2016 could be a very good year for business expansion and employment in the Birmingham area, except ….
That’s a bottom line from conversations with people who have fingers on the economic pulse of the area: Andreas Rauterkus, Associate Professor in University of Alabama at Birmingham’s Collat School of Business; Devon Laney, President and CEO of Innovation Depot, and Art Carden, Associate Professor of Economics, Brock School of Business at Samford University.
On their lists of 2016 stories-that-matter on the local economy:
You’re going to the doctor more. That’s a good thing.
Healthcare and financial services are dependable pillars of the Birmingham economy, and 2016 should be a good year for those enterprises, Dr. Rauterkus says. Local unemployment is down from recession levels, and that helps healthcare. “People go to the doctor more,” he explains. In financial services, most Birmingham-area businesses have little international exposure which means they are not very much affected by international economic slowdowns, he says.
Lower gas prices: Good for a retail boom, bad for manufacturing.
For the U.S., and Birmingham, lower gas prices mean more discretionary income. So expect to see announcements of new restaurants and shops competing for consumers’ dollars, Dr. Rauterkus says. But lower gas prices – and lower prices on other commodities such as copper – are among factors that slow down economies elsewhere in the world; that can hurt the international business of steelmakers and carmakers here at home, he says. U.S. Steel Fairfield Works laid off more than a thousand workers in October.
Are we there yet? 2016 signs improve for tech takeoff.
For new companies trying to grow, 2016 is the first time since the Great Recession that entrepreneurs will see a usual growth pattern, Devon Laney says. Innovation Depot works in partnership with UAB and its job is to help startups. Sometimes during the past decade, that meant keeping companies alive in his incubator for six or seven years. That’s far longer than the expected three or four years for a company to graduate, he says. Conditions were better in 2015 than 2014 though. Innovation Depot starts 2016 with more than 100 companies in residence, a record number, about half in medical device and software operations; several Innovation Depot companies are graduating to the local economy the first part of the year, and Laney believes Birmingham now has “a critical mass” of young entrepreneurs to fuel a tech take-off. Even through the bad economic years, Birmingham built a reputation nationally as “a good place to start,” Laney says. Dr. Rauterkus offers one caution: Since so much Birmingham innovation happens in the health care industry, election-year rhetoric on health issues might cause entrepreneurs to wait and see before investing.
Birmingham’s planning map shows an Entrepreneurial District. Can it come to life?
When Brookings Institution Vice President Bruce Katz visited Birmingham in October, he put forth a vision: An innovation district created in an area encompassing University of Alabama at Birmingham, Southern Research Institute, Innovation Depot, downtown Birmingham. It could drive the city’s economy, he said. Turns out the bare-bones of Katz’s concept is drawn as part of Birmingham’s master plan. For now, it is a drawing without a plan or action. Innovation Depot’s Laney says that is changing. What is needed is a consistent pro-active development strategy that might include such things as incentives for certain businesses to locate in the many old buildings in the area, he says. He has met with a handful of people interested in moving from map to substance; he believes those with other institutions involved are doing the same in pursuit of a functioning innovation district. “I believe it could happen in 2016,” he says. He sees the draw of such a district for Innovation Depot graduates. “They don’t want to move far away. They want to be close physically and to keep the connections they have,” he says. A first step may come in February when Birmingham City Council holds a hearing on whether to change the name from “Entrepreneurial District” to “Innovation District.”
You can do this at home. Here are two good ways to judge the economy in your neighborhood, your city, your state.
Art Carden says two good indicators of the economy are how people vote with their money and how they vote with their feet. He suggests checking on where people are moving, into or out of an area. And another good measure is whether real estate prices – commercial and residential — are rising or falling.