The southern US state of Alabama attracted more than $6.7bn worth of investments into its manufacturing sector between 2008 and 2013, according to crossborder investment tracker fDi Markets.
Among the investments is Airbus’ highly publicised decision to choose the town of Mobile for its new $600m plant. The project is expected to create 1000 jobs and, significantly, is the European aerospace giant’s first foray into the US. And while this win would be seen as spectacular in any part of the US, it means even more in the south, where rivalry for manufacturing projects is particularly fierce.
States in the south are also positioning themselves as hubs for hi-tech and creative media, with Austin in Texas establishing itself as a tech start-up cluster, Georgia making a successful move into the filming industry and Louisiana developing its gaming and IT sectors.
But Alabama has been struggling to gain recognition for its ability to innovate, often losing out to competitors. “In 2011, we did an asset mapping exercise and what we found was a thriving innovation ecosystem. The problem was that very few people actually knew about it,” says Brian Hilson, president and chief executive of Birmingham Business Alliance, an economic development agency for the state's biggest metropolitan area. “This knowledge was not common, even in Alabama. Only recently have people started noticing our local success stories connected with innovation.”
Innovation Depot, a Birmingham-based business incubator, is one of these success stories. Located in an old Sears department store that stood defunct for 20 years and was overhauled at a cost of $17m, the incubator houses 90 companies and employs more than 500 people. Nearly half of the tenants operate in the software and IT sector, while the remainder specialise in business services, biotechnology and engineering.
Devon Laney, chief executive of Innovation Depot, says: “When I was a little boy I remember coming to town with my grandparents and going to the big store. That was quite possibly this one... Who would have thought it would become a tech hub?”
Josh Smith whose company Solovis, a financial software developer, operates out of Innovation Depot, says: “I come from Atlanta and I know the start-up scene there. You hear about Austin, but Birmingham? I did not think about Birmingham as a place supportive for start-ups.” Mr Smith relocated to Alabama after his wife was awarded residency at University of Alabama in Birmingham. “Thanks to the move I discovered that there is quite a decent start-up [ethos] here and a lot of capital willing to support business and ideas. And I do not mean even venture capital, I just mean people with large businesses in town willing to invest their money locally,” says Mr Smith. In fact there are more than 700 technology-based companies in the Birmingham area and $2bn has been invested in innovation capital, according to estimates from Innovation Depot.
Dr Jian Han, an entrepreneur who came to Alabama in the 1980s to continue his studies on clinical molecular genetics, agrees. A decade after Mr Han's arrival in Alabama, a chance meeting with a local businessman gave him seed capital to launch Genaco, a molecular diagnostic technology company.
“I met a local businessman, who told me that he could help me find the money for my company if I provided him with a business plan. I found a [Microsoft] Word file template [of such a plan], filled in the gaps and there it was,” recalls Mr Han. “Then the businessman invited his friends over for a dinner, presented my business idea and they raised $500,000.” Eventually Genaco collected a further $2m in funding and in 2006 was sold to Dutch holding Qiagen for $40m.
After selling Genaco, Mr Han went on to found another biotech firm, iCubate, which operates out of the HudsonAlpha Institute for Biotechnology, a Huntsville-based biotech research and development centre. Huntsville is a good example of Alabama innovating. “We are unique in the sense that, among rural areas, we have this high concentration of scientists and advanced research,” says Tommy Battle, Huntsville's mayor. Indeed, since 1960 Huntsville has been home to NASA's Marshall Space Flight Centre, establishing itself as a space and defence cluster and earning it the nickname ‘rocket city’.
Alabama has also added biotech to its economic landscape, in large part thanks to Jim Hudson, a local entrepreneur and scientist who in 2008 co-founded and co-funded HudsonAlpha. “I am pretty much the product of [Huntsville]. As I kid I was surrounded by rockets and I was making rockets myself. And because Huntsville is in my roots, I wanted biotech to grow here,” he says.
But overcoming Alabama’s blue-collar stereotype was not easy even for Mr Hudson. “When I launched my company [Research Genetics] in 1987, I did not mention in my ads that we were based in Alabama. I was afraid nobody was going to order from me,” says Mr Hudson. But things have changed completely since then, in large part thanks to the state’s role in the Human Genome Project, an international effort to map every human gene, which took place between 1984 and 2003.
Outside the world of biotech, Alabama still battles image problems and has to fight for recognition of its forward-thinking and business-oriented approach. “A lot of people view us as laidback, barefoot, pregnant, beer-drinking folks,” says chief executive of Birmingham-based IT firm Moreson Conferencing, Mark Jackson, who was also recently appointed as Alabama's honorary consul for Japan. “But if that was the case, would you have more than 60 Japanese companies operating out of here?”.