Comeback Town: Why Birmingham struggles to grow jobs

This is an opinion column

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Today’s guest columnist is Don Erwin.

If the Birmingham metro is to grow and prosper, it must help new companies start up, help existing companies expand, and it must attract new companies to the metro area.

Two accepted measures of economic development success are the jobs companies bring and the money they invest in places they locate.

The seven-county Birmingham metro accounted for over 23% of the state’s population in 2023, but it generated only 12.1% of the state’s new jobs and 15.55% of its new capital investment, according to the Alabama Department of Commerce’s 2023 annual report.

During the 2019-2023 five-year period, Birmingham metro counties generated 15.9% of the state’s new jobs and 11.22% of its capital investment.

If we want the Birmingham metro to prosper, we must do better.

The Birmingham Business Alliance is the lead agency responsible for generating new jobs and investment. They have fine people and do a good job with the resources they have available, but in my opinion, they need far greater resources to help accelerate Birmingham’s growth.

Consider the staffing of three Birmingham regional organizations responsible for planning, tourism, and economic development:

Planning: The Regional Planning Commission of Greater Birmingham has sixty-seven people on its staff.

Tourism: The Greater Birmingham Convention & Visitors Bureau has thirty-three people on its staff.

Economic development: The Birmingham Business Alliance has just seventeen people on its staff.

Judging from the staffing numbers, it appears we place a much greater priority on planning and tourism than we do on generating new jobs and capital investment.

Most local and regional economic development organizations in Alabama—like the Birmingham Business Alliance—depend heavily on the Alabama Department of Commerce to bring them projects. The Alabama Department of Commerce does a fine job with economic development, but its primary orientation is filling industrial parks with traditional manufacturing companies.

The Birmingham metro has industrial parks, but its economy is more oriented toward white collar operations typically located in office buildings. For instance, Hoover, the second-largest city in the Birmingham Metro, doesn’t have a single industrial park.

According to the EDPA’s buildings and sites database, there are more than two million square feet of vacant and available office space in Jefferson and Shelby counties. That space, if filled with companies, could employ more than 8,000 workers, generating prosperity and tax revenue for the Birmingham Metro.

To fill that office space, we can’t rely on the Alabama Department of Commerce to bring us prospects. The Birmingham Business Alliance will have to identify and recruit suitable prospective companies largely independent of the Alabama Department of Commerce.

That takes resources to identify the appropriate companies and to build, train, and support a sales force to pound the pavement and knock on doors.

Birmingham also has rare and valuable assets—such as UAB’s and Southern Research’s life sciences research—which require specialized economic development expertise to transform into companies and jobs.

Comparing the Birmingham Business Alliance to other regional economic development organizations, we see that Charlotte has twenty-seven people, Louisville has twenty-nine people, Memphis has thirty-two people, and Atlanta has sixty people.

Obtaining the necessary resources for the Birmingham Business Alliance will not be easy. Unlike the Regional Planning Commission and the Visitors & Convention Bureau—which have guaranteed or largely-guaranteed funding sources—the Birmingham Business Alliance is almost totally funded by contributions from Birmingham-area businesses.

Unfortunately, we no longer have many of the Fortune 500 headquarters and large companies we once had that could make hefty donations to business recruitment.

Also, while many businesses are willing to contribute to the greater good, some businesses decline to contribute because they’re not interested in attracting companies who might be competition or who might lure their employees away.

For multiple reasons, it is unrealistic to expect Birmingham-area businesses to double or triple the contributions they make to the Birmingham Business Alliance.

An economic development organization funded largely by local businesses also has an additional weakness; it must spend some of its labor and resources doing fundraising to continue operating. That’s resources not available for business recruitment and development.

I’m not making a funding pitch on behalf of the Birmingham Business Alliance. They may not even agree with my conclusions. I’m simply going where the data leads me.

If we are to grow the Birmingham area, we need to step up economic development efforts by at least a magnitude or two. The current funding mechanism is sorely lacking.

If we want results, we must devote the resources to make results possible.

Don Erwin was an economic developer for twelve years. He is the author of Buffalo Hunting in Alabama, a novel about the competition among cities and states to attract economic development projects. He lives in the Birmingham metro.

David Sher is the founder and publisher of ComebackTown. He’s past Chairman of the Birmingham Regional Chamber of Commerce (BBA), Operation New Birmingham (REV Birmingham), and the City Action Partnership (CAP).

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Invite David to speak for free to your group about how we can have a more prosperous metro Birmingham. dsher@comebacktown.com