate social distancing needs with increased commerce once officials decree that the worst of the COVID-19 threat has passed.

State Rep. Danny Garrett, R – Trussville, will serve as chairman of the subcommittee.

The other members of the subcommittee include: Senator Chris Elliott, R – Fairhope, Senator Garlan Gudger, R – Cullman, Representative Joe Lovvorn, R – Auburn, Rosemary Elebash – National Federation of Independent Business, Alabama State Chair, Mindy Hanan – Alabama Restaurant and Hospitality Association, Executive Director, Katie Britt – Business Council of Alabama, CEO, Rick Brown – Alabama Retail Association, President, Tony Cochran of CK Business Solutions in Albertville, and Stephen McNair of McNair Historic Preservation in Mobile.

The state remains under emergency shutdown orders from Alabama Kay Ivey (R) through April 30. All nonessential businesses have been ordered to close and Alabamians have been ordered to shelter in place.

On Thursday, Treasury Secretary Steve Mnuchin said that he believed that the economy can reopen in May.

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A number of measures were taken at the national, state, and local levels to shut down the economy beginning in early March in order to stop the spread of the coronavirus strain, SARS-CoV-2, that causes COVID-19.

In March there were estimates from public health officials that over a million Americans would die from COVID-19 without the forced economic shutdown. As Americans have widely adopted the social distancing recommendations of the CDC and the White House Coronavirus task force those estimates have come down to less than 60,000 deaths.

The fear of opening the economy up too soon is that it will unleash the virus as everyone returns to work, restaurants, sporting events, and shopping. The fear of waiting too long to open the economy is that businesses are currently burning up their emergency funds and lines of credit with little or no revenue coming in. The fear is that the longer we wait the fewer the businesses that will survive likely sparking a long protracted recession that will deeply impact Alabama families.

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The 22-member Small Business Commission is statutorily tasked with formulating “policies encouraging innovation of small businesses in the state” and advising the Department of Commerce in promoting small businesses within Alabama. The state legislature placed the Alabama Small Business Commission under the authority of the Lieutenant Governor’s Office in 2018.

 

Brandon Moseley is a senior reporter with eight and a half years at Alabama Political Reporter. You can email him at [email protected] or follow him on Facebook. Brandon is a native of Moody, Alabama, a graduate of Auburn University, and a seventh generation Alabamian.

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Economy

ArcelorMittal announces expansion of Mobile County steel plant

Brandon Moseley

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(STOCK PHOTO)

ArcelorMittal announced its intention to build an Electric Arc Furnace steelmaking facility at AM/NS Calvert. Once the new furnace is completed, the planned facility will be capable of producing 1.5 million metric tonnes of steel slabs for the Hot Strip Mill and producing a broad spectrum of steel grades required for Calvert’s end-user markets.

Construction on the project is expected to take 24 months and the new facility is anticipated to produce an additional 300 jobs.

“An electric arc furnace at Calvert makes strategic sense as it allows our asset to be more reactive to the local market as well as being in line with the USMCA,” said Lakshmi Mittal, the chairman and CEO of ArcelorMittal, referring to the U.S. Mexico Canada Agreement on trade which replaced NAFTA. ”Furthermore, it aligns with our ambition of producing smarter steels for a better world.”

Brad Davey is the CEO of ArcelorMittal North America.

“The addition of an EAF at AM/NS Calvert presents a transformational opportunity for what is already widely considered to be the world’s most advanced steel finishing facility,” Davey said. “This is a logical next step in optimizing AM/NS Calvert’s supply chain. Enhancing our already highly competitive lead times with short lead-time flexibility, combined with our existing world class facilities will give AM/NS Calvert a decisive competitive advantage.”

“In addition, the USMCA trade agreement is a ‘game changer’ for former NAFTA and as a result, future steel supply chains for the automotive markets will be required to use steel that was created within North America,” Davey explained. “A new EAF at AM/NS Calvert will further secure ArcelorMittal’s leadership in the North American Automotive market.”

“Alabama has a long heritage in steelmaking, and the decision by AM/NS Calvert to invest more than $500 million at its Mobile County mill represents another important development in the history of the industry in the state,” Gov. Kay Ivey said. “The growth will help the company serve customers in industries such as automotive with great ‘Made in Alabama’ steel.”

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Economic developer Nicole Jones told the Alabama Political Reporter, “The United States Mexica Canada trade agreement is a historic accomplishment by the Trump Administration on behalf of the American Worker that serves as a catalyst for job creation and new investments.”

“In Alabama, we are witnessing immediate results from terms outlined in the USMCA, specifically the requirement for the automobile industry to utilize more steel made in North America, with ArcelorMittal’s announcement,” Jones added. “ArcelorMittal chose to construct a new electric arc furnace steelmaking facility at its AM/NS mill in Calvert, Alabama. Metals and advanced materials is one of our state’s dominant industries. Alabama Department of Commerce data from 2018 shows that primary metal manufacturing exports valued at nearly $1.6 billion, and fabricated metal manufacturing exports valued at $382 million. The direct and indirect jobs resulting from this project will provide significant economic benefits for South Alabama and our entire state.”

AM/NS Calvert is already the world’s most advanced steel finishing facility and further demonstrates the highly successful partnership between ArcelorMittal and Nippon Steel Corporation.

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AM/NS Calvert was originally built by Thyssenkrupp, with a total investment cost of $4 billion. The plant was acquired by ArcelorMittal and NSC as a 50:50 joint venture in 2014. The joint venture has already invested more than $200 million into strategic projects in Calvert since its acquisition.

These capabilities combined with the geographic location and the new electric arc furnace will position the facility well for meeting the automotive and energy market demand well into the future.

ArcelorMittal is the world’s leading steel and mining company. It has a presence in 60 countries and operates steelmaking facilities in 18 countries. In 2019, ArcelorMittal had revenues of $70.6 billion and crude steel production of 89.8 million metric tonnes, while iron ore production reached 57.1 million metric tonnes.

ArcelorMittal says that their goal is to help build a better world with smarter steels. Steels made using innovative processes which use less energy, emit significantly less carbon and reduce costs. Steels that are cleaner, stronger and reusable. Steels for electric vehicles and renewable energy infrastructure that will support societies as they transform through this century.

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Economy

Business Facilities Magazine ranks Alabama No. 4 for business climate

Brandon Moseley

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Alabama received high rankings for its workforce development programs and auto manufacturing strength in a new report from Business Facilities magazine, which also picked Birmingham and Huntsville as top cities for business climate.

This is the 16th installment of Business Facilities’ Annual State and Metro Rankings Report. The magazine ranked Birmingham/Hoover as the No. 1 mid-sized metro area for its business climate and Huntsville was No. 1 among small-sized metros.

Overall, Alabama ranked No. 4 for its business climate.

“Alabama’s economic development team will continue to work tirelessly to recruit high-caliber companies, and this ranking is another testament to the advantages that our state possesses for businesses across the globe,” said Alabama Commerce Secretary Greg Canfield. “One of those key advantages is our workforce training programs, which are a key component of the support system we have in place in Alabama to help companies in many different industries find and develop the skilled workers they need to achieve success.”

Economic developer Nicole Jones said, “Business Facilities Magazine is a respected publication in the field of economic development and once again recognized Alabama’s achievements in several areas: business climate, manufacturing output, workforce training leaders, automotive manufacturing and foreign trade zone export activity. Business Facilities also recognized Birmingham as the No. 1 mid-size metropolitan area for its business climate and Huntsville as No. 1 among small-size metros.”

“Economic development is a continuous process of cultivating relationships, investing in human capital, and working with communities to find their hidden talent within,” Jones explained. “Gov. Ivey, the Alabama Department of Commerce and thousands of members of the business community collaborate daily to foster an environment conducive for economic growth. We work as a team to recruit and retain business and industry, and ultimately, it is the heart and the quality of life people experience in Alabama that solidifies every project.”

Alabama’s workforce development and talent attraction programs ranked No. 2 among the states in the ranking, while Business Facilities rated Alabama’s automotive manufacturing strength No. 5.

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AIDT is the state’s primary workforce development agency and is a central player in Alabama’s strategic economic growth efforts. AIDT has worked with 5,200 companies and trained nearly 1 million workers since its founding in 1971. Last year, AIDT’s economic impact on Alabama was calculated at $7 billion.

“Any success we have in Alabama regarding workforce development and talent attraction is due to a myriad of things,” said Ed Castile, the director of AIDT and deputy secretary of the Alabama Department of Commerce. “This includes an available workforce with an extraordinary work ethic, world-class companies that choose Alabama and hire our citizens, a business-focused Governor and Legislature who are totally engaged in our workforce strategies, and a Secretary of Commerce who helped create the Accelerate Alabama strategy that is the foundation of all our work.”

“The AIDT staff is among the best in the business of both workforce development and talent attraction, and I commend them and many others involved in this work for this recognition,” Castile said. “We are very proud to be part of the ‘Made in Alabama’ and the ‘AlabamaWorks’ team.”

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Business Facilities magazine also ranked Alabama No. 6 for Foreign Trade Zone activity (exports), No. 7 for manufacturing output (percentage of GDP) and No. 10 for Birmingham/Hoover (GDP leaders, mid-size MSAs).

 

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Economy

Alabama weekly unemployment claims dip below 10,000 for first time since March

It is the lowest number of initial claims filed in a week since the number first spiked in the third week of March, when it jumped from 1,824 to 10,982 — though still much higher than before the pandemic began.

Micah Danney

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(APR GRAPHIC)

There were 9,468 unemployment claims filed in Alabama last week, down from 11,692 the previous week, according to the Alabama Department of Labor.

It is the lowest number of initial claims filed in a week since the number first spiked in the third week of March, when it jumped from 1,824 to 10,982 — though still much higher than the normal before the pandemic began. The most weekly claims filed during the pandemic was 106,739 in the week ending April 4. In 2019, an average of 2,500 people per week filed unemployment claims.

65 percent of the claims — or 6,110 claims — from Aug. 2 to Aug. 8 were related to COVID-19, according to the Alabama Department of Labor. That compares to 76 percent the week before.

New claims dropped sharply in May and declined fairly steadily, then increased over the first half of July as cases resurged in Alabama but began declining again in the second half of July. Average daily COVID-19 cases peaked on July 19 before beginning a new decline.

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Small businesses faring better than chain stores as sales economy rebounds, retail group says

Micah Danney

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(STOCK PHOTO)

The state collected more in sales tax from stores, restaurants and online retailers in the first half of this year than in the same period last year, and that bodes well for Alabama’s retail sector, according to the Alabama Retail Association.

Revenue from state sales taxes and the simplified sellers use tax program for online retailers was up nearly 6 percent during the first six months of 2020 compared to the same period last year, according to the Alabama Department of Revenue.

Collections were down in March and April compared to 2019 but increased significantly in May and June. While sales tax collections for June were up 11.32 percent over June of last year — the first such double-digit growth since a 10.99 percent increase in April 2019 — part of the increase is due to some small businesses being allowed to delay remitting sales tax from February, March and April until as late as June 1.

That fudges the numbers somewhat, but the overall takeaway is that Alabamians have continued to spend despite the global health pandemic, albeit in different ways, said ARA spokesperson Nancy King Dennis.

When places like grocery stores and home improvement stores were the only businesses that were open, their sales went up. Consumers continued to buy even though their options were limited, many with help from federal unemployment insurance that created an influx to the local economy, Dennis said.

While some businesses, including large chain stores, have closed due to the pandemic, shops and restaurants that were able to pivot and adapt did better, she said. Businesses that sell on as many channels as possible — in-store and online, including using social media — have been particularly successful.

“Smaller retailers are actually probably doing better than the larger big chain stores because they’re closer to their customers, they know their customer base,” Dennis said. “For the time that stores were closed, they were selling over Facetime, they were doing a lot of social media sales.”

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The retail industry employs a quarter of Alabama’s private-sector workers, more than any other industry, according to the ARA. It provides the state with almost $2.5 billion in sales tax each year, which was about 20 percent of state revenue last year.

“When looking at the numbers back in March and April, my thought was we wouldn’t see an increase over the previous year for any months until probably 2021,” she said.

Rick Brown, president of the ARA, urged Alabamians to shop local in order to keep open small businesses that contribute to their communities.

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“Alabama’s retailers and restaurants are leading our state’s recovery,” Brown said in a statement. “They continue to put people back to work, pivot to make their businesses safe for their customers and employees and innovate to serve customers however those customers prefer.”

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