Banks Rated Strongest to Weakest in Mobile and Baldwin Counties, Alabama

Banks are often placed on a pedestal, but they are like any other kind of business; some are stronger and better managed than others.  And also like other types of businesses, many were hurt by the Great Recession.

It’s been a while since we visited the local banking situation, so we offer this update.

One publicly available bank rating service is Bankrate.com.  This system employs more than 20 tests to measure the capital adequacy, asset quality, profitability and liquidity of each rated financial institution. Individual performance levels are determined from publicly available regulatory filings and are compared to asset-size peer norms, industry standards and key benchmarks. Combined results form the basis for the star ratings.

Bankrate.com assigns a 1-to-5 star rating with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or better stars with the majority of banks falling into the three- to four-star range.  Ratings are believed to be reliable but the information is not guaranteed. In addition, events since the information was collected may have altered an institution’s financial condition.

These results for Mobile and Baldwin Counties, Alabama, just released by Bankrate.com, are based the banks’ financial statements as of June 30, 2012:

5 Stars (superior, top rated):

• Bank of the Ozarks
• BB&T
• Wells Fargo Bank

4 Stars (sound, indicative of a sound financial condition):

• Centennial Bank
• Century Bank
• Citizens Bank
• First Federal Bank of Florida
• Hancock Bank
• Iberia Bank
• National Bank of Commerce
• PNC Bank
• State Bank & Trust
• Woodforest National Bank

3 Stars (performing, indicative of a generally satisfactory financial condition):

• Bancorp South
• Bryant Bank
• Coastal Bank & Trust
• Community Bank
• First Community Bank
• Merchants Bank
• Regions Bank

2 Stars (below peer group, indicative of a below average financial condition):

• Southpoint Bank
• United Bank

1 Star (lowest rated, indicative of a significantly below average financial condition):

• Bay Bank
• BankTrust (being acquired by 4-Star rated TrustMark of Mississippi)
• Commonwealth National Bank
• First National Bank of Baldwin County

The foreign owned BBVA Compass is unrated.

Again, keep in mind that these ratings are based on information furnished by the banks as of June 30 of this year.  Things could have changed since then.  And there are other bank rating services whose rankings may differ.

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William Bruce is a business broker and appraiser.  He consults nationally on issues involved in business transfers and valuation.  He may be reached at WilliamBruceOnline@gmail.com or (251) 626-4949.  His business brokerage website may be viewed at www.WilliamBruce.net.

Why Do Business Buy-Sell Agreements Fall Apart?

We are indebted to BusinessesForSale.com for the following article.  BusinessesForSale.com is one of the world’s largest and most repsected business-for-sale websites.

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In many cases, the buyer and seller reach a tentative agreement on the sale of the business, only to have it fall apart.

There are reasons this happens, and, once understood, many of the worst deal-smashers can be avoided. Understanding is the key word. Both the buyer and the seller must develop an awareness of what the sale involves–and such an awareness should include facing potential problems before they swell into floodwaters and “sink” the sale.

What keeps a sale from closing successfully? In a survey of business brokers across the United States, similar reasons were cited so often that a pattern of causality began to emerge. The following is a compilation of situations and factors affecting the sale of a business.

The Seller Fails To Reveal Problems.   When a seller is not up-front about problems of the business, this does not mean the problems will go away. They are bound to turn up later, usually sometime after a tentative agreement has been reached. The buyer then gets cold feet–hardly anyone in this situation likes surprises–and the deal promptly falls apart. Even though this may seem a tall order, sellers must be as open about the minuses of their business as they are about the pluses. Again and again, business brokers surveyed said: “We can handle most problems… if we know about them at the start of the selling process.”

The Buyer Has Second Thoughts About the Price.   In some cases, the buyer agrees on a price, only to discover that the business will not, in his or her opinion, support that price. Whether this “discovery” is based on gut reaction or a second look at the figures, it impacts seriously on the transaction at hand. The deal is in serious jeopardy when the seller wants more than the buyer feels the business is worth. It is of prime importance that the business be fairly priced. Once that price has been established, the documentation must support the seller’s claims so that buyers can see the “real” facts for themselves.

Both the Buyer and the Seller Grow Impatient.   During the course of the selling process, it’s easy–in the case of both parties–for impatience to set in. Buyers continue to want increasing varieties and volumes of information, and sellers grow weary of it all. Both sides need to understand that the closing process takes time. However, it shouldn’t take so much time that the deal is endangered. It is important that both parties, if they are using outside professionals, should use only those knowledgeable in the business closing process. Most are not. A business broker is aware of most of the competent outside professionals in a given business area, and these should be given strong consideration in putting together the “team.” Seller and buyer may be inclined to use an attorney or accountant with whom they are familiar, but these people may not have the experience to bring the sale to a successful conclusion.

The Buyer and the Seller Are Not (Never Were) in Agreement.   How does this situation happen? Unfortunately, there are business sale transactions wherein the buyer and the seller realize belatedly that they have not been in agreement all along–they just thought they were. Cases of communications failure are often fatal to the successful closing. A professional business broker is skilled in making sure that both sides know exactly what the deal entails, and can reduce the chance that such misunderstandings will occur.

The Seller Doesn’t Really Want To Sell.   In all too many instances, the seller does not really want to sell the business. The idea had sounded so good at the outset, but now that things have come down to the wire, the fire to sell has all but gone out. Selling a business has many emotional ramifications; a business often represents the seller’s life work. Therefore, it is key that prospective sellers make a firm decision to sell prior to going to market with the business. If there are doubts, these should quelled or resolved.

Some sellers enter the marketplace just to test the waters; to see if they could get their “price,” should they ever get really serious. This type of seller is the bane of business brokers and buyers alike. Business brokers generally can tell when they encounter the casual (as opposed to serious) category of seller. However, an inexperienced buyer may not recognize the difference until it’s too late. Most business brokers will agree that a willing seller is a good seller.

Or…the Buyer Doesn’t Really Want To Buy.   What’s true for the mixed-emotion seller can be turned right around and applied to the buyer as well. Buyers can enter the sale process full of excitement and optimism, and then begin to drag their feet as they draw closer to the “altar.” This is especially true today, with many displaced corporate executives entering the market. Buying and owning a business is still the American dream–and for many it becomes a profitable reality. However, the entrepreneurial reality also includes risk, a lot of hard work, and long intense hours. Sometimes this is too much reality for a prospective buyer to handle.

And None of the Above.   The situations detailed above are the main reasons why deals fall apart. However, there can be problems beyond anyone’s control, such as Acts of God, and unforeseen environmental problems. However, many potential deal-breakers can be handled or dealt with prior to the marketing of the business, to help ensure that the sale will close successfully.

A Final Note.   Remember these three components in working toward the success of the business sale:

• Good chemistry between the parties involved.
• A mutual understanding of the agreement.
• A mutual understanding of the emotions of both buyer and seller.
• The belief, on the part of both buyer and seller, that they are involved in a good deal.

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William Bruce is a business broker and appraiser who is a member of BusinessesForSale.com, the firm that supplied the above information.

William Bruce consults nationally on issues involved in business transfers and valuation.  He may be reached at WilliamBruceOnline@gmail.com or (251) 626-4949.  His business brokerage website may be viewed at www.WilliamBruce.net.

What is a Franchise REALLY Worth?

We are indebted to Business Brokerage Press for the following article and information. Business Brokerage Press is the most respected and authoritative source of small business pricing guidelines available.  They may be reached at http://www.bbpinc.com.

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From the October newsletter of Business Brokerage Press:

From the upcoming 2013 Business Reference Guide, we have listed franchises with a “quick” rule of thumb, or range, usually expressed as a percentage of sales. For many of them we have based it on quite a few actual sales; others may have been based on just a few; and, in some cases, just one where we felt it was appropriate. They can be a good starting point for pricing the business.

Many of the franchises are well known while others are very new with just several units. By the time this goes to press, some of the franchises may have folded, sold or merged. We try to keep this as up-to-date as possible. We could use your help. To contribute to our ever-growing list, just complete the franchise resale form on our web site. Please also email tom@bbpinc.com if you find that a franchise has disappeared or merged, etc. Obviously the big changes such as Mail Boxes to UPS Store will be caught by us or by our researchers (hopefully).

Keep in mind that rules of thumb are just that. Every business is different and rules of thumb will never take the place of a business valuation or even an opinion of value. Rules of thumb are also not intended to create a specific value or to be used for an appraisal. But, they will give you a quick ballpark idea of what the business might sell for with everything else being equal. A rule of thumb will tell you whether a seller is in the ballpark when he or she tells you what they think their business is worth or what they want to sell it for.

For up-to-date information and for those companies where the number of units is not shown, track down their web site. Read the footnotes where indicated.

FRANCHISE LIST – A thru C:

A number in parentheses beside a franchise indicates a note at the end of the list.

Ace Cash Express 1.25

Ace Hardware stores (1) 45%

Adam and Eve 35%

Andy on Call 25%

Aero Colours 70%

All Tune & Lube 20 – 25%

AlphaGraphics 60 – 65%

Allegra Printing 60 – 65%

American Poolplayers Association (APA) (2) 140%

Andy OnCall 25%

Arctic Circle 40%

Atlanta Bread Company 25 – 30%

Baskin-Robbins Ice Cream 45 — 50%

Batteries Plus 30 – 35%

Beef O’Brady’s 22%

Ben & Jerry’s 35 – 40%

Between Rounds Bagel Deli & Bakery (3) 40 – 45%

Big Apple Bagels 35 – 40%

Big City Burrito 55 – 60%

Big O Tires  - 35%

Black Jack Pizza 45 — 50%

Blimpies 45 — 50%

Boba Loca 30%

Bresler’s Ice Cream 35 – 40%

Bruster’s Ice Cream 50%

Budget Blinds (4) 45 – 50%

Burger King 40%

Camille’s Sidewalk Café 30 – 35%

Carl’s Jr 40 – 50%

Cartridge World 30 — 35%

Carvel Ice Cream/Restaurants 55%

Car X Auto Service 35 – 40%

CertaPro Painters 45%

Chester’s International 45%

Cheeburger Cheeburger 35 — 40%

Chick-Fil-A 60 – 70%

Closets by Design 50%

Closet Factory 50%

Cold Stone Creamery 30%

Conroy’s Flowers 55 – 60%

Cost Cutter’s Family Hair 55 – 60%

Coverall Cleaning Systems (5) 2–3 times mo. sales

Culligan Dealerships 80 – 120%

Curves for Women (6) 35 — 40%

(1) Sales seem to indicate that smaller sales bring a higher multiple (50% +) than stores with sales over a million, which seem to bring lower multiples. Price is plus inventory which may be the cause of lower multiples for larger stores.

(2) $1,000 to $1,800 per team in sales; selling price – $2,000 to $2,500 per team

(3) 3 – 4 times earnings

(4) 2 times annual EBIT, plus inventory & equipment

(5) Master/Area developer – Sell for 3 to 5 times earnings plus some blue sky for size and potential of market (some cases).

(6) Prices for Curves for Woman seem to be all over the place. Some sales have been reported at 75+% of sales. One sale reported was 1.31 times sales for four units.

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FRANCHISE LIST – D thru L:

A number in parentheses indicates a note at the end of the list.

Dairy Queen 45 — 50%

Deck the Walls 35 – 40%

Del Taco 90%

Dick’s Wings and Grill 35%

Dollar Discount Stores 20%

Domino’s Pizza 50 – 55%

Dream Dinners 45%

Dr. Vinyl 75%

Dry Cleaners USA 55%

Dunkin’ Donuts (7) 75 – 80%

Eagle Transmission Shops (8) 40%

Environment Control 42%

Fantastic Sam’s (9) 35 – 40%%

Fast Fix (Jewelry) 80 – 85%

Fast Frame 32%

FasTrac Kids 45%

Fast Signs 42 – 46%

FedEx Ground 65 – 70 %

Firestone Tire Stores 35%

Floppy’s Mouse Club 70%

Foot Solutions 60%

Framing & Art Centers 60%

Friendly Computers 30% — 35%%

Friendly’s Restaurant 40%

Geeks on Call (Australia) 60%

General Nutrition Centers 40%

Godfather’s Pizza 28%

Goin’ Postal 30 – 35%

Goodyear Store (Business Opportunity) 35%

Grease Monkey 50%

Great Clips 1 – 1.5 SDE

Great Harvest Bread Co. (10)

Great Steak 50– 55%

Grout Doctor 85 — 90

Hallmark Cards 40%

Harley-Davidson Motors (11) 87%

Heavenly Hams 30 — 35%

Home Helpers 35%

Home Team Inspection 35%

Honest 1 Auto Care 70 %

House Doctor 24%

Hungry Howie’s Pizza & Subs 35%

Huntington Learning Center 60%

i9 Sports 65 – 70%

Iceberg Drive Inn 40 – 45%

Jani-King 26-5 — 30%

Jersey Mike’s Subs 50%

Jiffy Lube 50%

Jimmy Johns 65 — 70%

Johnny Rockets 75%

Jon Smith Subs 20%

Juice It Up 24%

Kentucky Fried Chicken (KFC) 30 – 35%

Kuman Math & Reading Centers 80 – 90%

Kwik Kopy (printing) 50 – 60%

Lady of America 45 — 50%

Laptop Xchange 85 — 90%

Lenny’s Subs 15%

Liberty Tax Service 40%

Lil’ Dino’s Subs (12) 64%

Little Caesar’s Pizza 55%

Logan Farms (honey-glazed hams) 30%

(7) Dunkin Donuts shops now sell for 75 – 125% of annual sales, depending mainly on geography. It’s about 125% in New England, 100% of sales in the Mid-Atlantic States, and lower in the South and Midwest. There really is not a Dunkin Donut market in the West. A sale in Colorado was reported that sold for 22% of sales.

(8) Eagle is a Texas based franchise http://www.eagletransmission.com. They are the strongest transmission franchise in the Dallas area with 21 locations and are a minor player in Houston and Austin. The attraction is the royalties at 4% in Dallas and 6% Houston and Austin, and the training is “hands on” locally.

(9) These stores sell for maximum 2 times SDE versus $120,000 to $150,000 + for new. 10 to 12 sales have been reported at 2 times SDE for absentee owner stores (most are) and 2 times SDE + manager’s salary of owner operated.

(10) 3.3 – 3.4 times SDC

(11) Netted $2,100,000 and seller retained 20% of ownership

(12) One sold for 80% of sales, but it was located in an office building with vending rights.

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FRANCHISE LIST – M thru Z:

A number in parentheses indicates a note at the end of the list.

MAACO Auto Paint 40%

MaggieMoo’s Ice Cream (13) 32%

Maid Brigade 45%

Mama Fu’s 30%

Marble Slab Creamery 45 — 50%

Martinizing 60%

McGruff’s Safe Kids ID System 52%

Meinke Car Care Center 30 – 35%

Merry Maids 45%

Midas Muffler 35 – 40%

Minuteman Press 65%

Molly Maid 40%

Money Mailer 40 – 45%

Mountain Mike’s Pizza 27%

Moto Photo 72%

Mr. Gatti’s Pizza 25 – 30%

Mr. Jim’s Pizza 35 – 40 %

Mr. Payroll 1.3%

Mr. Rooter Plumbing (14)

Mrs. Fields Cookies 68%

Murphy’s Deli 50%

Music Go Around 40 %

My Favorite Muffin 30 — 35%

Nathan’s Famous 100%

Nature’s Way Café 45%

Natural Chicken Grill 25 – 30%

New York Pizzeria 35 — 40%

Obee’s Soup/Salad/Subs 55 — 60%

Oil X Change 30%

Once Upon A Child 25%

Orange Julius 32%

Original Italian Pie 35 — 40%

OXXO Dry Cleaners 65%

Pak Mail 50%

Panera Bread 35 – 40%

Papa Johns PIzza (18)

Papa Murphy’s Pizza 35 – 40%

Parcel Plus 25%

Petland 57%

Pillar to Post – Home Inspection 40%

Pizza by George 50%

Pizza Factory (15) 35%

Pizza Inn 47%

Planet Beach 35 — 40%

Play It Again Sports 40 — 45%

Precision Tune Auto Care 36%

Pump It Up 30%

Purrfect Auto 50 – 55%

Quaker State Lube 50%

Quizno’s Classic Subs (16) 25 — 30%

Red Robin Gourmet Burgers 32%

Reniassance Executive Forums 75%

Rocky Mountain Chocolate 65 – 70%

Rita’s – Ices, Cones, Shakes 80 – 1.3%

Roly Poly Sandwiches 34%

Safe Ship 40%

Samurai Sam’s Teriyaki Grill 50%

Sarpino’s Pizza 50%

Sears Carpet & Upholstery Care 30%

Senior Helpers 40 – 45%

ServiceMaster Clean 55 – 60 %

Serv Pro 90%

Shell Rapid Lube (Business Opportunity) 50%

Signarama 55 – 60%

Sir Speedy (printing) (17) 55 – 60

Smart Box 48%

Smoothie King 40 – 45%

Snap Fitness 40%

Soup Man (Original) 30%

Subway (18) 65 – 70 %

SuperCoups 40 – 45%

Superior Inspection 1.3%

Swisher (restroom hygiene service) 75%

Taco John’s 31%

Tan USA 60 – 65%

TCBY 40 – 45%

The Maids 40 – 45%

Togo’s Eatery 60 – 65%

Topz Healthy Burgers 40%

Tropical Smoothie Café 55 — 60%

Two Men and a Truck 43%

U Save (auto rental) (18) 10 – 15%

UPS Stores 40 – 45%

Valpak Mailers 3 SDE

Valvoline Instant Oil Change 50%

We the People 86%

Wild Birds Unlimited 30 – 35%

Wine Kitz (Canada) 55%

Wingstop Restaurants 33%

Wireless Toyz 45 — 50%

Worldwide Express 50 – 55%

Your Office USA 60%

You’ve Got Maids 60%

Ziebart International (auto services) 42%

Zoo Health Club 20%

(13) One MaggieMoo’s Ice Cream & Treatery sale was reported at 92%, three years old, great location, growth at 15% approx a year; but only 15% down payment

(14) 1 – 4 times SDC plus hard assets. The number between 1 – 4 depends on several factors such as the owner operating a truck, etc.

(15) Pizza factory has approximately140 units in the 10 Western States.

(16) Two sales in the Western states were reported at 99% of sales and another at 65% of sales. However, two sales in the lower Midwest were reported at 38% and 40%. One sale in New York was reported at 48% of annual sales, another in Massachusetts at 51% and one in Nevada at 45%.

(17) One sale was reported at 70% of sales.

(18) “As a former multi-unit Subway franchisee and a Development Agent, now a business broker Subway stores, there are many different formulas I have seen. 30 to 40 weeks sales, or 60 to 70% of sales is a popular one. Actual sales price depends on supply and demand and is closer to 70% of sales in So. CA.”

“On stores with gross sales of $300,000 to $500,000, multiple of 40% of annual sales. On stores with sales of $500,000+, multiple of 50% of annual sales. Franchisor would like 30% as a down payment on resales.”

“I would suggest for Subway, in New England and maybe all of New England, due to the high number of pizza restaurants, Subways tend to sell for a much lower of percentage of sales than 47% — sometimes as low as 20 – 25%.”

(19) Price does not include cost of vehicles, and revenues do not include auto sales.

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William Bruce is a business broker and appraiser who subscribes to the Business Brokerage Press publications.  He consults nationally on issues involved in business transfers and valuation.  He may be reached at WilliamBruceOnline@gmail.com or (251) 990-5934.  His business brokerage website may be viewed at www.WilliamBruce.net.

 

Montgomery and Mobile Lead Alabama Metro Areas in Business Confidence Index

Alabama business optimism as measured by the Alabama Business Confidence Index™ is a project of The University of Alabama.  The current results mark 44 consecutive quarters that The University has surveyed business confidence.

An index of 50 is neutral with results below that number predicting economic contraction and confidence above 50 suggesting economic growth.

Montgomery continues to be the most optimistic of the four metro areas tracked by the survey with an index of 51.3 for the fourth quarter of this year.

Confidence among Mobile businesses rose 2.1 points to 51.0, following the Airbus announcement and improving job growth.

Outlooks in Birmingham and Huntsville fell moderately. Birmingham’s index of 49.7 suggests a generally flat economy this quarter. Federal government cutbacks and uncertainty continue to depress Huntsville sentiment, where business confidence registered 44.3, the lowest of the metro areas tracked.

Overall, the Alabama index registered 48.3 indicating that both the economic environment and business prospects in general will be modestly weaker for the state as a whole compared to the third quarter of 2012.  The national economy index declined 1.4 points to 42.6, following last quarter’s dramatic 10.5 point slide.

The numbers suggest that Alabama’s economy, particularly the Montgomery and Mobile metropolitan areas, will fare significantly better than the national economy.

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William Bruce is an Alabama business broker and appraiser who participated as a respondent in this survey.

Boeing Continues to Whine About Airbus

Airbus announced recently it will locate an aircraft assembly plant in Mobile, Alabama.  Boeing promptly issued a whining objection.

So, what else is new?

Boeing’s latest whine alleges Airbus has recieved too much in the way of incentives from the French government.  Nevermind that Boeing has received billions in favorable treatment from the U.S.

Perhaps a review of the former criminal enterprise currently known as Boeing and its relationship to Mobile, Alabama is in order.

It’s a sordid history including corruption, suicide and bungling.  It dates back to 2001 when the Air Force announced its intention to lease 100 new tankers from Boeing for $20 billion.

In May 2003, the Pentagon chief arms buyer approved the lease four days before he retired.  Sen. John McCain promptly criticized the arrangement and called it a “sweet deal” for Boeing that would cost taxpayers more than the alternatives.

In November 2003, Boeing fired Chief Financial Officer Mike Sears and Vice President Darleen Druyun.  Boeing said Sears had improperly offered Druyun a job while she was an Air Force acquisitions officer in charge of the tanker project.  One week later, Boeing CEO Phil Condit “resigned.”  Sears and Druyun were criminally prosecuted for their role in the tanker deal, convicted and sentenced to prison.

Early in 2004, Secretary of Defense Donald Rumsfield canceled the Boeing tanker leasing deal.

In September 2005, American-based Northrop Grumman teamed up with EADS (European Air Defense Systems), parent company of Airbus, to participate in the competition to replace the Eisenhower-era tankers.

In January 2007, the Air Force issued a “final” request for tanker bids.  A few months later, Boeing and Northrop-Airbus submitted bids.  In October, The Air Force’s number two acquisition official, Charles Riechers, was found dead in his home of an apparent suicide.  Riechers was working on the tanker program and was under scrutiny while awaiting Senate confirmation for another job.

In January 2008, the Northrop/Airbus partnership confirmed that the tankers would be built in Mobile, Alabama should the Los Angeles-based company win the bidding.  The next month, the Air Force awarded the $35 billion contract for 179 tankers to Northrop/Airbus.

Boeing promptly filed a loser’s whining protest.  The aerospace giant brought its considerable political clout to bear, attempting to convince the government that whining constitutes substance.  Three months later on March 10, 2008, the General Accounting Office upheld the Boeing protest, citing “significant errors” in the process.

Later in 2008, Secretary of Defense Robert Gates canceled the Northrop/Airbus award and said the Pentagon would rebid the contract.  But he removed control over the process from the Air Force, saying his office would make the decision.  The Pentagon then released a draft request for another round of bidding.

Within days, Boeing filed a bullying complaint saying that it might bail out of the bidding unless it got additional time from the Pentagon to consider its offer.  The Defense Department yielded to Boeing and delayed the competition, effectively punting the decision to the Obama Administration which took office four months later.  President Obama asked Robert Gates to stay on as Defense Secretary and Gates agreed.  Gates returned control over the tanker process to the Air Force.

During the bidding process, Boeing promised the people of Kansas that if they won the contract, the tankers would be built in Wichita.  This so fired up the politicians of Kansas that, operating at full RPM in wild-eyed zealotry, they accused anyone who supported Boeing’s opponent in the contest of being “un-American.”

It didn’t matter that the other manufacturer in the contest would have assembled the tankers in Mobile, Alabama, a city that most cartographers would locate within the United States of America.

Long story short, Boeing won the contest with a low-ball bid and with the help of its superior lobbying efforts in Washington.

And surprise, surprise!  Within months of winning the contest with their lower bid, Boeing announced that there would be significant cost overruns as allowed under the contract.

And another surprise!  Boeing has announced that they are taking the tanker manufacturing out of Kansas.  Never mind the promises.  “Adios Wichita.”

But Mobile, Alabama gets the last laugh.  Airbus has announced a HUGE facility to be built at the Brookley Aeroplex in Mobile which will employ over a 1,000 workers to assemble the Airbus 320, one of the hotest selling aircraft on the world market.

Message to Boeing: Get a grip, y’all.

Alabama Cities Ranked by Strength of Local Economies: Two in Top 10% Nationally

Policom Corporation has just released its 2012 city rankings.  The firm is an independent economics research organization based in Palm City, Florida, which specializes in analyzing local economies.

Since 1996, Policom has created economic strength rankings for all Metropolitan Statistical Areas in the U.S.  Currently there are 366 Metropolitan Statistical Areas, defined as urban areas of at least 50,000 population.

Policom says it addresses the condition of an economy from the viewpoint of its impact upon the “standard of living” of the people who live and work in an area.  The formulas used to determine economic strength measure how the economy has behaved, not what has caused it to perform.

The highest ranked areas have had rapid, consistent growth in both size and quality for an extended period of time. The lowest ranked areas have been in volatile decline for an extended period of time.

Alabama has two cities, Huntsville and Birmingham, ranked nationally in the top 10 percent of all 366 metro areas.  Huntsville is Alabama’s top ranked economy at number 16 nationally, up from 52 last year.

Birmingham is next and is ranked number 29 out of 366 markets, down one notch from last year’s rank.

Of Alabama four largest cities, Montgomery is third and ranks at 72 nationally which is up from the city’s ranking of 84 last year.

Mobile is the lowest ranked of Alabama’s largest cities at 193 which is actually an improvement over its ranking last year of 205 among all 366 metro economies.

Other metropolitan areas (above 50,000 in population) in Alabama and their national rankings are shown below:

City & National Ranking Among All 366 Markets

•             Tuscaloosa                                   165
•             Phenix City-Columbus               166
•             Auburn-Opelika                          270
•             Dothan                                          291
•             Florence-Muscle Shoals             297
•             Anniston-Oxford                         335

Interestingly, across the country the top five economies were Washington, DC, Des Moines, Seattle, Nashville and Austin, Texas.

The absolute worst were: Muncie, IN; Flint, MI; Danville, VA; Anderson, IN; and in place number 366, dead last, was Danville, IL.

Policom also rates smaller markets for economic strength.  Referred to as micropolitan markets, they are defined as “an urbanized (city) area with a population of at least 10,000 but fewer than 50,000.”  There are currently 576 micropolitan areas in the U.S.

Within Alabama, the highest ranked micropolitan area for economic strength is Enterprise-Ozark which weighs in at number 28 nationally out of the total of the 576 markets.

Not far behind is Daphne-Fairhope-Foley which is ranked at number 42 nationally.  Other Alabama micropolitan markets and their national rankings are:

City & National Ranking Among All 576 Markets

•             Troy                                         263
•             Talladega-Sylacauga              310
•             Cullman                                    407
•             Albertville                                438
•             Ft. Payne                                  457
•             Alexander City                        461
•             Scottsboro                                485
•             Eufaula                                      518
•             Selma                                        522
•             Tuskegee                                  555
•             Valley                                        575

For a list of all American markets and details on the methodology used by Policom in this research, readers may visit www.Policom.com.

Clearly, the leaders in some of Alabama’s smaller markets have their work cut out for them.

What do you think?  Do you agree with these rankings?

For a list from another organization of the best and worst states for business in 2012, please visit our recent article by clicking here.

Best and Worst States for Business in 2012

We are indebted to the folks at Chief Executive magazine for the following information.

In the magazine’s eighth annual survey of CEO opinion of best and worst States in which to do business, Texas easily clinched the No. 1 rank, for the eighth successive time. California earns the dubious honor of being ranked dead last, also for the eighth consecutive year.

This year, 650 business leaders responded to the annual survey. CEOs were asked to grade states in which they do business among a variety of areas, including tax and regulation, quality of workforce and living environment. The Lone Star State was given high marks foremost for its business-friendly tax and regulatory environment. But its workforce quality, second only to Utah’s, is also highly regarded.

Florida moved up from number three last year to number two. It is perhaps no coincidence that Texas and Florida have the highest net migration of people to their states from 2001 to 2009. By contrast, New York and California lost over 1.6 million and 1.5 million in net migration out of the states, respectively, over the same period.

North Carolina, Tennessee, Indiana, Virginia, South Carolina, Georgia and Utah held their positions in the top 10, with Indiana moving up a notch to fifth.

It may be no accident that most of the states in the top 20 are also right-to-work states, as labor force flexibility is highly sought after when a business seeks a location. Several economists, most notably Ohio State’s Richard Vedder and Harvard’s Robert Barro, have found that the economies in R-to-W areas grow faster than other states, have higher employment and attract more inward migration.

Although often eclipsed by Texas, its next door neighbor, Louisiana, is the Cinderella of business improvement. In 2006, it ranked 47th—where Massachusetts is today. And Katrina didn’t help matters. But since then it has climbed steadily up the ranks so that it is now 13th—up from 27th last year—the biggest leap in a single year of any state. “In Louisiana there is an active government push to reduce taxes and regulation and to encourage new industry to relocate to the state,” commented one chairman. “This was valuable for one of our companies, which decided to make the state our headquarters.” Other chiefs point to the big strides the state has made in workforce training and economic incentives. Its economic development office is also aggressive in luring disaffected businesses from the Northeast and California.

California’s enduring place of perpetual decline continues in this year’s ranking. Once the most attractive business environment, the Golden State appears to slip deeper into the ninth circle of business hell. The economy, which used to outperform the rest of the country, now substantially underperforms. And its status as the most ruinously contentious place to operate remains undisturbed in eight years. Its unemployment rate, at 10.9 percent, is higher than every other state except Nevada and Rhode Island. With 12 percent of America’s population, California has one-third of the nation’s welfare recipients.

Following is the complete list from ChiefExecutive.net.  You can click on each state for details.

What do you think?  Do you agree with this list?

2012 RANK	STATE	2011 RANK	1-YEAR CHANGE
1	Texas	1	0
2	Florida	3	1
3	North Carolina	2	-1
4	Tennessee	4	0
5	Indiana	6	1
6	Virginia	7	1
7	South Carolina	8	1
8	Georgia	5	-3
9	Utah	9	0
10	Arizona	13	3
11	Colorado	12	1
12	Nevada	10	-2
13	Louisiana	27	14
14	Delaware	16	2
15	North Dakota	21	6
16	Wyoming	14	-2
17	Oklahoma	11	-6
18	Idaho	19	1
19	South Dakota	15	-4
20	Wisconsin	24	4
21	Alabama	26	5
22	Iowa	22	0
23	Kansas	25	2
24	Missouri	23	-1
25	Kentucky	17	-8
26	New Hampshire	18	-8
27	Nebraska	20	-7
28	Montana	28	0
29	Arkansas	30	1
30	Mississippi	38	8
31	Alaska	31	0
32	Maine	36	4
33	New Mexico	32	-1
34	West Virginia	42	8
35	Ohio	41	6
36	Minnesota	29	-7
37	Washington	34	-3
38	Vermont	40	2
39	Rhode Island	35	-4
40	Maryland	37	-3
41	Hawaii	43	2
42	Oregon	33	-9
43	Pennsylvania	39	-4
44	Connecticut	44	0
45	New Jersey	47	2
46	Michigan	46	0
47	Massachusetts	45	-2
48	Illinois	48	0
49	New York	49	0
50	California	50	0