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June 4, 2011

Michael Tomberlin
The Birmingham News
Article Source »

Economic developers in Alabama will soon be able to offer an international company a new perk -- state tax credits to offset federal tariffs on imported items as it establishes oper­ations in the state.

What has been dubbed the Made in Alabama Job Incentives Act would ap­ply to a foreign company that invests at least $100 million and creates at least 100 jobs in Alabama. The company would get a state income tax credit of up to $20 million over three years to offset federal tariffs the company would pay on im­ported products while it builds and opens a plant here.

As an example, if a for­eign automaker wanted to produce cars in Alabama to save the tariff expenses as­sociated with bringing the cars into the U.S., the com­pany could claim a state tax credit against those levies paid while the automaker is in the process of building its factory in Alabama.

"In this economy, we have to think outside the box when it comes to re­cruiting jobs, and this pro­posal is the perfect exam­ple of that," said Rep. Barry Mask, R-Wetumpka, who sponsored the House ver­sion of the bill.

The idea grew out of the Commission on Job Cre­ation that was formed by Alabama House Speaker Mike Hubbard, R-Auburn, in February. Business and community leaders sug­gested nine ways to im­prove the state's business climate and expand jobs, including incentives that would offset tariffs.

Both the House and Sen­ate have passed the bill, and a spokeswoman for Gov. Robert Bentley said Friday the governor plans to sign it into law.

Using these temporary tax incentives to attract in­ternational companies was one of the more innovative ideas recommended by the Commission on Job Cre­ation, Hubbard said. Ala­bama will be the only state in the country to offer this kind of incentive, giving us a real competitive advan­tage that could bring thou­sands of jobs to Alabama.

Hubbard spokesman Todd Stacy said there is al­ready at least one company considering Alabama that views the incentive as an enticement.

"I can tell you that sev­eral companies have al­ready indicated an interest in coming to Alabama as a result of this legislation," Stacy said. One is a combi­nation of both a domestic company and its foreign supplier.

Stacy said the domestic company is looking to lower the costs of its materials and the foreign supplier wants to establish a U.S. presence. Should they locate in Al­abama, it would produce several thousand direct jobs, Stacy said.

This bill uniquely addresses their situation. The condition of the global economy makes the time ripe for foreign direct investment, experts say, and an incentive tailored to secure major foreign investment could tip the scales in favor of one state over another.

"Attracting new busi­nesses that will create jobs and spark economic growth is our first priority," Sen. Marc Keahey, D-Grove Hill, sponsor of the bill in the Senate, said in a statement.

"This bill sends a message to companies around the world that Alabama is open for business. The incentive represents another weapon the gover­nor and the Alabama De­velopment Office can use when recruiting new indus­try to the state.

The foreign company has to maintain its operations and jobs in the state for at least eight years or be forced to repay the incentive, according to the legislation. In the end, foreign exec­utives like to see states working to address real concerns, Stacy said.

"Other projects have al­ready expressed interest in Alabama because we are recognizing their business challenges and offering an opportunity to work with them to address those in a way beneficial to both Ala­bama and the company," he said.

The bill recog­nizes the expected increase in foreign direct investment in the U.S. over the next several years.