Have you ever heard someone say, “Birmingham’s limited because we don’t have the wealth of other cities?”
That’s just not true.
Many of us think of Birmingham as this impoverished town with low wages and a poor standard of living. But the facts and actions of our citizens tell another story.
I first got a hint of Birmingham’s wealth when the Birmingham Business Alliance (BBA) hired Market Street Services to prepare its strategic plan. One of the statistics presented was income per capita—a number I expected to be low–but I was wrong.
(Per capita personal income by Metropolitan Area, 2005-2009)
- Austin $42,902
- Raleigh $42,709
- Birmingham-Hoover $41,850
- Huntsville $41,595
- Louisville $40,970
- Atlanta $40,963
- Charlotte $40,465
- Memphis $40,288
- Montgomery $37,905
- Mobile $32,772
How’s it possible that Birmingham’s per capita income is higher than cities like Louisville, Atlanta and Charlotte?
Where did this money come from?
We may get depressed when we read about all the local businesses that are sold to out of state firms. But the money from those sales stays right here at home.
In the past few months sales of the following local private companies were announced: All Seasons Travel, Riteway Services, Integrated Medical Systems (IMS) and Boatright Railroad Products. These are multi-million dollar transactions, and since they are private, we don’t know the sales price of each, but al.com published that IMS sold for $175 million.
We also continue to lose our public companies—but even when our public companies are acquired—a good portion of that money flows right back to Birmingham.
And what about the dollars generated day after day by private companies headquartered here in Birmingham?
According to the BBJ, fifteen years ago Birmingham had only one private company with sales of $1 billion. Now there are six with sales of $1 billion or more and seven with sales greater than $500 million.
Companies with sales of over $1 billion:
- Drummond Company $3 billion
- EBSCO Industries $2.4 billion
- O’Neal Industries $2.3 billion
- Brasfield & Gorrie $2.02 billion
- McWane $1.6 billion
- American Cast Iron Pipe $1 billion
Companies with sales of over $500 million
- Coca-Cola Bottling United $775 million
- Robins & Morton $759 million
- Mayer Electric Supply $671 million
- Bill Harbert International $657 million
- Consolidated Pipe & Supply $604 million
- The McPherson Cos $604 million
- Buffalo Rock $600 million
Principals in these companies have money. According to Forbes, the Stephens family of EBSCO Industries has an estimated net worth of $4 billion.
Great wealth is a good thing, but what really distinguishes us is the generosity of our citizens. Drive around town and note the names on buildings and venues—The Alys Stephens Center, McWane Science Center, UAB Collat School of Business, and Barber Motorsports Park–to name a few.
Private money saved Vulcan and resurected our Zoo. Railroad Park would never have been developed without private contributions. The Lyric Theatre recently surpassed its $7 million fundraising goal. The Rotary Club of Birmingham raised $4.5 million for our new Rotary Trail. And UAB is in the process of raising $1 billion.
Folks in other states marvel at our local United Way. In order to belong to the United Way’s Tocqueville Society, donors must contribute $10,000 a year or more. Our Tocqueville Society has 725 members and is the 4th largest in the U.S. Our Tocqueville Society has more donors than cities like New York, Los Angeles and Chicago. 725 people/families donate $10,000 a year or more–pretty impressive!
And we’re recognized nationally for our charitable giving. Last month mylife recognized Birmingham as the number one city in the United States for the percentage of income donated to charity.
We in Birmingham often spend too much time and energy concentrating on our limitations.
Birmingham is not impoverished. We can do anything we want with a community vision.
After all, we are blessed both with an abundance of private wealth and the most generous people in America.
Let’s turn Birmingham around. Click here to sign up for our newsletter. There’s power in numbers. (Opt out at any time)
David Sher is the publisher of ComebackTown, a co-founder of Buzz12 Advertising Agency and co-CEO of AmSher Collection Agency. He’s past Chairman of the Birmingham Regional Chamber of Commerce (BBA), Operation New Birmingham (REV Birmingham), and the City Action Partnership (CAP).
David – Thanks for your newsletter and your advocacy for Birmingham. Thank you also for providing some statistical perspective on the Birmingham business economy. The thought of companies selling to out-of-state (or out-of-country) acquirers does create concern because of the potential loss of jobs but there are significant upsides to these acquisitions. Certainly the founders, management and shareholders benefit financially as you point out and often, the majority of those beneficiaries stay right here in Birmingham. But beyond just creating wealth for the shareholders, more often than not, these sales of local companies create an ecosystem of entrepreneurial activity. I look back to the sale of Complete Health to United Healthcare 20 years ago and I can point to the creation of at least a dozen companies that currently employ multiple times the number of employees that Complete Health ever employed. Examples of current companies that were founded by capital and people from Complete Health include Viva Health, Momentum Telecom, New Capital Partners, Hospice Partners, just to name a few. In addition, there were another dozen or so companies that were created and sold, repeating this virtuous cycle of generating wealth and entrepreneurial activity. Examples of companies spawned by Complete Health’s legacy and sold include MACESS, Virtual Learning Technologies, EHS Success, Community Hospice, etc.
I admit that it can be hard to see the benefit of losing a large “headline” business or publicly traded company but the number of smaller entrepreneurial companies that are often created collectively provide more benefit to Birmingham. Our community should look at the sales of both public and private companies as opportunities for gain and not regret the loss. The opportunity for talented management teams and funding capital to come together can create multiple companies and compound both job creation and our community’s successes. Instead of mourning the losses of great companies, let’s celebrate their successful exits and the potential for creating many new successful companies.
– James Outland
James, very insightful. Would you consider repurposing your above comments into a guest blog? (You’ve just about got it written) If you have an interest, plese click on following link: https://www.comebacktown.com/guest-bloggers/
*I do think the income for Birmingham is off, as it seems to only target Hoover….what if you included ALL of Birmingham then what would the per capita be? Far less than $41,800 I am sure…
Renee, all statistics are for metropolitan area so all city comparisons are the same.
*David, since my wife passed away last August, I have made frequent trips from Dothan to Birmingham to visit my daughter. Each visit, I discover something new about Birmingham that I enjoy .I would venture to say that many of the local critics of Birmingham take for granted the positives of Birmingham.
So true, Jack. Keep on coming to Birmingham.
Excellent information and insight, Dr. F. Thanks for sharing.
*Rather than looking at averages, you might more informatively look at income inequality in our metro area (see http://www.bizjournals.com/birmingham/news/2014/01/31/five-eye-opening-stats-on-income.html). Birmingham is a great place to live — if you have wealth. Without it you have ill health, both physically and emotionally. Birmingham’s greatest need is greater educational opportunity and attainment and a skilled workforce. Increasing the percent of our population in Birmingham with college degrees can increase population growth, economic productivity and entrepreneurial activity. From an informative blog at http://www.rethinkms.org/2014/01/20/mississippi-develop-educated-cities-sustainable-growth/ “When they consider all metropolitan areas in the U.S., an increase of
5 percentage points in the share of the adult population with
bachelor’s degrees causes population growth over 30 years to be about 8 percentage points higher than it would have been otherwise. For the South, however, their results show a similar increase in the
college-educated population to be associated with a 19 percentage-point
increase in population, by far the largest predicted growth in any
region of the country, and more than double the national average.More skilled workers lead to much
higher productivity, and the data show that a 5 percentage-point
increase in the share of workers with college degrees increases overall
economic productivity by about 25 percentage points over 30 years for
the nation as a whole. In the South, however, this effect is again
greater, with a 5 percentage-point increase in college graduates being
associated with a 33 percentage-point increase in productivity.The productivity increase in the South is also of a different nature
than in the rest of the country. For the entire U.S., about 85 percent
of the increased productivity associated with a more skilled workforce
comes from an increase in firm-level productivity; that is, most of the
increase comes from existing firms’ doing their jobs more efficiently,
with only about 15 percent of the increase coming from a larger number
of entrepreneurs starting new businesses. In the South, however, more than 40 percent of the increase in
productivity is associated with an increase in entrepreneurship. The
overall economic efficiency gains come almost in equal part from a more
diversified set of businesses in an area as from existing firms’
productivity gains.” http://www.rethinkms.org/2014/01/20/mississippi-develop-educated-cities-sustainable-growth/