The economics of diversification
by John Fleming
Editor at large
Sep 30, 2009 | 5654 views |  0 comments | 35 35 recommendations | email to a friend | print
Anniston Army Depot, above, has been Calhoun County's largest employer since the Army left Fort McClellan in 1999. Photo: Trent Penny/The Anniston Star/File
Anniston Army Depot, above, has been Calhoun County's largest employer since the Army left Fort McClellan in 1999. Photo: Trent Penny/The Anniston Star/File
Part 4: More diverse local economy still a goal

When Fort McClellan officially closed 10 years ago, community leaders did their best to look past a dire situation.

The fort had been a part of the community since 1917, and, over the years, its economy had in many ways become the local economy. Thousands of soldiers did their thing at the fort, but they were supported by thousands of civilian workers from the community. Military spending accounted for a big chunk of the local economy and many businesses relied heavily, if not almost exclusively, on business from the fort.

That was a decade ago, when Calhoun County’s one-crop economy was Fort McClellan. As long as the military saw fit to spend, northeast Alabama reaped the benefits.

When the party ended, the only consolation seemed to be that the change would force the area to diversify.

No longer would Calhoun County be tied to the ups and downs of military spending, leaders declared. In the future, the risk would be spread around, or so went the talk at the time.

But just how far has the area come in recent years to realizing that dream of diversification? How much of an economic impact does the military spending have now, opposed to then?

To be sure, thousands of jobs were lost when the fort shut down, but since then, other military-related jobs have sprouted, including those at the Anniston Army Depot, which has grown to be the county’s largest employer.

Military contractors, too, have increased their presence in the area since the war in Iraq began. The Alabama National Guard is training more of its personnel at the old fort property and hundreds of well-paid people are working to dispose of chemical weapons, an Army contract.

Still, the military is not the only thing going on in the area. The service industry in Oxford has exploded in the last decade, and Honda’s decision to locate in nearby Lincoln has been a significant boost to the area’s economy.

Nathan Hill, the military liaison for the Calhoun County Economic Development Council, points out that the Homeland Security Department’s Center for Domestic Preparedness, though a government entity, represents some diversity as well as the arrival of industries such as wood-products manufacturer Kronospan in Bynum.

“We’ve also seen the growing importance of our local educational institutions,” he added. “Jacksonville State and Gadsden State are both playing a bigger and more crucial role in the economy.”

So the answer to whether we have achieved diversification is not easy or simple. But some conclusions can be drawn from the numbers available.

A 1989 study done by Jacksonville State University’s Center for Economic Development shows the considerable economic punch carried by the fort at a time when it was running at full throttle.

The center put the total number of military employed at Fort McClellan at 7,767, with the number of civilian employees, including contractors, at around 3,000. The military payroll was a little more than $112 million per year, while the civilian payroll was closer to $47 million.

The center estimated the direct local expenditures of the fort and those working at it to be in the neighborhood of $280 million and the total impact of the fort on counties in the region to be $672 million.

During that same year, according to the Department of Commerce’s Bureau of Economic Analysis, Calhoun County had some 40,000 jobs in private employment, a term used to refer to non-farm jobs and jobs outside the government sector. By 2007, according to the Bureau, that number had climbed to more than 51,000.

That seems to suggest some diversification away from military spending, but the figures also saw ups and downs in other sectors.

Two decades ago, the figures show there were more than 11,000 jobs in manufacturing and 2,500 in construction in the county. By 2007, manufacturing jobs had fallen to 7,600, while construction jobs held at about 3,500.

One entity that complicates the question of diversification away from the military is the Anniston Army Depot.

According to the depot, there were 4,223 people, military, civilian and contract employees working at the depot in 1999, when the fort was closed. The combined payroll was close to $124 million.

In a 2003 study, JSU’s Center for Economic Development said the economic impact of the depot on the local community was upward of $1.1 billion.

Hill, of the EDC, feels strongly that the community needs to strive to continue to diversify and pointed out that the former fort property could be a key to that diversification.

“Everyone’s heart is in the right place on fort redevelopment,” Hill said. “But we certainly need to solve the rest of our problems so we can start developing it.”

Hill says he sees any number of possibilities, including developing alternative energy on the property.

Pat Shaddix, director of the Center for Economic Development at JSU, believes the area is more economically diverse than at the time the fort closed. But he says the community needs to strive to continue to bring in new types of industry and move away from government jobs.

“We are a more diverse economy than before,” he said. “We have Honda, that’s a big positive, and a number of small facilities have moved in. But we still have a lot of military and government-related businesses here.”

Shaddix pointed out that the Alabama National Guard conducts a lot of training exercises at the former fort and that the depot is a strong employer locally.

“All these jobs are great for us,” he said, “and they look especially good in times like these. But we have to be careful. Government jobs are great, but you never know what’s going to happen.”

As another example, Shaddix pointed to the experience of Huntsville, a place he described as booming at the moment. But it hasn’t always been that way, he insists.

“During the moon landings,” Shaddix said, “it was the best place to be. But after NASA started cutting back, Huntsville went through some bad times.”
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Editor at large

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