Birmingham and the Construction Industry

 

When most people think of Birmingham, Alabama, their first thoughts are of Nick Saban Crimson Tide Football, the Civil Rights movement, delicious BBQ(of course) and a once vibrant city significantly affected by the Great Depression and recessions past.

In this post, I’ll make the argument that Birmingham is a place that should be known for more than the mentioned above. Birmingham is changing and can and should lay claim to a new identity: Birmingham can become the construction technology capital of the United States.

I’ll explore the current state of the construction industry in the city, and the landscape of Birmingham’s tech ecosystem. We will also take a look at whywhen combinedthese attributes can define Birmingham as a place for entrepreneurs in the construction tech industry to call home.

Birmingham

Birmingham is the largest city in Alabama in terms of population, with over 210,000 people calling Birmingham home. Established in 1871 and named for the English city of the same name, Birmingham very quickly became a center for iron smelting and steel production. Birmingham was primed for this type of growth- due to its location close to the vast amount of iron ore, coal and limestone deposits located in Red Mountain.

The city grew quickly, and soon new mines, steel plants and railroads were built throughout the Birmingham area. In 1907, in what was perhaps was the largest catalyst for economic growth in the city, Pittsburgh-based US Steel Company purchased TCI(The Tennessee Coal, Iron, and Railroad Company). At the time TCI was the largest and most significant iron and steel company in Birmingham. With the purchase, US Steel brought in an incredible amount of resources to Birmingham including capital and the creation of thousands of jobs.

 

The coke ovens operated by TCI in Birmingham.

Birmingham continued to grow until the Great Depression when US Steel was forced to shut down its steel mills. Much like the rest of the country, Birmingham country did not recover until the United States entered WWII when the need for steel and mining dramatically increased. After the war, the city began to grow, learning lessons from the days of US Steel, Birmingham made a tremendous effort to diversify its industries. Over time Birmingham became a major player in insurance, banking, biotech, healthcare, and chemicals manufacturing in the south.

Despite a relative lack of captivation, one industry has remained consistently strong in Birmingham, construction. Birmingham is home to five of the largest general contractors in the country according to Engineering News Record’s Top 400 General Contractors,

  • Brasfield and Gorrie, National Ranking: 27.
  • BL Harbert International, National Ranking: 60.
  • Robins & Morton, National Ranking: 79.
  • Hoar Construction, National Ranking: 96.
  • Doster Construction, National Ranking: 247.

Combined these companies generate over $4.1 billion in revenue and with a significant amount of that revenue coming from outside Alabama. BL Harbert is a go-to general contractor of the US government to build secure US Government facilities abroad. BL Harbert has built over 20 embassy compounds for the State Department from London, Pakistan, to Indonesia. Most recently Brasfield and Gorrie topped out Piedmont Health’s brand new 16 story Piedmont Tower in Atlanta, while Robins and Morton recently completed, the Beverly Knight Children’s Hospital in Macon Georgia.

The US Embassy in London during its design phase. Completed by BL Harbert International in 2017.

 

The strength of Birmingham’s construction industry does not stop with large general contractors. Birmingham boasts some of the best homebuilders in the country. Birmingham is home to the 6th largest home builders association in the country, with over 292 homebuilder members and over 1200 associate members. Alabama itself is home to over 1,700 homebuilders and over 7,000 associate members of the NAHB. Compare that to California, with just over 500 registered Homebuilders and 2,000 associate members of the NAHB.

Birmingham’s homebuilders have made a splash on the homebuilding industry nationwide. In 2017, Harris and Doyle Homes, a volume builder based right here in Birmingham, was purchased by Warren Buffet’s Berkshire Hathaway subsidiary, Clayton Homes.

The Bureau of Labor Statistics shows that Birmingham is home to over 29,000 people working in construction-related jobs. This number is on the rise, showingan increase of 8.2% over 12 months. Construction will continue to be a pillar of Birmingham’s economic development and strength as the city continues to grow and evolve.

The Tech Ecosystem of Birmingham

In one word, “exciting” is the way to describe Birmingham’s growing tech scene. With the acquisition of Shipt– a grocery delivery service by Target in 2017 for $550 million, Birmingham has seen an uptick in interest from investors on the coasts. Additionally, the acquisition has prompted growth in the availability of tech-related jobs and an increased interest in our city as a base for out-of-state tech companies looking for remote office locations.

What makes a strong tech ecosystem in a city like Birmingham? For this post, I’ll attempt to it boil down to an equation: a large pool of available tech talent+access to capital+supportive local government and universities+low cost of living=Strong Tech System.

Show Me the Money

In September 2018, the $25 million Alabama Futures Fund was launched to invest in the growing technology scene of Alabama as well as the out-of-state tech companies willing to relocate to Alabama upon receiving an investment. A couple of months trailing the launch of the Alabama Futures Fund, Dave Gray, former CEO of Birmingham based SaaS company Daxko, launched the Biso Collective, with the backing of the local conglomerate, EBSCO Industries. Biso’s mission is to acquire B2B SaaS companies and if necessary, relocate them to Birmingham. Biso gives established SaaS companies an alternative route to venture capital and private equity financing, and Birmingham a way to attract more tech companies and tech talent to the city.

In 2016, Birmingham’s Innovation Depot, the heartbeat of start-ups in the city, launched the Velocity accelerator program. The program provides funding and resources to local and out-of-state start-ups accepted to the 3-month program. Once they graduate, the companies can then pitch Velocity’s Venture Fund for more follow-up funding that comes in the form of an equity-free grant.

Angel Investments in Birmingham have picked up as well thanks to the formation of the Alabama Capital Network and the leadership of Miller Girvin. ACN has done a tremendous job connecting local Birmingham start-ups to Angel Investors.

It’s an exciting time to raise capital as a start-up in Birmingham. The capital here is ready for the risk, and investors are more than ever are interested.

 

Velocity Accelerators 2018 Cohort, which included Y Combinator Graduate, Smart Alto, and Rise of the Rest Winner, Mixtroz.

Government and Universities

The local Birmingham government, led by Mayor Randall Woodfin has also been very supportive of the local start-up community. The administration has worked closely with local workforce development programs such as Innovate Birmingham, start-up founders, and companies like Shipt to make sure operations stay local and continue to innovate in town. Last year, it announced the creation of the Putting People First Fund, the first human capital incentive that offers occupational tax rebates to startups to establish a tuition assistance fund, incentivizes local hiring and assists with funding for conferences. This program was co-designed and launched with Shipt as a part of its retention package.

The University of Alabama Birmingham(UAB) continues to be Birmingham’s largest catalyst for economic growth. With over 30,000 employee’s, UAB is the states largest employer and has an economic impact of over $7.0 Billion. UAB is classified as an “R1 Research Institution”, classifying them as a university with high research activity, having been granted over $500 million in research grants. A result of that research is company creation-like Incysus Therapeutics which is developing a treatment for cancers based on research out of UAB’s O’Neal Comprehensive Cancer Center.

UAB is also a major supporter of the Innovation Depot, providing funding to support Innovate Birmingham as well as the graduates of the Velocity Accelerator.

In 2017 UAB launched its own student accelerator program, providing students with the resources necessary to get their companies off the ground. One such company is Fledging, which produces the fastest SSD (Solid State Drives) on the market as well as other Mac accessories. Fledging graduated from UAB’s accelerator- and were subsequently accepted into the Velocity Accelerator earlier this year.

Birmingham is uniquely positioned because of the strong relationship between UAB and the local government. Their willingness to provide the necessary resources for founders in Birmingham shows that this tech ecosystem can rely on its local government and university for support.

 

Mayor Woodfin(in the Green Tie) made it a priority for companies founded in Birmingham like Shipt to remain in Birmingham.

Affordability.

One of the many beauties about living in Birmingham is the reasonable price of living.

The median monthly rent for a one-bedroom apartment in Birmingham is $900, compared to $4,200 in San Francisco. When looking at comparable cities in the South, Birmingham is still more affordable than Nashville, where the median one-bedroom apartment monthly rent $1,750, as well as Atlanta with a median rent of $1,650 a month.

When it comes to homes, the median price of a home single family home in Birmingham was $175,000 according to Trulia.com, Nashville’s was $300,000 and Atlanta’s was just a bit lower at $292,000.

Entrepreneurs and their families can live in Birmingham and not worry about breaking the bank like in other cities. Happy home life means a happy work life.

It’s About The People

Taylor Peake of Birmingham-based software development companyMotion Mobs may have put it best when she stated, “Innovative technology needs innovative talent”.

Birmingham understands that the success of the economy is predicated on the competitiveness of our workforce.

In 2017, UAB was awarded America Promise grant for $6 million from the US Department of Labor to launch Innovate Birmingham, comprised of 15 community partners and 35+ employers, to equip underemployed and unemployed young adults in the Birmingham area with skills necessary to work in IT and tech.

Innovate Birmingham currently offers courses in software engineering and data analytics. Graduates from Innovate Birmingham, and have started their careers at companies like Shipt, Apple, Encompass Health and local healthcare start-up, XpertDox.

Innovate Birmingham Cohort Graduation.

In May 2018, the City of Birmingham announced a partnership with Apple, where Apple and Birmingham City Schools hosted Summer Coding Camps using Apple’s Everyone Can Code Curriculum. This partnership provides an opportunity for students in Birmingham to learn the basics of coding apps and getting them excited about future careers in technology. The school system is now scaling the program district-wide.

Months prior, Lawson State Community College also partnered with Apple, in which Lawson State, began to offer courses in Apple’s Swift programming for mobile app development. Alabama-native and Apple CEO, Tim Cook, believes in this state, this city and our ability to equip our workforce for an innovative future.

Birmingham is also home to over 30 Venture for America Fellows. Founded in 2012, Venture for America is a two-year fellowship program for recent grads who want to work for start-ups and create jobs in American cities.

Through the fellowship, recent college graduates from some of the top universities in the world like Yale, Brown, UPenn, UNC, Duke, Washington U. St Louis and Vanderbilt move to Birmingham to call it home as a part of VFA. These recent graduates start their careers at start-ups here in the city, often serving as managers and directors at their companies, helping them grow with the hopes that at the conclusion of their 2-year fellowship, they’ll stay in Birmingham and start their own companies.

None of this would be possible without an incredible group of local leaders like Mayor Randall Woodfin, Director of Innovation and Economic Opportunity-Dr. Josh Carpenter, Director of Civic Innovation for the President of UAB-Dr. Anthony Hood, Director of Innovate- Dr. Haley Medved Kendrick, Venture for America’s Abby Guerin and Sara Williamson, ACN’s Miller Girvin, Innovation Depot’s-Devon Laney and Deon Gordon of Tech Birmingham.

Birmingham is not one to sit idly by as the rest of the country begins to innovate. Innovation is Birmingham’s mission and is developing an innovative workforce that will make sure our city and tech ecosystem will do just that.

Its Birmingham’s Choice

Innovate Birmingham’s Tech Ecosystems Gaps Report sums it up best, “The first step in creating a more focused entrepreneurial sector is to identify and share the needs of these key industries with the entrepreneurial community.”

That key industry can and should be construction. Birmingham is home to thousands of construction employees, five of the largest general contractors in the country, and one of the largest homebuilding associations in this nation.

Even with the growth of the construction industry, the construction industry worldwide has a $1.63 trillion productivity gap that surely impacts our local construction industry.

To me, that means opportunity. That means if I am a tech entrepreneur with an idea that can positively impact the construction industry with my tech, I should look to call Birmingham home. When you combine a growing tech ecosystem like Birmingham’s and access to a large local industrial vertical like construction, that opportunity is tremendous. That opportunity is already being explored by several great Birmingham construction tech-based companies like O3 SolutionThe Construction Channel and Bidsters.

Birmingham has made leaps and bounds in terms of innovation and developing its tech ecosystem. As an early stage startup employee working in construction tech, I’m excited about what lies ahead. I truly believe that Birmingham is on the cusp of something incredible in its tech ecosystem, it just needs focus. It may have not found it yet, but a good place to start? It might just be construction tech and it has the resources necessary to become the construction tech capital of the United States.