While “irrational exuberance” may not quite describe the Mobile Chamber’s tone as expressed during its recent 2017 State of the Economy event at the Battle House downtown, it’s fair to say the data-driven results from a recent survey of 136 key local executives indicated resounding optimism regarding business prospects moving into the new year.
That’s not surprising considering the metro area seemed to be virtually awash in positive business news every few months this year. Results, reflecting good optics locally, helped to generate a very bullish attitude moving into 2018 — especially when compared to the overall economic outlook nationwide.
A few numbers:
• Fifty-seven percent think Mobile’s economic outlook for next year will be much better than the previous year, with 26 percent saying it will be better and 16 percent saying conditions will remain the same.
• Those results are nearly the inverse of their opinion of the national outlook. Ten percent of executives surveyed think the climate will be much better and 59 percent think the nation’s economic engine will moderately improve, while 24 percent think things will remain status quo.
• Respondents basically split the difference when asked about individual outlooks. Twenty-four percent think they will do much better, 53 percent see moderate improvement and 21 percent don’t expect to grow from the year prior.
As is often the case with economies apparently on the mend, the most significant challenge for local business growth — as well as with macroeconomic challenges facing the city — was attracting and retaining qualified employees.
Other factors potentially impeding future overall growth for the big picture involve regulatory burdens, while on a smaller scale salaries and employee benefits were identified as potential obstacles for small business growth.
Four industry leaders representing different sectors of the local economy spoke at the event in a panel discussion moderated by Mobile Chamber president Bill Sisson.
The overall tone from the panel was positive regarding next year. Panelists expressed cautious optimism when pressed to address key challenges for sustained growth facing the area.
Noteworthy takeaways included:
Brian Harold, managing director of APM Terminals, was emphatic about deepening the Mobile Ship Channel another five feet above and beyond its current depth of 45 feet. This is because shipping volume has tripled since 2009 and there has been a significant increase in demand for containerized cargo.
“Airbus brought great press for APM. We are the fastest growing port in North America this year,” Harold said. He went on to say big box shippers as far as north as Minnesota are chasing after APM now and there is a premium for warehouse space. He also said the Wal-Mart Distribution Center was a big win for the area, considering that there are only six around the country.
Recognizing the need for the new Interstate 10 bridge to be constructed soon, more of a short-term focus should be on getting the most utility of the local intermodal rail services network. “The proposed I-10 bridge is an absolute must,” Harold said.
Jimmy Lyons, president and CEO of the SSI Group, highlighted the fact that education is necessary to build on a healthy human capital pipeline of qualified graduates in the local burgeoning tech industry. Although he said he has seen an improvement in education over the past 15 years, Lyons emphasized that it was the one constant negative perceived about Mobile over the course of his career. The perception, while improving, affects outside optics and needs to be addressed now more than ever, Lyons said, to keep up with accelerating local technical job demands.
Lyons mentioned the new partnership with Rural Sourcing as an example of new creative collaborations happening downtown that show continued progress and positive growth within the burgeoning tech corridor industry evolving downtown.
John Peebles, principal of NAI Mobile, talked about a “cosmic transformation” in the Lower Dauphin Street district around commercial real estate. He cited the fact that there are now 51 restaurants downtown that have created 1,000 to 2,000 restaurant-related jobs.
“People want to be downtown, and 10 new major residential developments are actively in play to accommodate a new 24-hour population and community in the area,” Peebles said.
Some of the things desired by a new “creative class” population include quality entertainment, arts and culture, better-than-adequate shopping and abundant walking accessibility in the downtown central business district, he said.
Peebles went on to say that Class C and D real estate space is now being repurposed to A and B status, and that the average per-square-foot cost for new business arrivals looking to lease in that area is going to range from $18 to $20 per square foot.
“It’s not unrealistic to see prices climb to the $30 per square foot if trends continue,” he said. Additionally, observing that more than 5,000 are employed in the hospitality industry locally, Peebles noted that the area needs to attract more convention business in order to fill the new hotel floor spaces opening up.
Peebles emphasized the need to have a new airport downtown, supported by already having a second FAA Tower at Brookley. He said enplanement volume would increase by 30 percent with the relocation.
Peebles said one of the biggest challenges is retention of the federal historic tax credit. Its removal would be a “body blow,” not only locally but nationwide, for urban growth related to repurposing abandoned and blighted historic properties.
Craig Perciavalle, Austal USA president, told the audience about a conference he recently attended in San Diego, California, where he heard the Trump administration wants to upgrade the military’s existing naval force to 355 ships, considerably above the 276 currently in place.
Austal USA currently assembles four to five ships per year, Perciavalle said, down from a booming 2016 when nine were built. He spoke proudly about the six Littoral Combat Ships and eight Expedentiary Fast Transport ships in the United States fleet, serving domestic interests worldwide.
He also said Austal USA currently employs 4,600 workers, with an average salary of $63,000 per year — significant considering the nation’s fifth largest shipyard employed 800 when it first opened in Mobile in 2009.
Perciavalle said workforce development was vitally important locally and applauded AIDT’s efforts (among others) to keep up with ongoing human capital shipyard demands. He also announced that the new LCS 26, the U.S.S. Mobile, will be introduced in a media event soon and probably be ready for launch in 2019.