December 15, 2009

Birmingham Business AllianceAnnual Meeting

TodayToday’’s Economic Realitiess Economic Realities

Economic Forecasting

“The only function of economic forecasting is to make

astrology look respectable.”John Kenneth Galbraith

Economist

“Economic forecasting makes weather forecasting

look like physics.”Ben BernankeChairman

Federal ReserveJuly 26, 2009

The Great Recession:

Jobs lost in 2008 & 2009

Total Jobs Lost During Current Recession:

7.3 million

Source: Bureau of Labor Statistics, seasonally adjusted

15.4 million

unemployed

9.3 million working

part time, wanting

full time work.

Unemployment Rates

October 2009

United StatesUnited States 10.0%10.0%AlabamaAlabama 10.9 %10.9 %Birmingham MSABirmingham MSA 9.9%9.9%

Source: U.S. Bureau of Labor Statistics, seasonally adjusted

California 12.5%

Michigan 15.1%

Rhode Island 12.9%

South Carolina 12.1%

Oregon 11.3%

Nevada 13%

North Carolina 11%

D.C. 11.9%

Tennessee 10.5%

Kentucky 11.2%Florida 11.2%

Illinois 11%

Alabama 10.9%

Georgia 10.2%

Ohio 10.5%

Household Net Worth 1981-2009

Source: United States Census Bureau, Moody’s Economy.com

Losing Confidence

The consumer confidence index from a survey of 5,000 U.S. households:Seasonally adjusted: 1985=100

Source: The Conference Board

How Far Down?

Recession Realities

• Mortgage and financial crisis – continuing problems• Huge decline in discretionary (especially retail) spending – Outlook poor for

Christmas• The continuing decline in housing value, sales, and new construction• Widely fluctuating consumer confidence – down 50% from 2007• Job losses every month of 2008 and huge losses throughout 2009 – still falling• Federal and state deficits soaring across the country• Commercial Real Estate Market is falling rapidly• Exports have dropped rapidly and are very low• The continuing cost in Iraq and Afghanistan (human and fiscal) – new questions• Enormous stock losses and continuing market volatility• Fluctuating price of oil – rising now• Citizen anger and distrust (AIG, Madoff, TARP, etc.)

Source: J. Mac Holladay, October 2009

“Elvis Has Left the Mountain”

“First, if it is not apparent to you yet, it will be soon: there is no magic bullet for this economic crisis, no magic bailout package, no magic stimulus…We are going to have to learn to live with a lot more uncertainty for a lot longer than our generation has ever experienced.”

Thomas L. FriedmanNew York Times

February 1, 2009

Market Street ServicesMarket Street Services

Background on Market Street

• Three key principles distinguish our work from other firms:

– Rather than prescribing quick fixes, our goal is systemic change.

– Rather than producing boilerplate studies where only the client’s name changes, our goal is producing deliverables specific to each client’s situation.

– Rather than faceless consultants that make two presentations and disappear, our goal is developing a relationship as partners.

Why Market Street?

• We do our own research; we don’t take anything for

granted

• Each project is unique

• Our reports are in plain English

• We tell the truth

• Outside-the-box thinking for today’s new economic

landscape

Market Street Current Clients

• Currently, Market Street is working in the following communities:

�Hopkinsville, KY

�Murray County, GA

�Nashville-Davidson County, TN

�St. Louis, MO

�Sioux Falls, SD

�Southwest Louisiana (Lake Charles), LA

�Waco, TX

Blueprint Birmingham Blueprint Birmingham

A Regional Economic Development StrategyA Regional Economic Development Strategy

“The future is not a result of choices among alternative paths offered by the present, but a place that is created first in mind, next in will, then in activity. The future is not some place we are going to, but a place we are creating. The paths are not to be discovered, but made, and the activity of making the future changes both the maker and the destination.”

Author Unknown

“Success is not a random act. It arises out of a predictable and powerful set of circumstances and opportunities.”

Malcolm Gladwell

The Outliers

• This is a time of change for Greater Birmingham

– Formation of the Birmingham Business Alliance in July 2009

– Opportunity to chart a fresh new course

• Do current priorities still reflect past challenges?

– What needs to be done to address continuing concerns?

– What “new” challenges have arisen in the recent past?

• How can this strategy take the region to the “next level”?

Birmingham Business Alliance –

A Fresh Start

Scope of Work

Stakeholder Input

• 28 Interviews with key business, community, and education leaders

• 14 Focus Groups with over 200 participants. Focus Groups included:– Large Employers - K-12 Education

– Workforce Development - Small Businesses

– Faith & Non-profit Leaders - Public Officials

– Young Professionals - Legal

– Media - College Students

– Quality of Life - Construction/Real Estate

– Board - Innovation/Venture Capital

• Online Survey for broader public input from those interested in seeing the region advance and a Project Website to share project

information: www.blueprintbirmingham.com

“Cultural legacies are powerful forces. They have deep roots and long

lives. They persist generation after generation, virtually intact, even as

the economic and social and demographic conditions that spawned

them have vanished, and they play such a role in directing attitudes

and behavior that we cannot make sense of our world without them.”

Malcolm Gladwell

The Outliers

Competitive RealitiesCompetitive RealitiesInitial FindingsInitial Findings

People

• Between 2000 and 2008 the population of the Region increased by almost 72,000 residents (a 6.8% increase). Of the 6.8% only a 0.2% increase was in Jefferson County.

• More than 24,000 residents of Jefferson County migrated to surrounding counties in the metro area between 2003 and 2008. Jefferson County did attract a net in-migration of more than 7,400 new residents from other parts of the country.

• As of 2008, 27.1 percent of the region’s population was between the ages of 25 and 44.

• As of 2008, 26.2 percent of Greater Birmingham’s adult population possessed a bachelor’s degree or higher.

• Between 2002 and 2007, per capita income increased from $30,573 to $39,401 in the Birmingham-Hoover, AL metropolitan area, equivalent to 28.9 percent growth over the five year period.

Prosperity

• Since the onset of the current recession beginning in December 2007, the Greater Birmingham region has lost nearly 26,000 nonfarm jobs, equivalent to a 4.8 percent reduction in employment based on themonthly Current Employment Statistics.

• The unemployment rate in the region climbed from a pre-recession level of 3.7 percent in December 2007 to 9.9 percent in October 2009.

• Between 2003 and 2008 the labor force participation rate in Greater Birmingham dropped to 71.0 percent from 73.6 percent.

• Based on the Quarterly Census of Employment and Wages Program, between the 1st Qtr 2007 to 2009 the Birmingham Region lost 29,805 private sector jobs based on detailed business sector classification. Only healthcare and social assistance and arts; entertainment; and recreation had employment increases.

Place

• The composite Cost of Living in Greater Birmingham is lower than the national average but higher than all of the competitor regions.

• The Birmingham region has the largest number of teaching hospitals when compared to the competitor regions.

• The Magic City region was ranked by Forbes Magazine as the 28th most affordable city among 100 metros. However, this ranking was lower than Louisville-Jefferson County, KY and Oklahoma City, OK.

Success

“Everything we have learned in Outliers says that success follows a predictable course. It is not the brightest who succeed, nor is success simply the sum of decisions and efforts we made on our own behalf. It is rather, a gift. Outliers are those who have been given opportunities and who have had the strength and presence of mind to seize them.”

Malcolm Gladwell

The Outliers

“the single most important thing a city can do is provide a community where interesting, smart people want to live with their families.”

Economic Development StrategyEconomic Development Strategy

Success StoriesSuccess Stories

Austin, Texas – Opportunity Austin

�Opportunity Austin (2003)– Chamber Economic Development staff expanded

– Marketing efforts and outreach helped put Greater Austin back “on the map”

– EXCEEDED 72,000 five-year jobs target in 3 years (80,900 jobs)

– EXCEEDED $2.9 billion payroll increase target in 3 years ($3.5 billion in new wages)

– Attained 92 corporate relocation announcements (five-year goal = 100)

�Opportunity Austin 2.0 (2007)– Launched 20,010 by 2010 efforts

– Increased economic diversification – Green businesses

– “Austin the Human Capital”

Nashville, Tennessee – Partnership 2010 (2006)

�43 new companies relocated or established major new facilities in the Nashville 10-county region and seven sizable companies relocated their headquarters to the Nashville area

�National public relations efforts continued to pay off as Nashville remained in national headlines, with more than 30 high placements for the city in rankings

� “I am a Music City” branding campaign, Nashville Entrepreneurship Center, and Career Academies launched

�2009 Chamber of the Year by the American Association of Chamber Executives AssociationSource: Nashville Area Chamber of Commerce

Montgomery, Alabama – Imagine a Greater

Montgomery (2007)

�Five career academies opened in MCS and mentoring program launched in 5 junior high schools this school year

� Increased media coverage had Montgomery featured in WSJ, CBS, NBC, Nightline, NPR, CBN, and New York Times

�ER Solutions, Mobis Alabama, Bell Microproducts and others recruited

�Hyundai, GE Plastics, GKN Aerospace and other expansions.

� “Riverfront Renaissance” & “Riverwalk”

�September 2009 Diversity Summit – 500 attendees

A few things to rememberA few things to remember……

“We can’t solve problems by using the same kind of thinking

we used when we created them.”

Albert Einstein

“Insanity is doing the same thing over and over again and

expecting to get different results.”Albert Einstein

“What do we really want? What kind of life – and what kind of

society – do we want to bequeath to coming generations?

To purposefully address it we must harness all of our

intelligence, our energy and most important, our awareness.

The task of building a truly creative society is not a game of

solitaire. This game, we play as a team.”

Richard FloridaThe Rise of the Creative Class

“Superstar lawyers and math whizzes and software entrepreneurs appear at

first blush to lie outside ordinary experience. But they don’t. They are

products of history and community, of opportunity and legacy. Their

success is not exceptional or mysterious. It is grounded in a web of

advantages and inheritances, some deserved, some not, some planned,

some just plain lucky – but all critical to making them who they are. The

outlier, in the end is not an outlier at all.”

Malcolm Gladwell

The Outliers

Birmingham Business AllianceAnnual Meeting