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By Martin Liptrot

By Martin Liptrot

Tale of Two Cities

This week, Martin contrasts the fortunes of the two Birminghams. Perhaps the UK's civic leaders would benefit from learning from their US namesakes.

To celebrate our 28th wedding anniversary, I took the wife to Alabama. I know, I know, I spoil her.

It is fair to say Alabama has had something of a reputation challenge to overcome.

It’s most infamous pages in history are around the struggles and strife of the Civil Rights Movement, the march on Montgomery, the 16th St church bombings, Rosa Parks’ bravery, and the ‘Bus Riders’ who came from across the nation to challenge the cotton state’s refusal to desegregate its citizens.

Worth remembering too, it wasn’t even 60 years ago that this part of America so openly discriminated against its own people.

But modern Alabama is an economic success story, fuelled by the emergence of the state as the home to much of the U.S. automotive industry and being a base for Boeing, Airbus, Lockheed Martin, NASA and the military’s research into space exploration – earning Huntsville, Alabama the nickname- Rocket City.

Since Mercedes Benz chose to open their only US manufacturing facility in the state, Toyota, Mazda, Hyundai and Honda have all followed suit and created a huge engineering, manufacturing and supplier ecosystem with more than 200 firms directly employing 75,000 workers feeding supply chains to churn out 1.2million vehicles and 1.5million engines each year.

And Birmingham, the state’s historically largest city, is now recognised as a magnet for entrepreneurs, attracting healthcare, financial services, and technology businesses at a rapid clip – growing faster than other economic hotspots like Jacksonville, FL and Austin, TX to rank 7th nationwide in a recent survey for inward investment.

Birmingham, Alabama could perhaps teach its UK namesake a lesson or two.

Back in Blighty, Birmingham UK’s local government finances are a mess. They have run out of money to provide the services citizens rely on and independent advisors and commissioners are being brought in to resolve the problem.

The city’s woes were also exasperated by its historic failings to deal with equality; a near billion-dollar settlement for having systematically and deliberately discriminated against women in the workforce for decades has put an unmanageable strain on its coffers. But Birmingham’s civic leaders have also made some disastrous economic choices and decisions along the way, for example, a £19million computer upgrade still isn’t complete and has so far cost the city’s taxpayers more than £100million.

And of course, central government isn’t helping.

Last week, the Prime Minister drew the ire of West Midlands’ businesses when he conflated the city’s challenges by announcing his careful but deliberate reversal away from HS2 – the multi-billion-dollar rail infrastructure project designed to share the wealth around the nation.

The fast train network which was meant to link the Northwest and Yorkshire to London would have created a giant new intersection for business, leisure, and freight rail transport in England’s second city. But now, as PM Sunak shared, it seems the plan to ‘spread the wealth’ is on hold, if not abandoned for ever.

The rapid volte-face didn’t go unmissed on this side of the pond either, where significant investment decisions impacting the Midlands are made.

Birmingham City FC’s U.S. owners wrote to the Prime Minister to point out the short-sightedness of his back tracking on HS2.

Tom Wagner, Birmingham City’s Chairman and managing member of Knighthead Capital Management, reminded the PM that his and previous Conservative administrations had ‘emphasized their commitment to delivering HS2’ and these promises had ‘led to significant private investment decisions’.

Wagner’s letter didn’t rehash the economic and social benefits of the fast train link, instead it spoke to something much more fundamental.

The Blues’ boss focussed his attention on the impact the withdrawal of support would have on ‘continued trust and confidence in the UK government which supports foreign direct investment’.

Upsetting a few Brummie car dealers and small business owners may have looked like manageable collateral damage to Sunak and his advisers, but losing the trust of the global investment community may be too big a price even for them. Money, it seems, does make the world go round.

Birmingham Alabama has acknowledged the importance of attracting global investment.

As was revealed in a recent survey – ‘job creation tied to international investment in Alabama has been rapidly outpacing the state’s general employment growth rate’.

Analysis from Global Business Alliance says employment tied to Foreign Direct Investment surged 12% in the last decade, with FDI projects generating nearly half of new capital and 40% of job commitments since 2020.

Greg Cranfield, Secretary of Alabama Department of Commerce said; ‘International investment projects represent major job-creation engines for many Alabama communities’ and claimed ‘FDI has injected vitality into local economies.’  I’m sure they could do with a bit of that in Digbeth and Selly Oak.

In the past decade international investment in Alabama has surpassed $25billion – $10billion in the last 12 months alone – and generated 38,000 new jobs in key sectors. It is for these hard-nosed reasons PM Sunak will have to think long and hard about the damage this reversal could do across the entire country.

As Wagner wrote: “The expectation is that the government will honour its commitment to deliver on publicly stated long term plans. Any deviation could result in a loss of investor trust, and this would have a considerable negative impact on the UK.”

While the fortunes of Birmingham City FC might not hang entirely on the completion of the rail link, the broader city’s aspirations certainly do.

As Wagner’s letter – reproduced in the Financial Times – said: “Knighthead’s goal is to make Birmingham City, and by extension Birmingham, a beacon for excellence that is recognised worldwide. This means investing in world class facilities and infrastructure. Making the Club, and Birmingham, a destination of choice… a location that people will want to visit … we will drive significant investment into the city, creating new jobs and new opportunities.”

Birmingham has already experienced the power of hosting global events. But despite staging one of the most successful Commonwealth Games, it may have proved ‘a step too far’ for the city’s leaders, distracting them from the bigger financial challenges facing Europe’s largest local authority.

While the $775million bill for hosting the Games was picked up by central government and covered through ticketing and commercial activities, critics claim it pulled officers and elected members’ focus away from ‘the basics’ taxpayers were concerned about.

While Birmingham UK’s leaders were no doubt fretting about getting tickets, hospitality and being visible in the flag waving and swell of civic pride, their counterparts in Alabama were laying out their post-Covid economic recovery plan to improve local hiring rates, reform small business taxes, improve infrastructure and network with global investors.

As the Commissioners sit on the slow train north from London to take up their duties in rectifying Birmingham’s financial plight, you wonder if a call to their US counterparts in Alabama might be a worthwhile use of the time.

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Martin Liptrot

Martin Liptrot is a Public Affairs, PR and Marketing consultant working with UK, US and Global clients to try and ‘make good ideas happen’.

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