Keeping you informed and inspired. January 2022
VOLUME 5 • ISSUE 1
NASA
Artemis Part III: Stacked and Loaded to Execute a Successful Mission COVER STORY
America’s space program is known for its ambitious timelines, and the delay is short-lived as Artemis I will undergo a wet dress rehearsal for her historic rendezvous with the moon in early January, according to NASA deputy associate administrator for exploration systems development, Tom Whitmeyer, speaking to Space News in October.
See story on page 12
By Kimberly Ballard - Page 8
DEVELOPMENT
Huntsville/Madison County DEVELOPMENT Chamber’s Redstone Update Provides a Glimpse Behind the Gates
Recently, Huntsville/Madison County Chamber of Commerce hosted its annual Redstone Update at the Von Braun Center, its first in-person event since the COVID-19 outbreak forced it to go virtual. By Dawn Suiter - Page 18
ADDITIONAL STORIES • Sit Down With Success: John Shields of Century Automotive Group: Let Luck and Wisdom Guide You By Kimberly Ballard • Page 3
• Huntsville Ranks #6 Among Best Places to Work in Manufacturing By Lori J. Connors • Page 6
• Huntsville Area Realtors Provide Insights on the 2022 Housing Market By Dawn Suiter • Page 16
Online
Huntsvillebusinessjournal.com
@HsvBizJournal
www.linkedin.com/company/huntsville-business-journal/
www.facebook.com/huntsvillebusinessjournal
HUNTSVILLE
BUSINESS JOURNAL Vol 5, Issue 1 January 2022 600 Boulevard South Suite 104 Huntsville, AL 35802
2
Huntsville BUSINESS JOURNAL
ECONOMY
Eye Opening Inflation to Hit the Commercial Lease Market in 2022 By Lori J. Connors After the New Year’s midnight toast, retailers and small businesses will have a rude awakening. Their retail or commercial leases are indexed for inflation. In November 2021, the annual inflation rate in the US jumped to 6.8%, the highest it’s been since June 1982. After many years of taking low inflation for granted, inflation is now front and center in everyone’s minds. At the start of 2021, the U.S. was forecast to end the year with 2% inflation. Instead, it’s dangerously close to 7%. Things like rising demand, wage pressures and supply chain disruptions drive the continued increase. The challenges brought on by the COVID-19 pandemic, including the dramatic recent rise of inflation, is cause for concern. Many leases are tied up to the 12-month change in the consumer price index (CPI), which is going up sharply, but is forecasted to eventually level out at 6% by mid2022. “In the last few years, inflation has been running less than 2%,” said Mark Vitner, senior economist at WellsFargo. “Rents are typically adjusted to the CPI and now they are up to 6.8%. That’s pretty substantial when you’re used to your rent only going up 2% a year, it marks a big change.” As inflation is likely to go up 3-5% at least through the rest of the decade, retailers and small businesses are likely to bear the brunt, unless their lease is maturing, and they’ve got other, lower priced options. “I think it’s the retailers are probably going to get hurt the most,” said Vitner. “I know that some office leases are tied to the CPI, but I think that some small businesses are going to be stuck a little bit there. “In isolation, the retail environment had been very weak, a lot of
retailers were struggling and were giving back space,” said Vitner. “A lot of folks were working from home and moving back to the suburbs. I think that the retailers are going to have to eat this increase in rent, I don’t think they’re going to have a whole lot of alternatives.” With a lot of people still working remotely, many businesses are consolidating space, which might provide a little more negotiating room for those companies that have office leases that are going up. They might even be able to extend their lease in exchange for better terms. According to Vitner, the term “transitory” needs to be retired. While the Fed and the Biden administration have said that higher inflation is “transitory” they may be soon readjusting their perspective. Those in the real estate industry that are most likely to be negatively affected by inflation include developers faced with the rising costs of construction and supply chain constraints, as well as landlords whose tenants are locked into long term leases that do not account for inflation adjustments. At some point, the commercial real estate industry will have to conclude that higher inflation is destined to be a long-term issue. However, predicting the future of inflation and its impact on commercial real estate is not so simple. “The economy doesn’t just grow, it’s kind of slowly evolving,” said Vitner. “And it’s not always pleasant.” w
January 2022
3
SIT DOWN WITH SUCCESS
John Shields of Century Automotive Group: Let Luck and Wisdom Guide You “Sitdown with Success” spotlights local entrepreneurs who describe their successes and failures, with tips for upcoming business owners. For the full-length interview, visit huntsvillebusinessjournal.com.
Huntsville was a small, but booming, town when John Shields first came to Huntsville from Detroit via Jacksonville, Fla. in 1968 to train a group of six car salesmen for Royal Chevrolet. Months later, when speaking to a banker about buying out his partners, he secured the loan because “…there are two things for certain – Coca-Cola and Chevrolet!” At 83, his daughter and son-inlaw Tracy and George Jones own and manage the business but John is still active and discusses the challenges he faced in building today’s Century Automotive Group. What are some of the challenges the business has faced through the years? We have faced several crises
through years, some of them critical. In the early years, I had a negative net worth. I was about 115 percent leveraged with no equity. My dad helped me by co-signing on loans for me. It wasn’t easy but I eventually put it together. Then there was the 1972 energy crisis when the oil supply was cut off and we were not getting or selling cars. In the 1970s, LBJ moved the space program to Houston. Before that, Huntsville was a boomtown. Then there was a GM strike that was bad. We could we not get cars for six weeks. In the 1980s, interest rates hit 20.5 percent; followed by a labor strike; the 2007-2008 Financial Crisis; and now the pandemic. What is the key to your success? Very simply, luck and wisdom. Being lucky enough to have a daughter who is smarter than me and the
wisdom to get out of her way. Tracy (Jones) was a CPA with Price Waterhouse when I made her comptroller, but she never answered to me as her boss, and we had an understanding - tell me about the problem after you get it fixed. You know what I can’t teach you, and I have confidence you will figure it out. That was 20 years ago. It was an easy transition. After so many years in the automotive business, what do you think of the car industry? Competitively there seems to be room for everybody. The real competition is the electric car. I don’t see a guy out there in the country using a driverless pick-up truck, so I don’t think the driverless cars are gaining much traction, but electric cars are. Jaguar tells us that by 2025, all their cars will be electric.
By Kimberly Ballard / Photo by Steve Babin
What advice do you have for someone opening a business in Huntsville now? Today is a good time to open any kind of business in Huntsville. I think finding something you like and have a passion for is important. I’ve always liked cars and I was willing to work hard and do what a lot of people today are not willing to do to be successful. w
4
Huntsville BUSINESS JOURNAL
Subsidiary of EVENT Publishing
President /Publisher................................................................ Todd Stephenson Editor ................................................................................................Gus Wintzell Writers.........................................................................................Kimberly Ballard Alan Clemons Lori J. Connors Mike Easterling Noah Logan Dawn Suiter Graphic Design ............................................................................. Justina Simon Website................................................................................................ Jim Gharib Photographers...................................................................................Steve Babin Kimberly Ballard Justina Simon Director of Sales ................................................................. Carolyn Stephenson Account Executives......................................................................... Noah Logan Distribution......................................................................................Glenda Mace Huntsville Business Journal is published monthly by EVENT Publishing,
PO Box 14219, Huntsville, AL 35815. For advertising information call 256.533.8078, e-mail todd@eventhuntsville.com, or visit us on the web at www.huntsvillebusinessjournal.com For editorial information contact editor@huntsvillebusinessjournal.com ALL CONTENTS ©2021. ALL RIGHTS RESERVED. REPRODUCTION OR USE IN WHOLE OR IN PART OF THE CONTENTS WITHOUT THE PRIOR WRITTEN PERMISSION OF THE PUBLISHER IS PROHIBITED. HUNTSVILLE BUSINESS JOURNAL IS A REGISTERED TRADEMARK OF EVENT PUBLISHING. ALL RIGHTS RESERVED. UNSOLICITED PHOTOGRAPHS OR ARTICLES ARE SUBMITTED AT THE RISK OF THE PHOTOGRAPHER OR AUTHOR. EVENT PUBLISHING ASSUMES NO LIABILITY FOR THE RETURN OF ANY UNSOLICITED MATERIALS AND MAY USE THEM AT ITS DISCRETION.
January 2022
5
FOOD / DINING
Coming Soon to Huntsville: Scooter’s Drive-Thru Coffee For those of you who like to grab and go with your morning cup o’ Joe, mark your calendars. In April 2022, Scooter’s Coffee will open its first Huntsville location. The Nebraska-based drive-thru coffee franchise promises an enticing assortment of high-quality coffee drinks, smoothies, teas, and breakfast items. Over the past couple of decades, Scooter’s has become one of the fastest-growing franchises in the country. In 1998, Co-founders Don and Linda Eckles opened the very first Scooter’s in Bellevue, NE. Originally known as “Scooter’s Java Express,” it quickly became “Scooter’s” because the name was catchy, and it fit the company’s mission of keeping customers happy by helping them “scoot in and scoot out” with their perfect cup of coffee. The secret to Scooter’s’ 23 years of success is largely due to Scooter’s commitment to its original business principles and company core values. It’s important to find a great location, stay committed to high-quality, speed of service, and offer up a BIG smile. Scooter’s goal is for guests to order and receive their beverage within 40 seconds, a deadline they always strive to meet. Scooter’s quality and speedy service were huge draws for owners Cole and Emily Harris. After spending several years considering a variety of franchise concepts in various indus-
tries, the Harrises quickly embraced the coffee business. Scooter’s proved to be a highly appealing franchise opportunity because of its mission to connect with coffee farmers directly, support franchise owners, and desire to build relationships with its team members. The location on Governors Drive was selected because of its visibility from Memorial Parkway and the high volume of traffic that passes by each day. It’s also conveniently close to downtown, Huntsville Hospital, Twickenham Square, and all points in between. Scooter’s roasts select coffee from the top 10 percent of specialty coffee beans in the world – high quality beans that are sourced from Costa Rica. “We have lots of incredible choices when it comes to coffee,” said Ms. Harris. “Scooter’s will serve a coffee flavor-of-the-day as well as seasonal items.” Scooter’s most popular drink is the Caramelicious— a signature espresso with frothy hot milk, sweetened up with car-
amel sauce, then topped with whipped cream and a caramel drizzle. As the majority of Scooter’s are exclusively drive-thru, the Huntsville location will also follow suit. Guests will be able to make a quick dash to Scooter’s to grab a coffee, a smoothie, or a breakfast item without missing a beat. Scooter’s is quickly approaching the 400 mark with several more locations currently in the works. Once
By Lori J. Connors / Photos courtesy of Crunkleton
the Governors Drive location gains a solid foothold, the Harrises plant to open additional locations here in the Rocket City. “I am originally from Huntsville, and I’ve had a front-row seat as new creative concepts have entered the market,” said Ms. Harris. “We believe the city will embrace Scooter’s—especially with it being so close to medical facilities, apartments, and retail centers. The franchise has been successful in every market it has entered. We can’t wait to welcome customers next year.” Scooter’s: Amazing People, Amazing Drinks…Amazingly Fast!® and the Harrises are thrilled to be bringing it all to the Rocket City. For more information, go to: www.scooterscoffee.com. You can also follow the coffee kiosk on Facebook and Instagram. w
6
Huntsville BUSINESS JOURNAL
MANUFACTURING
Huntsville Ranks #6 Among Best Places to Work in Manufacturing Although the manufacturing industry hit its peak in the U.S around 1969, about 7.5 million jobs have been lost nationwide in the 50 years of industrial decline that followed. But there is good news. The manufacturing sector is making a comeback here in the United States. What’s more, it’s becoming quite the big deal in Huntsville-Madison County. To find the best places to work, specific to the manufacturing sector, SmartAsset recently analyzed data for 378 metropolitan areas. This data was then evaluated with regards to manufacturing jobs as a percent of the total workforce, employment growth, income growth, and home affordability. To further fine-tune its findings, SmartAsset relied on the most recent unemployment data, using it to factor in the overall impact of COVID-19. According to study, the Huntsville metro area made it into to the top ten out of the 378 metro areas surveyed. In fact, Huntsville ranks number 6, just below neighboring Cleveland, Tennessee. According to the chart, the South and the Midwest have both experienced growth spurts in manufacturing. Though many of the individual metro areas are different, these two historic manufacturing industry hubs dominated the top 10 in the SmartAsset study for the second year in a row. When evaluating Alabama’s top industries, transportation equipment manufacturing ranks as the state’s largest industrial sector, employing 47,247 workers. Food processing ranks second with 34,179 jobs, while third-ranked fabricated metal products accounts for 31,562 jobs. The ushering in of a new era in manufacturing in North Alabama speaks volumes regarding the quality of life and subsequent growth of the community. It translates into bigger and better opportunities; creating more available jobs, coupled with more revenue brought into the region. The North Alabama manufacturing base consists of a diverse mix – Photo both traditional and technology by Dawn Suiter
manufacturers – that make up roughly one-fifth of the overall local area employment. The area’s manufacturing sector is made up of over 220 companies with 32,000 employees. Many of those workers being trained and developing the skills needed to perform technology-based precision manufacturing. The population has been growing a rate that surpasses state and national averages. Manufacturing labor is a significant portion of the overall labor force. Huntsville’s metro area has the capacity and can sustain another 7,000 manufacturing jobs through 2022. The area’s well-developed interstate, rail, and air cargo infrastructure make North Alabama ideal for the manufacturing industry. The Port of Huntsville’s Huntsville International Airport is home to Foreign Trade Zone #83 and the International Intermodal Center, as well as U.S. Customs. There are also over 30 foreign based companies with manufacturing and business operations in Madison County. There’s a lot of encouragement to bring manufacturing to the Rocket City. The Huntsville-Madison Chamber of Commerce has industry retention and expansion initiatives in place. These initiatives enhance business growth for industry and entrepreneurs alike. As the metro area continues to grow, it is important to
have a diverse set of industries. It’s good for the local economy as well as the community. To learn more about the Chamber’s manufacturing industry initiatives, go
By Lori J. Connors / Graphic by Lori J. Connors
to: https://asmartplace.com/ To access the SmartAsset data, go to: https://smartasset.com/ data-studies/best-places-to-work-inmanufacturing-2021. w
January 2022
7
8
Huntsville BUSINESS JOURNAL
NASA
Artemis Part III: Stacked and Loaded to Execute a Successful Mission This is the third story of a three-part series on the inauguration of the Artemis Lunar and Deep Space Missions using the SLS Rocket, developed and tested here in Huntsville, and set to launch from Kennedy Space Flight Center It’s true, a 2021 launch date for the first of NASA’s Artemis “Return to the Moon” missions has been moved to February 12, 2022 at 5:56 p.m. EST. But America’s space program is known for its ambitious timelines, and the delay is short-lived as Artemis I will undergo a wet dress rehearsal for her historic rendezvous with the moon in early January, according to NASA deputy associate administrator for exploration systems development, Tom Whitmeyer, speaking to Space News in October. A wet dress rehearsal (as opposed to a dry run) consists of fueling the SLS (Space Launch Systems) core stage and putting the rocket through a practice countdown, stopping just short of the ignition of its four RS-25 engines. In early September, Huntsville native David Beaman, systems engineering integration manager for the SLS program, walked an awestruck audience at the Davidson Center’s National Geographic Theater, through preparations for Artemis’ iconic launch as it currently awaits its magnificent journey from the Vehicle Assembly Building at Kennedy Space Center. Beaman grew up watching the space program with a ringside seat as his father was part of the Wernher von Braun team in the 1950s and 1960s. Graduating from the University of Alabama-Huntsville, Beaman’s job today has been to ensure that the hardware, which has been developed by a number of individual companies, is integrated with the SLS rocket at the VAB, and to make sure it’s ready to execute its mission when the time comes for liftoff. “Artemis’ solid rocket boosters are the largest in the world, standing over 170 feet tall,” Beaman said. “I am a classic car nut, so the best way I can describe how powerful these boosters are, is to envision lining up 1967
Corvettes nose-to-tail. For them to produce power equivalent to just one of these boosters, they would stretch from here to Kennedy Space Center.” He remined the audience Arte-
mis will be the first time in nearly 50 years NASA has developed and integrated a heavy lift vehicle - since the Saturn V. After “stacking” and thereby integrating the core stage with its two solid rocket boosters, the vehicle stands at an astounding 212 feet tall inside the VAB. On top of the Core Stage, they stacked the Launch Vehicle Stage Adapter (LVSA), and on top of that is the upper stage Interim Cryogenic Propulsion Stage (ICPS), built by United Launch Alliance (ULA) in Decatur. The actual Orion spacecraft will then attach to the ICPS, however, with the entire vehicle fully integrated, a mass simulator is installed on top. It represents the Orion as they go into a series of tests that are currently still in progress in the VAB at Kennedy. There are 10 specific tests the vehicle must go through after integration to make sure it is ready to fly. “The testing assures us we are do-
By Kimberly Ballard / Photos courtesy of NASA
ing everything we can to make sure everything we have done to this point works as we have modeled it out to do,” said Beaman. “That the hardware we’ve built is integrated and not only the physical interaction, but the electrical interaction of the hardware responds the way analytical models predict it should when the vehicle is ready to take on its mission.” One of those tests is a push-pull test in which the solid rocket boosters are moved back and forth while measuring the dynamic interaction between the boosters and the launch pad. They also perform a shake test of the entire vehicle after it is assembled to make sure it dynamically responds the way it is expected to. “We had several things in the space shuttle program where we came very close to having issues, and they were all tied to the dynamic interaction of the vehicle,” said Beaman. “We have a test program that puts us in a good position to understand the vehicle and to validate and verify our analytical models.” Beaman describes each of the integration steps they put the vehicle through is a well-orchestrated dance. “We have a team here in Huntsville responsible for the integration,
January 2022
NASA
and we have individual teams with individual elements developing the hardware, and we have a physical integration team down at Kennedy going through all of that process to develop everything we need to execute the mission and make sure it is run successfully.” Beaman said they also do simulations, leading up to launch. “We must go through a process of understanding not only is the hardware ready, but are the people ready to support the mission,” he said. “We have facilities at Marshall Space Flight Center and people spread all around the country doing simulations or practice runs. “Football coaches say you should practice like you play and that is what we do – we practice like we play, and we practice hard.” Taking a complex vehicle into space requires leadership and Beaman said the people leading teams at MSFC and at the Huntsville Operations Center are constantly
analyzing the data, practicing the launch countdown, and monitoring the actual flight machine with the vehicle to make sure it is performing as expected. “We want to be ready when we get to the final countdown, and ready when we send the first woman and next man into space, and we want to make sure we do it in a safe way. These simulations and practices make sure we are ready to execute the mission.” Beaman said while Artemis I will not carry a manned crew, payloads are extremely important to the Artemis I mission. “We have 10 secondary payloads on the Orion Stage Adapter that will fly on the first mission,” Beaman said. “Several of them are locally developed. “One of them is the Near-Earth Asteroid Scout (NEA Scout). It will fly to a near-earth asteroid and gather data and bring that data back. Think of it … something the size of two
loaves of bread has the capability of flying in space and sending data back. It’s amazing the science contribution we will get from this mission. “The other secondary payload is called Bio Sentinel. It will carry yeast DNA and measure the response of double strand breaks of DNA,” he explained. “In space, we are not just dealing with the cold, but we are dealing with radiation. It is a very violent environment, and it will help us detect, measure, and compare the impact of deep-space radiation on living organisms over long durations beyond Low-Earth Orbit (LEO). Finally, Beaman stresses that Artemis I is not just a one-trick-pony. “We are already working on Artemis II, III, IV, and subsequent missions; processing a lot of the hardware for Artemis II and III already,” he said. “Our next mission is only a little over two years away, so when we fly early next year, we are about 2 years away from Artemis II.” w
9
10
Huntsville BUSINESS JOURNAL
WORKFORCE DEVELOPMENT
HATCH Program Finds Success with First Two Cohorts It’s been almost three years since HATCH co-founders Garret Coyne and Beth Boyer first talked about the idea for a hospitality workforce program that would empower its participants to lead self-sufficient lives. HBJ was able to interview the two co-founders after the program was launched and personally see how important the Huntsville community is to everyone involved. Their vision of HATCH is now a reality. Students from the program’s first and second cohort have seen their lives dramatically change participating in the eight week curriculum and being compensated to do so. Every student from the first cohort of HATCH is still employed with their initial job placements and the second cohort is set to graduate on December 17th. Kierra Burks graduated from HATCH’s first cohort in October. She had a passion for making food and was able to complete her externship at the HATCH Café which opened with the brand new South Huntsville Public Library as a service for guests at the library and a way to raise funds for the program. The 20 year old is still employed at the café today while also attending school to be an RN like her mother before her. Burks said she would definitely recommend the program to anyone who qualifies.
“Getting involved with the program is a great idea especially if you’re not exactly sure where you want to go in life” “Before I joined, I wasn’t sure if I would like it but I really did enjoy it in the end,” she said. “It teaches you a lot over the course of the program while also making friends and making connections. It taught me a lot of things I use at my job now from general hospitality and customer service to different ways to prepare food and more.” The program has over 40 different employment partners for externships and job placements including the restaurant Drakes and manger April Mount. Mount hired HATCH graduate James Moore and remarked on his transformation throughout his time there and also the program as a whole. “James has come very far since day one.
His time at HATCH helped him with things like attitude, demeanor, how to handle stress at work and how to interact with both guests and fellow employees,” she said. “Getting involved with the program is a great idea especially if you’re not exactly sure where you want to go in life,” she elaborated. “It lets you reach out to people who can genuinely help you start a path in the hospitality industry and get your foot in the door. It really is a great program they have.” Some of the employment partners working with the second cohort include The Camp, Rhythym on Monroe, Darkside Coffee and Sam & Greg Pizzeria. Audrey Smith has overseen both cohorts in her time as Program Director for HATCH. Her background as a counselor has helped the program emphasize mental health and various life skills in addition to job training. “A lot of our kids have experienced
By Noah Logan / Photos courtesy of Audrey Smith
“It lets you reach out to people who can genuinely help you start a path in the hospitality industry and get your foot in the door. It really is a great program they have.” trauma and they have a very limited support system so we try to address that while they are here,” she explained. “We brought on a therapist, Dr. John Ruffin, for the second cohort. He does group sessions three times a week and individuals throughout the week.” “In addition to that, I bring in a lot of guest speakers from the community,” she continued. “For each cohort we have had speakers talk about topics from substance abuse awareness and sexual assault prevention to leadership styles and responsible home ownership.” Applications are still open for the third cohort of HATCH graduates at the time of writing. Applicants who fall within the 18-24 year old age group can apply at hatchhsv.com. Those chosen will begin their eight week curriculum on January 11th and be paid $1,250 over the course of the program. w
January 2022
11
12
Huntsville BUSINESS JOURNAL
COVER COVER S
“You Just Have to Be Creative Dealing with Sup
By Dawn Suiter / Pho As anyone who has gone shopping recently knows firsthand, consumer goods such as toilet paper, meat, and frozen vegetables have been more difficult to find and often more expensive. Consumers around the world are having similar experiences due to disruptions in the global supply chain. Although inconvenient for consumers, the recent supply chain disruptions have hit small independent business owners especially hard, significantly impacting many business sectors including retail stores, restaurants, breweries, homebuilders, and numerous others who lack the economies of scale enjoyed by large chains and franchises.
According to Assistant Manager Anthony Smith of GigaParts, access to new technology presents a major issue for the company, which builds custom computers and sells components for those who want to build their own systems, as well as radio equipment and other electronics. Smith noted that some products have been “out of or low stock for so long they’re infinitely backordered,” such as graphics cards and chips. Although price increases on stand-alone computer components make individual parts less attractive to customers, Smith explained that the sticker shock is reduced when
those parts are incorporated into a computer system. He has also noticed that customers are more aware and forgiving these days. Graphics cards have increased in price because of low supply and high demand, and Smith said that they are in such short supply, vendors that do business online raffle off the opportunity to buy them at full price. GigaParts won one of these raffles, buying cards at full price and then doing a customer giveaway in which they presented one lucky winner with a free graphics card. According to Smith, “it makes sense...when things go back, we hope people remember where they won one or where they entered to get it.”
GigaParts adapts however they can to the ebb and flow of access to goods. “We get something in to tide us over and try to buy what we can where we can. It’s been hard. One thing we have hugely in our favor: the October before Covid we started growing into our own distribution center. We could buy in larger bulk and greater quantities for larger products. Vendors place higher priority on us.” As for the radio side of the business, Smith reported that some vendors have had a much worse time than others. Components are manufactured in Japan and China, with products at different levels of completion due to a lack of parts. He
added that some brands of accessories are particularly hard hit because they are shipped by boat. Labor in China has also taken a massive blow. The radios themselves have had periods of shortage, according to Smith. However, he said, manufacturers have made a concerted effort to equal things out as much as possible.
Madison Band Supply owners Robin and Frank Cotton also reported that electronics are especially hard to find. In addition, Chinesemade products like earplugs are out of stock, and both instruments and parts for instrument repairs are harder to find. The most common euphonium from Yamaha is backordered for months, and even a simple pipe for the instrument is hard to find. “Students are choosing to replace instead of repair--whole horns are in supply rather than parts.” Most musical instruments are now made in China and Taiwan, and according to Frank Cotton, even USmade instruments have parts from there, with the metal supplied by China. Although scarcity presents problems, Frank Cotton said “we’ve kept our prices the same as two years ago. Supply prices haven’t really escalated yet, although our main supplier is going up by 5% rather than the usual 2-3%.” Finding products takes much more work now than before: “We have to go through five or six distributors now instead of the normal supply chain...Bandmaster (marching) shoes ran out of a lot of different sizes and we had to make substitutions. We’re okay but we have to be creative and it takes a lot more energy.” Robin added, “We’re having to relearn patience.” Local home builders and contractors are also experiencing the negative effects of supply chain disruptions.
Wendy Lee, owner and founder of LeeHouse Homebuilding, said that although the homebuilding business has experienced labor shortages for the past five years or so, supply chain issues have had the greatest impact on the industry recently. Lee noted delays in the availability of products ranging from plumbing fixtures and window glass to drywall mud and hardware glue. “There doesn’t seem to be a rhyme or reason but the end result is a delay in finishing the home, which not only affects the profit margin but, more importantly, adds frustration and disappointment for the customer who is already stressed due to higher pricing and a competitive market.” According to Lee, price increases occur in the housing supply market on a daily basis, with trade partners and vendors passing down material increases including freight costs that in some cases more than tripled. “As a boutique-size homebuilder I have no choice but to raise the sales price of my homes, which unfortunately results in some buyers being priced out of the market.” Adaptation is key: Lee focuses on frequent communication with customers, keeping them up-to-date on delays or product substitutions. While she continues to build pre-sale
January 2022
13
STORY STORY
e:” Local Small Businesses on pply Chain Issues
otos by Dawn Suiter homes for customers, she has added in more speculative builds, setting the prices once the homes are near completion so as to compensate for price increases incurred along the way. Lee acknowledges that “today’s market, with supply and labor shortages, the constant price increases, and so many unknowns, makes it a frustrating time to be a homebuilder...and probably more so a homebuyer.” She added, “let’s not lose sight of the American dream--it might take a little longer today but owning a home is still very much worth it.”
The food and beverage industry has also suffered heavily from supply chain disruptions. Tammy Hall, owner of Main Street Cafe in Downtown Madison, cited cost increases and lack of consistency as the two main issues faced by her business. Hall stated that “like most longterm restaurants, we like consistency. Our customers appreciate this factor as well. The products that are key to that consistency are just unavailable at times. These are products that have never been a challenge to secure. And obviously because they are hard to get, the cost of those same products has consistently risen over the last 7 months since returning to normal service after COVID.” Hall used the example of chicken to illustrate the hardships faced by not only her restaurant, but others like hers: while a forty-pound case
of random-weight chicken cost $40 a year ago, “now it’s a bargain if I can get it at $80.” Although her ingredient costs increased across the board, Hall hoped to ride it out without significant price increases on the menu. As of January 2022, however, Hall said she will have to increase prices “just to stabilize our food costs, unfortunately assuming these costs are here to stay.” Hall has adapted by ordering larger quantities than needed once they become available or by substituting similar options. “It’s very stressful trying to order everything we need to supply our hard menus. I’ve added new vendors in an attempt to bounce product availability between them. One week I can get red snapper from US Foods, the next week I’ll use Sysco, and the next may be Inland. It’s crazy!” Each Sunday, Hall assesses her restaurant’s needs for the week, beginning the process of finding suppliers and determining when goods will become available. She said that the food reps are also stressed out, sometimes unable to find the simplest of goods such as cracker crumbs. “I mean, how can cracker crumbs be so hard to come by?” Hall’s advice to other restaurant owners and small businesses: “just keep swimming. Do the best you can by your employees and customers. Be grateful that business is good and
that you are fortunate enough to have to work to find products because business is good. Find your positives!” As the owner of a manufacturing brewery/winery/distillery as well as a restaurant, Straight to Ale owner Dan Perry has experienced supply chain disruptions on multiple levels. Perry reports that he has seen freight charges on equipment ordered from overseas increase by 4x at the same time the delivery times have slowed to a crawl. Straight to Ale is in the process of adding a new location and has been waiting on an electrical panel for over six months. “I could go on and on with examples (cardboard pricing, label pricing, bottle pricing), but I’m sure that everyone is seeing these same things at different levels.” Supply chain disruptions have also impacted beer canning for Straight to Ale: “Our lead times on empty cans have tripled while the pricing has gone up 50% and the minimum purchase levels have doubled. The restaurant side of the busi-
ness, Ale’s Kitchen, is experiencing the same issues as Main Street Cafe, with prices increasing for all of the ingredients and shortages of necessary supplies. The restaurant has adapted by modifying its menus and using available food items to be able to continue to serve its customers. Perry expressed hope that things will eventually return to normal. Although strains on the global supply chain are expected to ease by the second half of 2022, the use of creativity, flexibility, and patience will continue to pay off for small businesses as they adapt the lessons learned over the past couple of years to a changing economic environment. Perry’s advice to other small businesses is “to tighten everything up, get out ahead on ordering, be flexible, and hang on. I have faith that things will eventually get better, but the ride is going to be long and rough until we get to that point. Our customers are tremendously understanding and are continuing to support us through all of this, and we are certainly grateful for that.” w
14
Huntsville BUSINESS JOURNAL
REAL ESTATE
Huntsville Homebuyers Fight Back Against Corporate Cash Offers with RibbonCash Offers If you have tried to buy a house recently, you may have noticed the rules of engagement have changed. One out of every three homes in the country today are bought with cold hard cash, and yet 99 percent of everyday households need a mortgage to secure their home. Doesn’t quite add up does it? But it’s true. Hundreds of billions of dollars in cash is being used to purchase homes, but it is not coming from the typical American family. So, where are these homes going? Most of them are being sold to Wall Street investors who have stepped into Alabama and other states as well, with a single motivation of turning as much of the housing stock as they can possibly accrue into rental properties in which they are the landlord, reaping all the returns from the housing market. According to Realtor.com, two cities close to home top the list of metros with the highest share of investment buyers. While Memphis and Birmingham top the list, Huntsville too is in the crosshairs according to Shaival Shah, founder and CEO of Ribbon, a real estate concept new to Huntsville that gives everyday Alabama homebuyers a new competitive advantage – turning every homebuyer offers into a cash offer to fight back against the corporate takeover of the U.S. housing market. In early December, Shah said a memo crossed his desk from a Wall Shaival Shah, founder and CEO of Ribbon
Street investor stating they had $5.2 billion set aside to buy up housing inventory in Alabama. They were looking for markets with three recession-proof qualities: a military base, universities, and a strong hospital system. Sound familiar? “I brought Ribbon to Huntsville because it is one of the fastest growing markets in the country right now and it is a place where Ribbon can step in and support everyday families, making them more competitive in the homebuying process.” Ribbon officially launched in Huntsville with launch partner Crye Leike Realtors on December 7. Ranked the third largest independently owned real estate company in the nation, Crye Leike agents have a powerful tool in RibbonCash, to help everyday buyers compete - even in the most competitive market conditions, head-to-head with investors. “We’re excited for our agents and customers in North Alabama, because using Ribbon as part of the Crye-Leike Advantage program will give them
a better chance of being successful when making offers,” said Steve Brown, president of Residential Sales at Crye-Leike. “By making offers not contingent on appraisal and the equivalent of cash, they can compete with investors. It’s a win for the buyer, the seller and our agents who show fewer houses to get an accepted offer.” Alabama homebuyers continue to face steep headwinds in purchasing their dream home. The statewide median sale price increased 11.3 percent and the average days on market decreased from 71 days to 45 days, year-over-year, according to the Alabama Center for Real Estate. “There are three communities of investors out there putting pressure on the average homebuyer,” Shah said. “They are big Wall Street institutional investors, who are not buying a couple of homes, they are buying thousands of homes. “The second are high net worth individuals who have been living in places like New York, Boston, and Chicago, who because of the pandemic are working remotely and
By Kimberly Ballard
migrating into Charlotte, Atlanta, Nashville, and yes Huntsville, where they are bringing in a lot of assets to scoop up homes, they are used to paying $2 million dollars for in New York and Boston, for $225,000 in Huntsville. “And the third group are high dollar individuals still living in New York and Boston, buying second, third, and fourth homes all around the country as investment properties.” Zelda Freidman, a broker with Crye-Lieke said, “I am excited to see Ribbon in Huntsville because the housing market is so competitive right now, anything that helps our buyers compete with cash offers is welcomed by all of our realtors. “We are crazy busy with multiple offers and a lot of investors buying in Huntsville, making it really difficult for some buyers to be able to get their dream home. “A home is the biggest purchase you make, building equity, cherishing it, taking care of it, raising a family in it,” Freidman continued. “Once we submit your pre-approval letter to Ribbon, it gives that homebuyer the advantage of making a cash offer. It is just that easy.”
Real estate is a $30 trillion dollar market and the number one driver of the U.S. economy. Everyone looks at it like a pot of gold, and Shah admits that one of his concerns when he formed Ribbon is that the U.S. is beginning to see the gentrification of the middle class in America. That is the deliberate displacement of the middle class by a wealthier class. “We believe in home ownership,” Shah said. “Every other industry has faced disruption – look at retail with ecommerce, Walmart and Amazon. But real estate has been the last fron-
January 2022
15
REAL ESTATE
tier and the question is, what does that disruption look like in housing?” He said Ribbon is taking a different stance, one in which they help the everyday household and family to be much more competitive in the process of buying a home. “We have reconstructed the entire transaction in partnership with realtors and lenders, where now the family can secure their mortgage before or after they move into the new home.” With a sizable balance sheet of their own and credit facilities, Ribbon will back the homebuyer up by turning pre-approved buyers into cash buyers. “The average person who wants to buy a $300,000 house will typically get a mortgage. But if you put yourself in the place of the seller, the only thing they care about is the certainty the home transaction will close,” explained Shah.
“With a mortgage you must worry about financing contingencies, appraisal costs, and if you have an existing home, you must sell it before buying a new one, and all that has to happen in a tight window of 30 to 60 days.” He said one out of every three offers backed by a mortgage gets delayed or falls through. The seller tries to minimize risk and optimize for cash offers. “Just prior to Ribbon coming in this month, we had a first-time homebuyer struggling because some sellers won’t look at a mortgage-backed offer because it will cost the seller more time and money,” said Freidman at Crye Leike. “It’s been challenging but with Ribbon, we can present their offer as a cash offer. It is an easy process accessible to any pre-approved homebuyer.” According to Shah, once the buyer is pre-approved and the mortgage
bank says the buyer can secure a mortgage, the buyer can add Ribbon to your offer, giving them an automatic upgrade to an all-cash offer with a guaranteed close. “That moves you from the bottom of the stack to top of stack and gives you a 40 to 80 percent higher likelihood of winning the offer,” he said. “Once the offer has been accepted by the seller, if your mortgage isn’t ready in time or there are unavoidable delays, which happens every day, Ribbon steps in and buys the home and reserves it for you for up to six months, transferring the home to you at the original purchase price when your purchase closes.” What happens if the entire deal falls through or the family decides suddenly not to buy the house? “The risk we take is that if we
buy a home for someone and they choose for one reason or another they cannot or do not want to get the mortgage after Ribbon has bought it, they have the ability to freely walk away, and we put the house back on the market.” He said for every 100 families Ribbon enables, less than five do not eventually go through. w
16
Huntsville BUSINESS JOURNAL
REAL ESTATE
Huntsville Area Realtors Provide Insights on the 2022 Housing Market As the end of 2021 nears, homebuyers and sellers are eagerly anticipating, or perhaps dreading, what the next year will have to offer in the Huntsville metro area housing market. This past year’s market has been particularly eventful with demand greatly exceeding supply, multiple offers placed on homes within a very short period of time after listing, and buyers bidding well above asking price. This white hot real estate market raises questions about whether rising prices and low stock will persist throughout 2022 or whether the market will finally see a slowdown. As of December 13, 30-year fixed mortgage rates were as low as 2.750%. This does work in buyers’ favor, but home values have also risen dramatically in the past year. According to a recent Huntsville Area Association of Realtors® (HAAR) report, the inventory of area homes rose from the second quarter to the third quarter, the first time this has happened in seven years. While this sounds like good news for buyers, prices continued to increase significantly due to intense demand for homes. In addition, the number of affordable homes listed decreased dramatically over the past year: 170 homes were listed between $200,000-250,000 in the third quarter of 2020, whereas only 38 were listed during the same period in 2021, a 77.8% decrease. Home sales also decreased by as much as 39.5% for listings $300,000 and under, whereas they increased at all higher price points. Almost half (48%) of homes sold in the third quarter of 2021 had a selling price above the listed price. The housing market will likely become even more competitive with the expansion of Redstone Arsenal’s workforce next year. Madison County data provided by HAAR. New home construction is key to meeting the needs of homebuyers, especially as the Huntsville and Madison County population continues to grow. However, changing construction material and shipping costs, the availability of rental properties, and other factors can quickly alter the momentum of the residential real estate market. According to Huntsville Area Association of Realtors® (HAAR) and ValleyMLS.com CEO Josh McFall, the trends in the most recent economic report leads him to believe that all the challenges will not disappear in the first quarter of 2022. However, he expressed
optimism that as inventory increases, homebuyers will see relief in both prices and buying options. Robin Cotton of Crye-Leike Realtors and Robin Cotton Properties and Juli Gerrits of Leading Edge Real Estate Group echo this assessment, noting low inventory and fierce competition for housing contracts. “We are seeing new construction speed up as supply chain problems ease,” Gerrits said. In addition, there is still a backlog of prospective buyers, “be it those who put their plans on hold due to COVID, or frustration with the multiple offer competition as well as the ongoing influx of people newly relocating to here.” It is nearly impossible to predict next year’s home prices given the uncertainty of the past year. McFall cited multiple factors that could influence future pricing: “If the pandemic continues to recede, if the global supply chain strengthens, if labor becomes more available, if lumber prices decline--all these and more can influence affordability and availability of housing.” Cotton said she believes home prices will continue to increase, but added “The good news is, in my opinion, the Madison/Limestone County area has been undervalued for a very long time. I think we are just now valued properly.” Gerrits also foresees a continued increase in price, but expects to see prices “begin to calm, rather than the rapid, steep spikes we experienced in 2021.” Realtor Monica Evans of Keller Williams Huntsville predicts that increasing lending rates over the next year will lead to a slowdown, resulting in less buying power for prospective homeowners and fewer bidding wars as well as fewer sales above and beyond asking price. Evans also suggested that home values will hold steady, appreciating less aggressively due to increasing rates. “Over time, people will adjust to higher rates and if supply and demand remain as off-kilter as it is now values will remain strong.” General consensus indicates that recent home price trends are not a re-
peat of the earlier housing bubbles and that the market will stabilize to some extent over 2022. McFall described the current market as “a completely different beast than what we saw pre-bubble in 2008,” noting that existing homeowners will continue to see a healthy return on their investment. According to McFall, certain influences that factored into previous housing crashes are not evident this time, such as a high percentage of mortgages underwater and more extreme price increases. “HAAR can only look at trends to see where we’re going in the short term, but we are optimistic about the year ahead for both buyers and sellers across north and central Alabama.” Cotton observed that unlike before, “this market is built on cash, a solid foundation. In the 1990s and 2007-2008 the market was based on bad lending practices--a castle built on sand.” Another recent development is that “we have a lot of corporate investment gobbling up the entry level homes and turning them into rentals,” Cotton said. “If those investors disappear it will not leave a void. It will just make room for the first time homebuyers that have been pushed out of the market lately--they are eager and waiting.” Gerrits noted that today’s housing market does not have underlying issues such as excessive risky lending and high unemployment that brought about earlier crashes. “Locally, we’re expecting thousands of new jobs and our cost of living is still below national averages, even following recent home price spikes.” Evans stressed the importance of distinguishing between a bursting bubble and a market correction, saying “I believe a slight correction (five to six percent) is inevitable as the market has been hot for so long.” For those currently in the Huntsville-area housing market or planning to be soon, Cotton and Gerrits advised sellers to buy before they sell if possible, acknowledging that although there is some risk, the seller will not be left scrambling for a place to live before they are able to find the right house. Gerrits added that rentals, including AirBnBs, are also in high demand and short supply. According to Gerrits, this is the time
By Dawn Suiter
for sellers to take advantage of the market: “Generally speaking, for sellers my advice is to do it now! The competition to buy a home in today’s market means buyers are not as particular, so even previously hard-to-sell homes are not lingering on the market for extended periods. However, that’s not to suggest they will get top dollar for a home in poor condition. It still needs to be priced right for location and condition.” Evans also recommended that sellers wanting to capitalize on their homes should do so now if they want to downsize or absolutely need the cash. This comes with a caveat, however: “If you plan on buying again and want something similar to what you sold, it may not be a good idea as you will more than likely end up spending way more than you were paying before.” As for buyers, Cotton said “Hire a professional. Make sure your agent knows how to write an attractive offer... You will quite possibly have to bid on several homes before you are successful. Don’t get your heart broken if you lose out on a house. Remember, you can make any house a home but a good neighborhood is priceless.” Gerrits echoed the mantra of “Location, Location, Location,” cautioning buyers not to settle for a location they’re unwilling to accept long term. “Kitchens can be remodeled, but they can’t change their home’s location. I’ve been licensed since 1998 and have seen way too many hopeful sellers regret their purchases of just a few years earlier.” Buyers also need to take into consideration whether they will tire of their commute or prefer a different school district as children age. Although rates are expected to increase, Evans’s recommendation is that buyers save as much money as they can in order to be more competitive against other cash-heavy buyers. She also advises longer term housing investments on the grounds that they are safer than shorterterm purchases since the chances of some volatility may be approaching. McFall’s advice to both buyers and sellers is to “make sure you’re working with a Realtor®. They’re going to be your strongest voice, biggest advocate, and a professional advisor in the homebuying process. For most of us, our home is the largest investment we’ll make, and we should be hiring a professional to protect it. For buyers, be patient and prepared. For potential sellers, there’s never been a better time to list your property on ValleyMLS.com if you’re on the fence.” w
January 2022
COMMUNITY DEVELOPMENT
Hays Farms Continues to Take Shape With The Liam Groundbreaking By Noah Logan / Photo courtesy of Tina Blankenship
Pictured L to R: Tina Blankenship, Jennie Robinson, John Gilbert, Huntsville Mayor Tommy Battle, and Brandy Quick
The Hays Farm development in South Huntsville continued its progress and growth recently as ground was broken for a new upscale multifamily community called Liam at Hays Farm. Neither the cold nor the strong gusts of wind could deter anyone’s excitement for the new project headed by Houston-based Bomasada Group. Mayor Tommy Battle kicked off the groundbreaking by thanking Bomasada President John Gilbert for the investment in the city and emphasizing the importance of growth in all areas of the city. “I want to thank you for your investment in this city. This is what is so important in making sure we see growth in every section of the city. We are looking forward to great things to come.” Bomasada President and COO John Gilbert expressed the company’s excitement in being a part of the Hays Farm development. “Bomasada prides itself in selecting the best locations and designing the best multifamily projects in our prospective markets. We feel we have done that again with the Hays Farm development and we are excited to get started,” he explained. “Hays Farm is a wonderful master plan development as it contains all of the best elements one looks for in live, work and play environment,”
added Gilbert. “We are happy to join the new shopping center, Goodall Homes, Grissom High School and the various commercial projects.” Gilbert also took some time to include specific details about the upcoming project. The Liam will be a 329-unit Class ‘A’ property that will include 1, 2 and 3 bedroom apartments. It will be comprised of one four story building that will hold 299 units and 30 additional townhomes that will each contain three bedrooms and 3 bathrooms. Those who become tenants of The Liam in 2023 can expect to take full advantage of a resort style swimming pool, zen area, office spaces, fitness center and even a dog park. A separate building will be installed for bicycle maintenance and repair. City councilwoman Jennie Robinson explained how the new housing complex fits with the other developments at Hays Farm to revitalize South Huntsville. “In case you haven’t noticed, change is coming to South Huntsville,” she stated. “It started with three new overpasses. We have the new shopping center with Publix opening yesterday. The Liam will complement the other 500 houses that are also being developed. Altogether, it will build the energy that will make it possible to bring new retail and commercial business and revitalize this area.” w
17
18
Huntsville BUSINESS JOURNAL
COMMUNITY DEVELOPMENT
Huntsville/Madison County Chamber’s Redstone Update Provides a Glimpse Behind the Gates Recently, Huntsville/Madison County Chamber of Commerce hosted its annual Redstone Update at the Von Braun Center, its first inperson event since the COVID-19 outbreak forced it to go virtual. This event allowed Redstone Arsenal to highlight its continuing growth as a Federal Center of Excellence, which has helped the regional economy to soar to new heights. Attended by members of the Huntsville business community, the media, and members of key agencies on the Arsenal, the Redstone Update emphasized the diverse work taking place there and the thousands of jobs created by its agencies. Chamber Board of Directors Chair Jeff Gronberg kicked off the event, noting that Redstone Arsenal is an economic engine powering half of Huntsville’s economy with unparalleled capital investment and increasing employment. Senior Commander of Redstone Arsenal Lt. Gen. Donnie Walker greeted those in attendance, emphasizing the growth of the Arsenal from only 6,000 employees in 1942 to its current 45,000. Recurring themes discussed by the participants included a steadfast focus on the future, an emphasis on modernization and growth, the synergy achieved by the numerous agencies on the Arsenal, and the importance of people dedicated to serving their nation. U.S. Army Materiel Command (AMC) Chief of Staff Brig. Gen. Duzzny discussed Redstone’s Materiel Command and the importance of Huntsville to the Army’s global reach: Redstone Arsenal supports all six combatant commands which cover North and South America, Europe, Africa, the Middle East/Central and South Asia, and the Indo-Pacific region. Marshall Space Flight Center Director of Operations Robert Champion highlighted the importance of Marshall Space Flight Center (MSFC) to Huntsville, the Arsenal,
By Dawn Suiter
Photo by Eben Boothby, courtesy of Redstone AMC Public Affairs
and the Artemis program. He noted that over 7,000 people work for MSFC, with 70% of those engineers, 25% business and institutional, and 5% scientists. “We reap the benefits of Marshall’s economic impact. Statewide, Marshall provides $105 million in tax revenues and $1.7 billion in procurements. As an agency, Nasa provides more than 35,000 jobs in the state.” According to Champion, the pandemic was a learning experience: “We’ve learned how to adapt and still operate efficiently during that time.” Champion also discussed the Artemis program being developed in Huntsville, which will land the first Image provided by Nicholas Dimos
woman and person of color on the moon “using innovative technologies to explore more of the lunar surface than ever before.” MSFC is building the Space Launch System (SLS) to send astronauts to the moon aboard the Orion spacecraft as well as the Human Landing System (HLS). The SLS is going through final testing and will be launched in mid-February 2022. The unmanned Artemis I is the first in a series of increasingly complex missions that will enable human exploration. Marshall is the lead center for the Human Landing System, “the final piece of the puzzle needed for us to get astronauts to the moon. HLS is an ex-
ample of how Marshall is embracing and applying new partnerships and procurements and developing new operating models cooperating with industry and with NASA.” Champion noted that NASA is working with SpaceX to land the next humans on the moon with their Starship. In addition to its efforts to send human explorers back to the moon and on to Mars, Champion noted that Marshall’s Earth Science Division (ESD), which works in collaboration with UAH, focuses on controlling flooding and other natural disasters. Champion noted that they refer to this generation of young people as the Artemis Generation, adding that “we’re not only doing STEM, but STEAM as well as STREAM, adding arts and reading to that because we need all types of backgrounds and disciplines and fields to support our missions.” MSFC strives to inspire future generations of scientists and engineers through its sponsorship of community events like Artemis Day, as well as events such as the Human Exploration Rover Challenge, the FIRST Robotics Competition, and the Student Launch Competition. In his discussion of the FBI com-
January 2022
19
COMMUNITY DEVELOPMENT
ing to Huntsville, Federal Bureau of Investigation (FBI) Finance and Facilities Division Acting Assistant Director/CFO Nicholas Dimos reported that its move to Redstone is the largest single investment in the institution in its history. “It’s really the future of the FBI and it’s all about technology, innovation, talent, and resiliency.” Currently, 1,218 individuals work for the FBI in its Huntsville location, with 2,000 additional personnel coming to Huntsville by summer 2022. That number will increase to 5,200 by 2028, with an additional 2,500 training seat capacity. The FBI will have a North and South Campus on the Arsenal property. Five key North Campus facilities opened this year on base, with several others currently under construction. The South Campus Academic Zone and Smart City is on track to break ground next year and will be operational by 2025. Dimos described the facility as having a walkable, campuslike feel with a sense of community. Dimos stated that there are four key strategic objectives set by FBI Director Chris Wray that apply to Huntsville specifically: developing a Counter-IED Center of Excellence, strategic realignment that will transition a large portion of the DC workforce to Huntsville, enterprise and applied technology addressing emerging threats, and advanced and specialized training providing knowledge, skills, and talent for 21st century challenges. The FBI is actively hiring data analysts, computer scientists, forensic examiners, cybersecurity analysts, and network engineers. Dimos stated that although they are working with local educational institutions, they are also seeking people to come to Huntsville from elsewhere. He added that the FBI has two dedicated recruitment platforms: FBIJobs.gov/Huntsville, and FBI Jobs on LinkedIn. The selection of Huntsville as its new location is already paying off for the FBI’s recruiting efforts. Dimos said that there were positions they could not fill in the DC area, but as soon as they posted those openings in Huntsville “the inboxes filled up.” Lt. Gen. L. Neil Thurgood of the
Rapid Capabilities and Critical Technologies Office (RCCTO) stressed the uniqueness of his organization and the importance of its industry partners. His organization works at “a pace we haven’t seen since 1950...we are behaving differently than we ever have.” Thurmond credits transparency and open communication with its speed. Thurgood said his organization is set up differently from any other Army organization. Because the RCCTO is organized like a venture capital organization, it has the ability to create short-term teams to develop rapid prototypes for warfighter capabilities. Thurgood discussed a few of the projects the RCCTO is working on, including the “Dark Eagle’’ Long Range Hypersonic Weapon (LRHW) and the Valkyrie 300kW-class laser system. He added that “this valley, for our nation, is the heart of hypersonics for the nation.” Another thing the RCCTO does to set itself apart from other Army organizations is its solicitation of technology ideas from industry and academia. Its Army Strategic Rapid Acquisition (AStRA) program allows companies to submit concepts and proposals: “If you have a good idea, we want to know about it.” Projects developed through this program include a Bradley hybrid electric vehicle, a spherical brake system modeled after those of race cars, and an Enhanced Vehicle Security System (EVSS). During the Redstone Synergies Panel discussion, panel members Tom Webber, Don
Nitti, Col. Steven Ansley, and Kim King focused on the synergistic aspect of their respective agencies on the Arsenal and their agencies’ roles in protecting the safety of the nation. Each of the speakers stressed the importance of cutting-edge technologies in the implementation of their missions, as well as the cooperation between the agencies and the importance of the local community in helping them to achieve their goals. Lt. Gen. Donnie Walker wrapped up the Redstone Update by providing an overview of Redstone Arsenal’s importance to the Tennessee Valley, highlighting its exciting work and the global impact of the Army Materiel Command, as well as the economic impact of the Arsenal on Huntsville and the Tennessee Valley. Redstone Arsenal has a total annual economic impact of $18 billion, equivalent to 9,8 percent of the Alabama state GDP. In addition, it generates approximately 109,000 jobs, including 44,500 direct jobs on Redstone Arsenal, along with 64,500
indirect jobs across the region. Major career fields supporting Redstone include science and engineering, logistics management, and acquisition and contracting. The Arsenal produces around $467 million in total state and local tax revenue and provides approximately $5.9 million in contracts to the state of Alabama. Lt. Gen. Walker also discussed future developments underway, including the Redstone Gateway development, its focus on minimizing the Arsenal’s impact on the environment, and a new partnership with Huntsville Utilities for water, electricity, and gas. Walker stressed Redstone’s dedication to improving the quality of life for Arsenal employees, including access to affordable housing and higher education. He pointed out that unlike other locations, the Arsenal continued its morale activities throughout the pandemic despite financial losses incurred. Redstone Arsenal also issued almost 2,000 recreation badges to local residents in 2021, enabling the general public to hike and fish on base. Walker echoed the sentiments of all of the speakers, saying “Everything we do is about people...our people demonstrate the best qualities in this nation: dedication, commitment, patriotism, pride in what they do, and a selfless service to the greater good. They give their time and energy and their brain power to every mission they face. Our people really are our greatest strength and the reason we can envision the bright future that’s both here and now and that’s ahead.” w
20
Huntsville BUSINESS JOURNAL
COMMUNITY DEVELOPMENT
HudsonAlpha Aims for Collaboration, Increasing Workforce Diversity, and Reducing Fertilizer Use There’s nothing quite like a pandemic to shake up the best laid research plans. In late 2018, researchers at the HudsonAlpha Institute for Biotechnology, in collaboration with the University of Nebraska-Lincoln (UNL) were awarded a $3.9 million grant from the National Science Foundation (NSF) to study nitrogen efficiency in sorghum. Sorghum is a grain with many uses. It’s highly prevalent in the South and used as an inexpensive sweetener, sorghum molasses. It is also used for livestock feed and ethanol production. The research team had been evaluating sorghum to pinpoint the genes and regulatory networks that play a role in nitrogen uptake efficiency. Synthetic nitrogen fertilizers can be both energy intensive and costly. What’s more, fertilizer runoff negatively impacts the environment. Cultivating nitrogen efficient plants would reduce the need for synthetic fertilizer. The project was initially designed to promote student involvement in various stages of the research, with the overarching goal of training the next generation of scientists in the field of Agrigenomics. However, COVID-19 was a game changer, bringing research activities to a halt. As a result, many of the student-oriented learning opportunities were temporarily put on hold. To reboot the sorghum research efforts, the HudsonAlpha-UNL team was recently awarded a supplemental grant. Part of the grant involves the research of several sorghum varieties that will be planted in Nebraska and Alabama. The grant also includes the reinvigoration of the educational component. When it came to mindful diversity and extending valuable
learning opportunities to students, Alabama A&M University (AAMU) was an ideal match for collaborating on the sorghum research project. By bringing on Alabama A&M University (AAMU) as a third partner, it is anticipated that both the research and educational goals will be successfully reached. The team plans to place an emphasis on minority students who are often under-represented in STEM fields, particularly in the agricultural sciences. “Alabama A&M is excited to be a part of this NSF-funded project,” says Ernie Cebert, PhD, director of the Winifred Thomas Agricultural Research Station at Alabama A&M where the sorghum will be grown. “In addition to playing a part in such a scientifically and environmentally impactful project, it is also important to us that we will be contributing to the training of the future biosciences workforce.” The two-year supplement will mentor and cross train young researchers at AAMU, a public, historically black, land-grant university. The team hopes to help significantly increase the retention of young scientists in agriscience and broaden participation of mi-
norities in agriscience. “Our supplemental grant aims to address the practical limitations
By Lori J. Connors
of our first grant by scaling up the number of sorghum genotypes that we study and growing the sorghum in the field,” says Jeremy Schmutz. “At HudsonAlpha we have had a successful relationship with Dr. Ernie Cebert and his team at Alabama A&M University for many years, so it only made sense to bring them on as a third partner for this project to run field tests in Alabama.” w
January 2022
21
22
Huntsville BUSINESS JOURNAL
SMALL BUSINESS
One On One With Philip Kovacs, PhD of Tango Tango A former high school English teacher turned education professor, Dr. Philip Kovacs saw the need for transformation in education, and as a college professor he made it his mission to encourage his students to also shake things up, to create leaders. After leaving academia, Kovacs brought his transformative philosophy to the business world, where he facilitated massive growth for tutoring company Appleton Learning, then for communications company Tango Tango, located at 7800 Madison Blvd. STE 702 in Huntsville. After learning that he was stepping down as CEO of Tango Tango to become Chief Revenue Officer, I sat down with him to discuss his decision and to learn more about his unique skill for transforming small startups into highly successful enterprises. Dawn Suiter (DS): What led you to leave academia for Appleton Learning? Philip Kovacs (PK): I’d just gotten tenure in my 11th year [at UAH]. I’d been doing some part time consulting with Appleton and as the company was starting to grow pretty quickly they offered me a full time position with a salary and benefits that simply couldn’t be matched by the university. I also had a discretionary research budget so I could explore different ideas. In the humanities, money like that isn’t easy to come by so I was attracted to that opportunity. Also, I had a short attention span and I’d been either a graduate student or a professor for the better part of 13 years, so I was ready for something else. DS: What were your takeaways from this experience with Appleton? PK: Everything is not as bad as it seems when things get off the rails a little bit. It’s no reason to panic, just time to figure out what the problem is and fix it. Laying blame even when people deserve it is generally a waste of time. It’s really more about a problem to be solved. Another thing: setting measurable, achievable goals and celebrating them is important because business can be a grind. DS: You helped transform Ap-
pleton into a major player in the education field here in Huntsville. What convinced you to leave? PK: We started off with 10-13 full time employees and 40-50 part time employees. By the time I left it was 70 full time employees and 4,000 part time employees. Growing an idea and having it succeed and then managing that success are different enterprises and skillsets. Some people have those, but if there’s a running theme it’s my short attention span. I really like the growth part, but I really don’t like the management part. DS: What was your initial plan after leaving Appleton and how did it lead to you ultimately transitioning into the role of CEO of Tango Tango? PK: When I left Appleton Learning amicably, they gave me a great severance package, so I was set. I wanted to take a year off and do three pro bono consulting gigs and the reason for that was the recognition of how much time and energy they put into me...I definitely knew nothing about running a business when I started there but when I walked out I knew things. I worked with two other companies, and Tango Tango was going to be my third project. I’d heard about them and had coffee with the CEO at the time, Trey Sharp, who is now CEO again, and he asked me if I was interested in coming in and doing some consulting. I came in with 20 questions covering all aspects of the business, talked to the entire team for about two hours, and went home and typed
up a plan saying “this is where you guys are strong, where you’re weak, where your opportunities are, and here’s what I would do over the next 90 days.” I gave it to Trey and he was like “well, you come in and do it for 90 days.” That was no longer going to be pro bono consulting. In 90 days we lowered prices and established product market fit--where we got the pricing of the product right, we knew there was a need in the market, and we figured out how to get it out there. In April 2018 it really started taking off toward the end of my consulting gig. They offered me a job as Chief Operating Officer, which I accepted. I really liked the idea and thought the team had what it would take to get Tango Tango going. Trey was running another business and just had twins and said “I’d like for you to come on and me to step down and you’ll run the company as CEO.” I said “yeah, but there’s a caveat. In 36 months if I do my job I’m going to hate it because I’ve grown this thing to a level where you need someone with attention to detail and an attention span that I just don’t have.” One of the good things about being a professor was that if you get bored you can just switch to a different topic. With a business you can’t do that. There are just more things you need to pay attention to. So I was like “you’ll either have to come back or find something else for me to do.” That brings us to right now. Sharp returned as CEO in November, while Kovacs stepped down to become Chief Revenue Officer. During Kovacs’s tenure the company grew fivefold, from four employees to 21, with considerable revenue growth. DS: What are the greatest professional challenges you’ve faced at Tango Tango? PK: Being perpetually out of money, and part of that is we are essentially building out the internet of radio. That comes with a capital cost for equipment, so a lot of the money we raised goes into infrastructure and it’s a one time cost to get a cus-
By Dawn Suiter / Photo courtesy of Philip Kovacs
tomer up and running but it’s still expensive. To maintain high growth you have to continually add to your sales team or improve your product. We’ve really focused on growing the sales team. DS What brought about your decision to step down as CEO? PK: I really wanted to focus on growth--that’s what was fun for me. I’ve already got eight exciting projects for me over the next 12 months...one thing I want to do is multiply our presence in K-12 schools 10X. The majority of our income comes from first responders but we do have about a dozen schools or school systems across the country that are using us...I think we’ve got something that every school should have and really, what you need in order to have it is a PTO or PTA bake sale once a year. It’s a no-brainer. We just need someone chasing that project down and for me that’s exciting. DS: What’s your vision for the future of Tango Tango? PK:: The future is likely us integrating with or acquiring similar offerings to form an emergency communications platform company. That would be a one stop shop for multiple software services that first responders would find useful, like computer assisted direction--in big cities, firefighters who go up buildings need altimeters so you know where they are, so we’re working on someone to figure out how to integrate that into the offering. That’s the likely progression, but for now it’s growing the team nationally. DS Tell me a little about your ideal business/corporate culture. PK: There’s a very famous quote by Peter Drucker: “Culture eats strategy for breakfast.” The ideal culture is thick, without trying hard...everyone wants to be here, they feel like they’re respected, and they want to be contributing and growing. The key is in the people you hire, and every hire since August 2018 has been through that lens. Cultural fit is important, but also skills. It’s about checking in with your employees, letting them know they can come to you with anything they need to. w
January 2022
23
BRIEFCASE RECOGNITION
Beth Pippin Accepts Position as NAI Chase Huntsville’s Newest Property Manager NAI Chase announced that Beth Pippin accepted a new position as Property Manager at the company’s Huntsville office. Pippin will be responsible for managing over 675,000 square feet of property in Alabama. “We are excited to have Beth join our Property Management Team. With over 20 years of experience in commercial real estate, she brings attitude, talent and understanding of the industry, which provides depth to the NAI Chase Property Management Team,” said Tracy Hunter, Executive Vice President of NAI Chase Commercial. Prior to accepting the position, Pippin worked a myriad of roles that looked over various daily operations within the real estate field, including land development, construction design, re-fits, project management, and managing and leasing 1.5 million total square feet of office and industrial assets and spaces. NAI Chase Commercial, a member of NAI Global, is an Accredited Management Organization with offices in Huntsville and Birmingham. NAI Chase Commercial offers a wide variety of services, including Commercial Property Development, Commercial Property Management, Investment Property Brokerage, Construction Management Consulting, and Building Renovation Services.
RECOGNITION
David Raby Receives Founder’s Award from SMTA David Raby, president, and CEO of Huntsville’s STI Electronics, Inc., has been awarded the Founder’s Award from the Surface Mount Technology Association (SMTA), recognizing him for exceptional contributions to the electronics manufacturing industry, as well as ongoing support and service to the SMTA. He accepted the award during SMTA International in Minneapolis, Minn. The STMA is an international network of professionals who build skills, share practical experience, and develop solutions in Electronics Manufacturing Raby was selected for his leadership as a past president and member of the Board of Directors, as well as an officer in the Huntsville Chapter, and an ambassador. “SMTA and the electronics industry have benefited immensely from David Raby’s contributions over the years,” said Tanya Martin, CMP, Executive Director of SMTA. “To say I am honored to receive this award might be the biggest understatement of the year,” said Raby. “What really stands out in my mind in receiving this award is the contribution the industry and, most notably, the friends and industry colleagues have made in my life and my career path. SMTA has played a huge role in the opportunities to support and give back to our industry.” STI Electronics provides a full slate of services to the contract electronics manufacturing industry. The company joined SMTA upon founding in 1984. Over the years, Raby has been very involved in the organization, having held every office in the Huntsville office. He was elected to the Association Board of Directors in 1997 and re-elected in 2001. He served on the Planning Committee from 1997-2000 and was the Treasurer in 2003. In 2004, he was elected President and re-elected in 2006. Currently, he is again serving as the Huntsville Chapter president.
24
Huntsville BUSINESS JOURNAL