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OM in the News: Factory Rebound’s Winner–Mobile, Alabama

May 31, 2014
Austral has increased the workforce at its Mobile shipyard to 4,100 from 900 in 2009

Austral has increased the workforce at its Mobile shipyard to 4,100 from 900 in 2009

The U.S. has added about 650,000 factory jobs since their numbers rebounded after the recession, putting manufacturing workers at 12.1 million and reversing a long decline in such jobs, reports The Wall Street Journal (May 30, 2014). But uneven growth has created regional disparities in the nation’s overall economic recovery.

Mobile, Alabama is among the winners. Shipbuilder Austral Ltd.’s facility here is busy seven days a week as workers piece together enormous aluminum sheets in a space the size of 13 football fields. Airbus and BAE Systems, too, are adding factory jobs here. Mobile created more manufacturing jobs than all but 15 U.S. counties in the past 4 years. U.S. factory-job gains—driven by a range of factors from cheaper domestic energy to the auto-industry recovery—have concentrated in pockets since the recession, particularly in the Southeast and Midwest.

Mobile’s success illustrates some common patterns: Often, companies have added jobs in states with “right-to-work” laws—which allow workers in unionized workplaces to opt out of paying union dues—and where taxes are relatively low, in counties where governments provide large incentives and strong vocational education, and in places with access to ports or other transport hubs.

Austal chose Mobile because of location, waterfront property, cooperative local and state governments, low taxes and low union membership. Alabama’s government sponsored training for Austal workers and built it a $12 million training center.

Airbus Americas, hiring about 1,000 new employees for its first U.S. commercial assembly plant, didn’t consider any Northern states as finalists, as it was looking for a port to which it could ship airplane parts for assembly. Alabama’s right-to-work rules were a key attraction. Alabama gave Airbus tax credits and cash grants valued at $158 million to build in Mobile—including a $6 million training center. “Alabama had it all,” says the Airbus chairman. “I’m not sure the rust-belt states have the same attitude.”

Classroom discussion questions:

1. Evaluate the incentives offered Austral and Airbus based on the material in Chapter 8.

2. What are “right-to-work” states and what advantages do they offer?

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